
Amazon.com cuts California sales tax deal in stunning turnabout - scommab
http://www.mercurynews.com/california-budget/ci_18849537
======
gergles
I am really disappointed to hear this news, actually. I would rather Amazon
have fought the state's clear attempt to unconstitutionally tax interstate
commerce and gotten clear precedent that forcing companies without a physical
presence in a state to collect sales tax there is bullshit.

It's the same reason why I do not believe in 'use tax'. It is a tax which
exists solely to tax interstate commerce (which is exclusively the domain of
the Federal government) that I am stunned nobody has attempted to fight yet.

The argument that "Amazon gets an unfair advantage abloobloo" is garbage --
Amazon has to pay a local company to ultimately get the items to you, which
absolutely does pay local tax - UPS has to buy gas in California, pay
employees in California (and pay the associated exorbitant California payroll
tax), pay for inspections, facilities, etc... The state is collecting their
pound of flesh out of the transaction in one way or another.

(Not to mention the complexities of the tax code that aren't even consistent
on a ZIP code basis - it's the last weekend of August, you're shipping to an
address covered by the HRT district in Virginia Beach, VA, and you're selling
a $105 bikini. For $500, what's the tax rate? Hint: all of those factors
(date, exact location down to the house number, price, item type) play into
how much the tax rate is. It is not a naive lookup table of "zip code: tax
rate".)

~~~
rphlx
I've never seen a UPS truck at a regular gas station. Perhaps they too found
some way around retail gasoline taxes.

~~~
brianobush
they pay taxes, but the rate might be lower for commercial diesel like it is
for farm use.

~~~
repiret
Some of the taxes you pay on gasoline and diesel are meant to be public road
use taxes. If you're not burning the gas by driving on a public road, they
don't need to be paid. You can apply for a rebate based on how much you burnt
off-road (for example, you have a logging truck that burns 10% of its gas on
private logging roads). If you have an engine that you use exclusively off-
road (such as in farm equipment), you can buy whats called pink diesel or dyed
diesel. You don't have to pay the public road use taxes on pink diesel, but it
stains your engine. The engine of a vehicle used on public roads can be
inspected to see if its ever burned pink diesel, and if it has, you get in
trouble.

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aero142
I'm unsure of what Amazon's long term plan is. Is it their hope that Congress
deals with this on a national level and makes it workable? They just don't
want to deal with the mess on a state by state basis?

~~~
bh42222
I'm guessing for California they'll lobby to extend it for another year, and
another year, etc...

Nationally, I'm not sure Congress can force non-taxation on the sates, I think
that's a constitutional issue. I think Amazon's plan there is just to use
their market dominance and hope the states fold.

~~~
nknight
It's not even non-taxation. It's the fact that no two states with sales taxes
have the same rates (which can also vary by locality), rules about what it
applies to, or filing mechanism.

Amazon and everyone else involved in ecommerce would be a lot happier if there
were a unified system/database for dealing with sales taxes in the US. Rates
and rules wouldn't necessarily have to be the same, but there at least has to
be one system with unified categorization of products and a unified filing
mechanism which can be automatically queried, and as long as the merchants use
that system in good faith, they would need to be immune to any sort of lawsuit
or prosecution for not meeting the actual legal requirements of any particular
state/locality.

~~~
halostatue
The varying rates aren't a problem, for certain; Amazon deals with those just
fine in various localities (Canada has approximately 10 different rates; I
don't think that cities are allowed to put additional sales taxes, as that's
reserved to the federal government and the provinces/territories). What's
problematic for Amazon (IMO) is the wildly varying applicability rules and
filing mechanisms.

I think your idea of a unified sales tax database/system is spot on.

~~~
rfrey
Even Canada, with 1/10 the number of jurisdictions, is attempting to unify:
<http://en.wikipedia.org/wiki/Harmonized_Sales_Tax>.

~~~
alexhawket
British Columbians recently voted and repealed the HST in their province.

