5 ms·

The message being sent is simple; Amazon is receiving an unfair competitive advantage by not paying taxes (all their prices can be lower), and the legislature i

by eykanal 16y ago

The message being sent is simple; Amazon is receiving an unfair competitive advantage by not paying taxes (all their prices can be lower), and the legislature is trying to figure out some way they can "force" Amazon to have a local presence through people like you. Amazon, being the 800-lb gorilla they are, just said the equivalent of, "I'm taking my ball and going home." They did this because you were the "arm" of Amazon the legislature was trying to attack. In Amazon's eyes, it's easier just to cut off that arm than to try to support it and pay higher fees.

thaumaturgy 16y ago
> Amazon is receiving an unfair competitive advantage by not paying taxes... I don't understand this reasoning. They have to pay a shipping tax -- that is, regardless of the price of the item, the buyer is going to have to have it shipped to their home. If Amazon's offering free shipping, that just means they're choosing to absorb the cost, which eliminates a competitive advantage; if the buyer pays shipping, then that increases the total cost of the item, and again, that eliminates Amazon's competitive advantage. I don't think this has anything to do with unfair competitive advantages, and everything to do with states simply looking for ways to grab more tax revenue ... so that they can turn around and offer it as cuts to other businesses, of course.
- btilly 16y ago
  Here is an explanation. Residents of Illinois owe sales tax on their purchases. The state knows that people won't choose to pay this, so the state makes merchants collect the tax. If the merchants are based in the state, the courts say the state can do this. If the merchants are not based in the state, then the courts have ruled this to be interstate commerce, which is something that only the federal government has power over, and therefore the states can't do it. (The issue is hardly new. It was settled over a century ago with catalog companies.) Note that the tax is theoretically owed by the residents of the state regardless of where the merchant is. But in practice people wind up paying the tax at Walmart, and not at Amazon. Which gives Amazon an advantage.
  - burgerbrain 16y ago
    "advantage" != "unfair advantage"
    - btilly 16y ago
      The reason why this is seen by some as unfair is because Amazon's advantage comes from making it easy for Illinois residents to break Illinois laws. If Illinois residents weren't willing to break Illinois laws, then Amazon would have no advantage.
      - deleted 16y ago
        [deleted]
  - thaumaturgy 16y ago
    Amazon sells Item X for $19.99. An Illinois retailer sells the same Item X, also for $19.99. Your claim is that the buyer will purchase from Amazon because there is no sales tax: Amazon: $19.99 Retailer: $21.24 Except, the item must be shipped from Amazon to the customer. If customer pays shipping, then: Amazon: $24.99 Retailer: $21.24 If Amazon pays the shipping, then the shipping costs must be deducted from their profit on the item, further reducing their margin. If there's enough margin at $19.99 to make this feasible, then the retailer might choose to sell the item for just $1 less than Amazon: Amazon: $19.99, shipped. Retailer: $20.18. I don't see the unfair advantage here. To me, it looks like Amazon has the exact same advantage that any warehouse retailer has: lower overhead and (massively) larger volume, which allows them to operate on smaller margins. That is an advantage, but it is not an unfair one. In case I'm still not making sense, let me try one other approach: because Amazon must pay to ship items from their warehouses to the items' points of destination, does that mean that in-state warehouse retailers have an unfair advantage? Should we start levying a "shipping tax" on any in-state retailer that does not have to pay to ship their merchandise to the customer? If not, then how is this different from attempting to tax e-retailers, in the context of "unfair advantage"? Again, I can see this being a revenue issue for states. I so far do not see it as an unfair advantage issue.
    - deleted 16y ago
- true_religion 16y ago
  > They have to pay a shipping tax ... that eliminates Amazon's competitive advantage. Not really because Illinois based businesses have to ship their goods into the state as well and then have their customers pay Illinois sales tax on top of the shipping cost reflected in the sales markup.
  - thaumaturgy 16y ago
    Those costs are usually absorbed by the wholesaler, not the retailer.
burgerbrain 16y ago
What these government numbskulls don't seem to understand is that what Amazon is doing isn't fundamentally any different from what Sears was doing over a century ago with their mail-order catalog. Amazon it's receiving an "unfair" anything, they are operating well within the law and long established acceptable business practices. Politicians are just being greedy, plain and simple.
- A1kmm 16y ago
  Operating within the law doesn't imply something is fair - especially when we are talking about a law change. I think that the law should fairly target mail-order companies as well as Internet-order companies. Of course, levying taxes based on where the buyer lives makes things difficult for the seller in terms of compliance costs; I think the best solution would be for the federal government (or even organisations like the WTO) to request that jurisdictions provide a register of who taxes should be paid to, and enough information to automate tax payments, by geographic region. The private sector could do this, but a government or International Organisation backed solution might see more participation in the scheme by tax jurisdictions.
  - chopsueyar 16y ago
    An International Organisation to keep track of taxes owed on internet purchases? Who is in charge of that? What sort of conflict resolution would exist if one disagrees with the tax owed? Just suggest a world emperor and be done with it.

