

Amazon Tells States: 'Drop Dead' Over Sales Tax - spottiness
http://www.wired.com/epicenter/2011/06/amazon-conn-ark/

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ansy
State sales tax is just one revenue stream a state can employ. There are
several criteria for a good tax. One being it is not regressive. Another being
it collects more than the burden it places on society to collect it.

Sales tax is arguably regressive, so it already has one hit against it. And in
the internet age, when it is not enough to do business in your home state,
sales tax is becoming a bigger burden to collect.

That said, Amazon is large enough it could collect sales tax no problem. I am
just thinking in general, it may be time to look at another form of tax to
fill the void for sinking sales tax revenue.

~~~
mseebach
Sales tax is only regressive with regards to wealth and/or income. It's
perfectly linear with the activity it's taxing.

Also, non-regressiveness is a far cry from an established benchmark for a
"good tax".

~~~
protomyth
Also, depending on what the sales tax applies to, it can be a fairly good
thing. Some states exclude clothes, unprepared food, and medicine. People also
understand sales taxes, unlike income taxes.

Given that, progressive taxes are just as foolish. A rate is a rate.

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DanielBMarkham
_“We opposed this new tax law because it is unconstitutional and
counterproductive,” Amazon said in a letter to its Connecticut affiliates. “It
was supported by big-box retailers, most of which are based outside
Connecticut, that seek to harm the affiliate advertising programs of their
competitors. Similar legislation in other states has led to job and income
losses, and little, if any, new tax revenue.”_

First, "drop dead" is not mentioned by Amazon anywhere. The article title
looks a lot like linkbait. Not upvoted. It also looks to pander to a political
viewpoint.

Second, as far as I can tell, if you wanted to find the real political story
here (since this is a story with both tech and political overtones) is that
the big box retailers are looking to put the squeeze on their competition, and
using government to do so. Yes, states are in dire straits, and yes, there are
good arguments on both sides of the issue. But -- follow the money. Who stands
to gain from higher-priced internet goods? Who stands to lose? Remember that,
as an internet user, I'm free to purchase offshore as well. The big box guys
know that. They know that the states will not receive one-tenth the amount
they dream of. They're just happy to be throwing rocks in Amazon's way -- and
using the government to do so.

I remember many years back when Microsoft had to start paying for lobbyists in
D.C. The big buzz in the tech community was confusion: why would a company
that made computer programs need lobbyists?

Of course now the answer to that question is all too clear: just like every
other industry, some players played fast and loose with the rules, government
intervened, and suddenly everybody had their checkbooks out to keep from
getting squashed (and to squash the other guys as much as possible.)

~~~
atacrawl
_Second, as far as I can tell, if you wanted to find the real political story
here (since this is a story with both tech and political overtones) is that
the big box retailers are looking to put the squeeze on their competition, and
using government to do so._

I think this is a fascinating issue for many reasons, but specifically for
this one -- the fact of the matter is that big box retailers like Target are
at a huge competitive disadvantage when competing against internet-only
retailers like Amazon because of state sales tax laws, so it makes perfect
sense that the big box retailers would say to the government: "Hey, this
company found a loophole in your rules that I can't exploit!"

Also interesting is the fact that the case that Amazon always leans on, _Quill
v. North Dakota,_ took place in 1992 -- before the internet era even began.
Yet another instance of the government not keeping up with this whole
"internet" thing and changing laws to reflect that reality.

~~~
anamax
> Also interesting is the fact that the case that Amazon always leans on,
> Quill v. North Dakota, took place in 1992 -- before the internet era even
> began. Yet another instance of the government not keeping up with this whole
> "internet" thing and changing laws to reflect that reality.

What essential differences do you see between Quill (a mail order company with
a physical catalog) and Amazon? Suppose that Quill had distributed its catalog
via CD - would that make a difference?

The only thing different between the "mail order age" and the internet age is
the relative amount of commerce occuring via the latter. That doesn't come
into play wrt whether states can "ask" for help collecting taxes from their
residents.

Which reminds me - states that have no sales tax often have stores next to
their border with states that do have sales tax. Residents of the states with
sales tax will cross those borders to buy things at said stores, thus avoiding
the tax.

Should those stores be obligated to collect tax for the sales tax states? If
not, why doesn't the same rule apply to mail order and the internet?

Feel free to assume that said stores will mail goods post-sale that weren't in
stock at time of purchase.

~~~
atacrawl
_The only thing different between the "mail order age" and the internet age is
the relative amount of commerce occuring via the latter._

You're absolutely right that the main difference is the astronomical
difference in scale, but you're ignoring the fact that internet sales are
entirely on-demand, whereas mail order sales still require a physical catalog
to order from. This may not sound like a significant difference, but the
instant-on internet fundamentally altered the way the public buys the majority
of its goods in a way that mail order businesses never could. This is what I
meant when I said that the government didn't change its laws to reflect the
reality of the internet, and it's why _Quill v. North Dakota_ isn't a great
example of today's reality.

Personally, I think the problem is a simple one to solve by doing what
Illinois (where I live) did this past year with its tax form -- basically, you
had two options: you could either a) calculate what you actually paid in sales
taxes via receipts and whatnot, or b) divide your income by some small
percentage, and choose the higher of either that number or $50. (Or something
like that.) The kicker was this instruction -- _Do not leave this blank._ (The
irony, of course, is that Illinois passed an "Amazon tax" law of its own
earlier this year.) Since no one wants to be audited, I'm sure the rate of
compliance was pretty high.