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reemrevnivek
> While Democrats and Gov. Jerry Brown fretted that they would lose $200
> million a year in sales taxes

California residents are supposed to pay use tax on internet purchases
regardless of the physical presence of the retailer, right?

Running the math: the $200 million/year loss that they claim is an estimate on
tax fraud on just Amazon purchases? At a 7.25% tax rate, that's a tax on $2.7
billion in sales, and Amazon's US sales last year were 18.7 billion [1].
They're estimating that unreported purchases in California comprise 14% of
Amazon's revenue in the US.

California comprises about 12% of the US population. The assumption is
invalid, because 14% is greater than 12% - but, assuming it's reasonably
close, we can still say that either (1) the politicians are ignoring the use
tax or (2) there is a massive amount of fraud going on in use tax reporting.

[1] [http://www.internetretailer.com/2011/01/27/amazon-sales-
and-...](http://www.internetretailer.com/2011/01/27/amazon-sales-and-profits-
boom-2010)

~~~
mediaman
The rate of buying products online isn't going to be the same in every state,
and it's reasonable that it would be slightly higher in CA than in other
states.

And on use-tax: have anyone ever met someone who paid use-tax on goods
purchased from Amazon? Most consumers don't even know they're supposed to, and
audit enforcement is expensive and therefore uncommon.

~~~
impendia
I did. I think it's reasonably clear in the state tax forms that you're
supposed to pay use tax, and the clean conscience was worth the $13 or
whatever it was.

Obviously, though, as you say you can pay nothing without suffering any
consequences.

~~~
runningdogx
$13 isn't a lot to pay. However, if it takes an hour to save and itemize out
of state invoices, in order to pay taxes on them, I'm going to guess that's
less than you make per hour, so the entire exercise represents a net loss
(other than the benefit to your conscience).

Many people spend way more on out-of-state purchases, so their sales tax bill
would be in the hundreds or thousands of dollars. There's real incentive not
to pay, unless you're itemizing those purchases as deductions on your income
tax or unless you're making the purchases as an incorporated entity.

People get audited on their income taxes all the time. Businesses get audited.
I have never heard of an individual getting audited for failure to pay state
use tax on out-of-state purchases when they didn't declare those purchases on
any official forms.

A few states don't even have income tax; in those states there are no state
tax forms that the average citizen ever encounters.

~~~
rphlx
Even with 100% honest taxpayers, the use tax still puts local business at a
disadvantage, due to the time value of money. I'd much rather pay later, with
"worth less" dollars, than pay now.

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staunch
So does this mean Amazon is going to allow CA affiliates again?

~~~
getsat
_fingers crossed_

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kposehn
There is a very important aspect of this whole mess that is left out:

The legislation, which affects affiliates, would be repealed under the deal as
it stood this morning. At this time I don't know if that stuck.

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ck2
For some reason I cannot see the article linked.

Using this instead
[http://news.google.com/news/story?ncl=dZ6jw2rLSA2UmxMxmSxu9F...](http://news.google.com/news/story?ncl=dZ6jw2rLSA2UmxMxmSxu9FWhtEgWM)

I guess this is the critical line:

    
    
       If Amazon cannot get a change in federal tax policy by next June
       it will start collecting the tax in September 2012. 
    

So I guess the door is now open and every state will go after amazon for sales
tax.

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impendia
Very good! I can start shopping Amazon again with a clear conscience.

I say this not as sarcasm but as literal truth. I know many HN'ers disagree
that they were doing anything wrong -- but personally, their behavior turned
my stomach and I was avoiding buying anything from them which I could easily
get elsewhere.

~~~
tzs
Couldn't you buy from Amazon and then report the purchase (as required by
California law) to the State and pay the tax?

~~~
impendia
Sure. But that doesn't change the fact that Amazon tried to weasel out of
charging the same sales tax as every other retailer who sells books in
California; that they were going to try and get legally guaranteed special
treatment by promoting a state referendum (as other corporations have also
done); and that they abruptly screwed over their 10,000 affiliates in the
state.