by eykanal 16y ago

thaumaturgy 16y ago

> Amazon is receiving an unfair competitive advantage by not paying taxes... I don't understand this reasoning. They have to pay a shipping tax -- that is, regardless of the price of the item, the buyer is going to have to have it shipped to their home. If Amazon's offering free shipping, that just means they're choosing to absorb the cost, which eliminates a competitive advantage; if the buyer pays shipping, then that increases the total cost of the item, and again, that eliminates Amazon's competitive advantage. I don't think this has anything to do with unfair competitive advantages, and everything to do with states simply looking for ways to grab more tax revenue ... so that they can turn around and offer it as cuts to other businesses, of course.

btilly 16y ago
Here is an explanation. Residents of Illinois owe sales tax on their purchases. The state knows that people won't choose to pay this, so the state makes merchants collect the tax. If the merchants are based in the state, the courts say the state can do this. If the merchants are not based in the state, then the courts have ruled this to be interstate commerce, which is something that only the federal government has power over, and therefore the states can't do it. (The issue is hardly new. It was settled over a century ago with catalog companies.) Note that the tax is theoretically owed by the residents of the state regardless of where the merchant is. But in practice people wind up paying the tax at Walmart, and not at Amazon. Which gives Amazon an advantage.
- burgerbrain 16y ago
  "advantage" != "unfair advantage"
  - btilly 16y ago
    The reason why this is seen by some as unfair is because Amazon's advantage comes from making it easy for Illinois residents to break Illinois laws. If Illinois residents weren't willing to break Illinois laws, then Amazon would have no advantage.
    - deleted 16y ago
      [deleted]
- thaumaturgy 16y ago
  Amazon sells Item X for $19.99. An Illinois retailer sells the same Item X, also for $19.99. Your claim is that the buyer will purchase from Amazon because there is no sales tax: Amazon: $19.99 Retailer: $21.24 Except, the item must be shipped from Amazon to the customer. If customer pays shipping, then: Amazon: $24.99 Retailer: $21.24 If Amazon pays the shipping, then the shipping costs must be deducted from their profit on the item, further reducing their margin. If there's enough margin at $19.99 to make this feasible, then the retailer might choose to sell the item for just $1 less than Amazon: Amazon: $19.99, shipped. Retailer: $20.18. I don't see the unfair advantage here. To me, it looks like Amazon has the exact same advantage that any warehouse retailer has: lower overhead and (massively) larger volume, which allows them to operate on smaller margins. That is an advantage, but it is not an unfair one. In case I'm still not making sense, let me try one other approach: because Amazon must pay to ship items from their warehouses to the items' points of destination, does that mean that in-state warehouse retailers have an unfair advantage? Should we start levying a "shipping tax" on any in-state retailer that does not have to pay to ship their merchandise to the customer? If not, then how is this different from attempting to tax e-retailers, in the context of "unfair advantage"? Again, I can see this being a revenue issue for states. I so far do not see it as an unfair advantage issue.
  - deleted 16y ago
true_religion 16y ago
> They have to pay a shipping tax ... that eliminates Amazon's competitive advantage. Not really because Illinois based businesses have to ship their goods into the state as well and then have their customers pay Illinois sales tax on top of the shipping cost reflected in the sales markup.
- thaumaturgy 16y ago
  Those costs are usually absorbed by the wholesaler, not the retailer.

burgerbrain 16y ago

What these government numbskulls don't seem to understand is that what Amazon is doing isn't fundamentally any different from what Sears was doing over a century ago with their mail-order catalog. Amazon it's receiving an "unfair" anything, they are operating well within the law and long established acceptable business practices. Politicians are just being greedy, plain and simple.

A1kmm 16y ago
Operating within the law doesn't imply something is fair - especially when we are talking about a law change. I think that the law should fairly target mail-order companies as well as Internet-order companies. Of course, levying taxes based on where the buyer lives makes things difficult for the seller in terms of compliance costs; I think the best solution would be for the federal government (or even organisations like the WTO) to request that jurisdictions provide a register of who taxes should be paid to, and enough information to automate tax payments, by geographic region. The private sector could do this, but a government or International Organisation backed solution might see more participation in the scheme by tax jurisdictions.
- chopsueyar 16y ago
  An International Organisation to keep track of taxes owed on internet purchases? Who is in charge of that? What sort of conflict resolution would exist if one disagrees with the tax owed? Just suggest a world emperor and be done with it.