~~~
anamax
> You're absolutely right that the main difference is the astronomical
> difference in scale, but you're ignoring the fact that internet sales are
> entirely on-demand,

Huh? How is ordering something from a catalog not "on-demand"?

> whereas mail order sales still require a physical catalog to order from.
> This may not sound like a significant difference, but the instant-on
> internet fundamentally altered the way the public buys the majority of its
> goods in a way that mail order businesses never could.

I don't buy it. I grew up during the "catalog" days. Every house had several
catalogs for various types of items, collectively covering pretty much
everything that said household would buy.

During my time, almost all of these catalogs had 800 numbers so one could
order instantly. That said, during earlier times, depending on where you
lived, sending in an order form was no big deal because there often wasn't a
local supplier.

Remote commerce is not all that new. Heck, folks even bought houses via mail-
order.

In other news, boomers, hippies, yuppies, gen X etc did not invent any sex
acts either.

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Symmetry
_For its part, Amazon supports the Streamlined Sales Tax project, which aims
to harmonize and clarify states sales tax laws across the country._

I'm glad they're doing this. Given that the company sells a lot of different
things, and given that different states, counties, and municipalities can all
have different rules for how to categorize goods, which matter in terms of how
much sales tax you pay for them. I sure wouldn't want to be the person who has
to figure out whether Fig Newtons are cookies or are actually "Fruit and Cake"
in every jurisdiction in the US where it matters.

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smackfu
Hey Wired, what's up with using quotes around something no one said?

~~~
wmeredith
The same thing that's up with using single quotes outside of double quotes.
They don't write well.

~~~
chc
That's a question of style. Specifically, it's common in England.

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protomyth
It is burdensome to track sales taxes in every part of the country. It is much
harder than keeping track of 50 values. I actually wish that sales tax was
determined by the origin of a package and not the destination.

~~~
wiredfool
It's not just 50.

Every locality in Washington state potentially has a different sales tax rate.
And, Washington just changed their rules so that the sales tax for instate
merchants is not based on where the merchant is located, but where the
customer is. So, for every small business that does any business other than
through a physical storefront, they need to go based on (at the very minimum)
the zipcode. (<http://taxrates.dor.wa.gov>).

And that's just Washington State.

~~~
protomyth
ick, I edited out a clause - I was trying to say their are more than 50 values
because of all the different rules and localities - learn to proof I guess.

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bugsy
The Wired title is highly biased and misleading. Amazon is not the one that
passed a special windfall "amazon tax". The states are the ones that created
the situation. A better title would be "States ruin innovation climate with
targeted anti-business taxes".

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maeon3
Maybe Amazon could ask Connecticut to build them a new road in the state which
they currently reside. Connecticut would say: "Sorry, we won't service
entities that are not physically inside Connecticut."

And that quote illustrates he hypocrisy. Connecticut wants to receive money
from entities outside their state, but they will not service those same
entities outside their state.

This is all about getting something for nothing. If a state wants to tax
entities from outside the state, then it should bring on new responsibilities
for that state. Connecticut should be servicing Amazon in some significant
way, proportional to the amount of money extracted from it.

The best way for amazon to fight this is to insist on a fair and equitable
trade of tax money for state government services.

~~~
lsc
the thing is, the tax is already being levied. And it's generally considered a
tax on the customer doing the buying (who does live within that state) If the
merchant is also within that state, the merchant is expected to collect the
tax. If the merchant is out of state, the consumer is supposed to keep track
of and pay 'use tax'

The argument here is not over if the tax should be paid or not, or even over
who should pay the tax. the argument is over who should collect the tax; the
states want the retailers to collect because that's likely to lead to
increased compliance, and the retailers want the state to collect, 'cause that
makes out of state goods look cheaper to people who plan to not report their
use tax.

~~~
iwwr
Moreover, Amazon is trying to avoid a circumstance where every state and
county has different and potentially complex sales tax laws. Say, County X
could have 100 different little tax levels depending on the type of product,
time of day, phase of the moon etc. As is clear from the Amazon statement,
they are _not_ against sales taxes in principle and would agree to pay one if
it were uniform (i.e. hassle-free).

~~~
qeorge
_As is clear from the Amazon statement, they are not against sales taxes in
principle and would agree to pay one if it were uniform_

As lsc pointed out above, that's not the case at all. Amazon is refusing to
_collect_ taxes on behalf of its customers, _not_ refusing to pay its own
taxes.

By law, citizens are supposed to tally up what they bought from internet
retailers over the course of the year and pay any remaining sales tax on April
15th. Shockingly, this isn't happening, and the sales taxes aren't being paid
at all. So these states want Amazon to behave like a bricks and mortar
retailer, and collect the tax at time of sale instead.

Amazon doesn't want to collect sales tax because not doing so makes their
prices look lower than competitors like Barnes and Noble, which does collect
sales tax. Nothing more, nothing less.

~~~
patrickgzill
The law concerning use tax is un-Constitutional, that is the issue; and
something that most people who do not file the use tax portion, are well aware
of.

edit: what part of "No Tax or Duty shall be laid on Articles exported from any
State." is unclear?

~~~
jevinskie
Doesn't that only prevent the federal government from levying that tax?

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stonemetal
Actually it is the opposite it prevents states from monkeying with interstate
trade and reserves that right for the federal government.

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dolvlo
Fake quotes like this strip any sort of credibility away from wired.

