

Sorry, Shoppers, but Why Can’t Amazon Collect More Tax? - ojbyrne
http://www.nytimes.com/2009/12/27/business/27digi.html

======
ggrot
Sigh, why should amazon do anything wrt taxes except minimize costs to their
customers, maximize profits, and be legal? What they are doing is legal. Their
competition is doing the same thing.

Why do reporters continue to blast big companies for "not paying taxes"
instead of blasting the government for not requiring that the companies do?

~~~
nixme
Sadly, this isn't even your average reporter. The author, Randall Stross, is a
Professor of Business at San Jose State.

What I don't get is why he's angry at Amazon. Sales tax is levied against
consumption on a _buyer_. It's just that states can force sellers in their own
jurisdiction to collect it at the point of sale. For purchases made out-of-
state, states already have a mechanism for collection: use tax. I find it a
bit disingenuous that he doesn't even mention this. Why force the burden on
companies when it's a tax against people that they're not paying.

Shouldn't he be angry at all the shoppers who aren't helping "avert layoffs of
schoolteachers and firefighters and, yes, professors at state universities" by
not filing their use taxes?

~~~
gojomo
_Shouldn't he be angry at all the shoppers..._

He might as well be angry at rainclouds.

Tax policy is often designed to allocate tax burdens where they are easy to
measure and enforce, rather than where they 'theoretically' should be
triggered. Requiring millions of shoppers to record and pay their 'Use Taxes'
would be an onerous requirement; requiring merchants to collect 'Sales Taxes'
is relatively easy and indeed already traditionally done, even by Amazon.

So it makes perfect sense to focus on bringing cross-state retailing into the
sales tax regime, rather than scolding shoppers about use taxes.

~~~
nixme
Of course it is. If governments didn't force employers to withhold income, I
doubt income tax revenue would be nearly the same. And paying use tax is
pretty much a joke.

My point is that he's using vitriolic language to accuse Amazon unfairly (who
are abiding by the current commerce laws) when the same could be said about
the shoppers (who are not). Attacking either won't lead to an acceptable
solution.

I don't think we should interfere in interstate commerce at a federal level.
Rather the states that care will need to form a solution for all out-of-state
commerce taxes, something that's happening anyways.

------
ShabbyDoo
I'm a small government, anti-tax guy, but discrimination against bricks &
mortar businesses seems quite unfair. Why should the tax I pay on a new
computer vary based on how it is delivered to my home? Also, a sales tax is
probably the fairest known model of taxation and is least susceptible to
manipulation. To further the "Amazon should tax" argument, one could also make
the case that the sales tax becomes quite regressive when upper-income people
shop online but poor people (because they don't have credit cards, etc.)
primarily buy from a local store.

Certainly, Amazon must resist collecting sales taxes until all online/catalog
retailers are required to collect them -- anything less would lead to a
shareholder revolt.

~~~
nixme
_Also, a sales tax is probably the fairest known model of taxation_

My understanding is that it is one of the most _unfair_. Poorer people will
lose a greater percentage of their income to sales tax than richer people
because certain consumptions aren't elastic to increasing income. Now some
states won't collect sales tax on items deemed "necessities" but the
classifications can get tricky and imo just leads to inefficiency.

Like you said, sales tax can be considered a form of regressive tax:
<http://en.wikipedia.org/wiki/Regressive_tax>. How is that then fair?

~~~
ShabbyDoo
You are right that it tends to be slightly regressive w.r.t annual income.
However, every dollar earned that is eventually converted into something
tangible must be taxed. So, it's eventually flat if earnings are ever enjoyed.

Is flat fair? There's nothing inherently "fair" about a zero second
derivative. I'm actually ok with some sort of government rebate for the first
N dollars of taxation to reduce the burden on America's (relatively) poor
people.

~~~
nixme
Except that the rich or even moderately well-off never convert even close to
all their money into something tangible while the poor almost always must
immediately. The rich don't live paycheck to paycheck. They save, invest, go
on vacation, etc. They defer the second taxation (sales/use) to a later date
or place -- they have choices where the poor do not. So while it might seem
flat theoretically, it becomes regressive quickly.

But we probably agree on more than we disagree. I actually agree that flat
isn't fair and that the current situation isn't fair to b&m stores either. I
just don't think the solution is to interfere with interstate commerce. States
need to enforce use taxes, or if that turns out to be unenforceable, which I
suspect it might, rethink their taxation strategy.

By the way, not sure why you were downvoted. I upvoted to correct that. Thanks
for the discussion -- it got me thinking about this situation quite a bit.

------
tel
Small point, but

 _If the complexities that its retail competitors have mastered really are an
insuperable difficulty for Amazon, it could contract with a commercial vendor
that specializes in these calculations, like Vertex, as Netflix does._

What the hell is Stross's point here? If Amazon has deliberately masterminded
an enormous sales tax loophole they undoubtedly are not confused or unwilling
to deal with the complexities of tax law. By ignoring the obvious subtext with
which the Amazon spokesperson suggested "simple" and "fair" taxing schemes for
all business models Stross is only making a fool of himself while undermining
the entire shoddy article.

------
nfnaaron
As others point out, what Amazon does is probably legal. It's also probably
required; as a publicly held company they're required to pursue the best
return possible to investors. Stepping up to pay a tax that's not legally
required would violate that duty.