~~~
tzs
There are plenty of retailers who sell books to California residents without
collecting sales tax. (And the other way around--I, in Washington, have bought
books from California retailers who did not collect Washington sales tax).

------
shithead
Just FYI: in Europe, Amazon collects VAT at the buyers' local rate. For
example, when shipping books from the UK (which has zero VAT on books), the
bill includes VAT at the destination country's rate.

~~~
ars
Does VAT vary per county? Or also by smaller areas? If it's just per country
it's not that hard to do.

~~~
shoota
How about per city which is the level at which sales tax can vary in
California?

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cletus
While most like the trumpet the enumerated protections of the Constitution
that the US enjoys, this is (IMHO) an example of where the wording and the
intent of the Constitution is outdated.

Most developed nations have some for of consumption/sales tax. In the EU it's
typically 17.5-25%, in Australia it's 10%, in Switzerland it's ~7% and so on.
America has this on a state by state basis.

Nowadays the split jurisdiction with interstate commerce is now awkward and
unwieldy. I believe that in the coming years the Federal government will act
to enforce an interstate sales tax and maybe even a tax on imports. The path
of least resistance here is for the sales tax due to be the sales tax that
applies in the state of the recipient.

I'm not sure how much revenue that would raise but my guess is _a lot_.

As for Amazon, I'm not sure what they're thinking. In a year they'll have the
same problem. One would think they're confident of Federal action in the next
year on online sales taxes or they think the climate will have changed in a
year. I'm not convinced of either. Are they that desperate that a year's delay
is a win for them?

While we're at it, what's up with New York? Amazon collects sales tax for the
state of New York while it (thus far unsuccessfully) has tried to challenge
the "Amazon tax" in the courts. Is New York a test case? Are the affiliates in
New York that much more valuable?

~~~
pyre

      > Most developed nations have some for of 
      > consumption/sales tax. In the EU it's typically
      > 17.5-25%, in Australia it's 10%, in Switzerland it's
      > ~7% and so on. America has this on a state by state
      > basis.
    

1\. It's nice in that I live in Oregon and there is no sales tax. :P

2\. Canada has provincial sales tax and a national sales tax, so the overall
sales tax is still 'state-by-state.'

~~~
rationalbeats
>1\. It's nice in that I live in Oregon and there is no sales tax. :P

Have you looked at your paycheck and see how much they take out on state
income tax?

I spent half a year working in Oregon then another half in CA and when I got
my first paycheck in CA after 6 months in Oregon I thought there was a mistake
with payroll because we are talking about a few hundred more a paycheck for 2
weeks of work. The difference being state tax level between OR and CA.

So in CA I have a couple thousand more in cash to spend (or invest in savings
roth ira/401k etc) as compared to making the same salary in Oregon.

~~~
repiret
I've found that my paycheck goes a lot farther since I moved to Oregon. Oregon
has (nearly) a flat income tax at 9%, while California has a progressive
income tax topping out around 9.5%. The CA income tax advantage shrinks as you
make more money.

On the other hand, if you don't make a lot of money, then you probably have a
lower savings rate. If your savings rate is low, then a large portion of your
income is subject to the 7-9% sales tax.

It'd be interesting to draw a surface map. On the two horizontal axis put
income and savings rate, and make the height the difference between the total
effective California tax and Oregon tax. I'd do this now, but I need to sleep
instead.

Additionally, one should compare CA's Prop 13 with OR's Measure 47. Both limit
the rate at which a houses assessed value can grow, but Prop 13 allows for
discontinuities of assessed value when a house is bought, while Measure 47
doesn't. As a result, new home owners in OR pay much lower property taxes than
new home owners in CA. (By new home owner, I mean someone who newly owns a
house, not someone who owns a new house. Measure 47 favors old houses.)