I think the states can make a good case for requiring mail order consumer
businesses to pay sales tax. Bezos says that his employees and business don't
receive services from states, but they do. Without functional streets it would
be impossible for Amazon to have their products delivered, at the prices they
currently charge. Less directly, police and fire services ensure that their
customers and contractors can operate safely and with minimal disruption. More
abstractly, a functioning economy and legal system promotes the economic well
being of its citizens, without which Amazon could not function. At all.

~~~
jcnnghm
Streets aren't paid for by sales tax. They're paid for with taxes on fuel and
vehicles paid by the companies making deliveries in the state.

~~~
Anechoic
Only partially, use taxes cover about 50-60% of the costs for roads IIRC, the
rest comes out of the general fund.

------
gojomo
Stross only has <1000 words here, so he leaves out other parts of the case for
Amazon paying sales taxes. These include:

\- Amazon has commissioned retail sales staff -- via their Associates program
-- in every state

\- if distant sellers have a cost advantage from arbitrary tax loopholes, then
real non-replenishable resources (like fossil fuels, clean air) will be
consumed chasing those advantages. If prices indicate the real inputs to a
sale, resources are better allocated.

\- a broader base for the sales tax would mean less pressure for the rate to
rise to make up shortfalls (partially due to commerce moving online). Yes,
governments are voracious and irresponsible but dynamically in the long run,
more entities paying means a lower rate, and a larger constituency to lobby
against rate hikes. Currently, Amazon could secretly be cheering every rise in
California sales taxes. (That is, we should prefer to have Amazon on the "pro
low taxes for everyone" team, rather than the "pro low taxes just for those
with intricate interstate legal arrangements" team.)

------
jcnnghm
Sorry tax happy states, probably because it's an unconstitutional violation of
the commerce clause. Perhaps it's time to cut worthless social programs.

~~~
Anechoic
_Perhaps it's time to cut worthless social programs._

Which worthless social programs should be cut?

~~~
eggnet
<http://www.ebudget.ca.gov/Enacted/agencies.html>

We'll, I'm not sure we should be spending $12B on higher education. Let's
convert that to freely available online courses. If people want the full in-
person college experience, then maybe they should pay for it themselves?

We aren't getting our money's worth out of the $4.6B for the Legislative,
Judicial, and Executive line item.

$32B for Health and Human Services is full of charges to cover illegal aliens
that the Fed can't (or won't) keep out of the country, but California has to
(or chooses to?) cover the bill. We can't afford it. Tort reform would help
too, if there is anything California can do on its own about that, I'm not
sure.

And finally, I'm certain every other line item not mentioned has the usual
government overhead, most of which could be privatized to save more money or
simply cut to a certain extent.

~~~
Anechoic
_We'll, I'm not sure we should be spending $12B on higher education. Let's
convert that to freely available online courses. If people want the full in-
person college experience, then maybe they should pay for it themselves?_

Isn't that a bit simplistic? Sure, one might make the argument that a
Literature or History major might be okay with only online courses but there
are any number of fields (engineering among them) where a hands-on approach is
essential to understanding the material. "Pay for it themselves" just means
that only the rich will be able to afford college. It's in the state and
national interest for us to be able to train engineers, so certainly the state
should be supporting higher ed. As for the amount, $12b divided by 132k
positions = $92k/position (which also includes energy costs, rent, etc). You
think it's too much?

 _We aren't getting our money's worth out of the $4.6B for the Legislative,
Judicial, and Executive line item._

How much should a body that governs the worlds eighth largest economy cost?

 _$32B for Health and Human Services is full of charges to cover illegal
aliens that the Fed can't (or won't) keep out of the country, but California
has to (or chooses to?) cover the bill._

Specifics?

* Tort reform would help too*

Specifics? And what would this involve cutting?

~~~
eggnet
_$12b divided by 132k positions = $92k/position (which also includes energy
costs, rent, etc). You think it's too much?_

Those 132k positions also include support staff as well as junior colleges.
Yes, $92k/position _average_ is too much. I also highly doubt it includes any
form of rent, since the gov't probably owns all of the land it uses for
schools and would have made a killing on it.

 _How much should a body that governs the worlds eighth largest economy cost?_

I suppose that would depend on what that body _does_. We're currently spending
3.8% of the budget on this governing body, which seems awful high to me. Drill
into the line item, it'll blow your mind:

Judicial Branch: 2,001 people, $2.2 Billion budget. That's over a million
dollars per person, per year, average!!!

 _Specifics?_

My mistake for touching this political hotbed, but if you haven't heard of
illegal aliens obtaining free health care in emergency rooms, there is plenty
of info on the net about it.

 _Tort reform. Specifics? And what would this involve cutting?_

<http://en.wikipedia.org/wiki/Tort_reform>

Basically, malpractice insurance is a huge cost, some doctors pay more for
that than they take home in pay. Not to mention unnecessary tests that are
performed simply for protection against lawsuits. Tort reform ultimately cuts
payments to lawyers. But, congress (both state and federal) is full of
lawyers.

I'm not hopeful for tort reform. Congress doesn't have a history of passing
laws that negatively impact themselves personally. They've even exempted
themselves from the "universal healthcare" legislation:
<http://online.wsj.com/article/SB124536864955329439.html>

