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I'm confused about the part where Bezos was considering Washington and Nevada because he was looking for a state with no sales tax. As far as I can google, bot

by raldi 6y ago

I'm confused about the part where Bezos was considering Washington and Nevada because he was looking for a state with no sales tax. As far as I can google, both of those states have had a substantial sales tax for many decades — Washington's is one of the highest in the country! What am I missing?

eastdakota 6y ago
Was about where consumer base/population was. In Amazon’s early years, you only paid taxes in state where you were located. If they’d setup shop in CA then they’d pay sales tax on all shipments to CA (~20% of early sales). By setting up outside CA/NY (their two earliest markets) they’d have a competitive pricing advantage over any competitors set up in either. Arguably, this regulatory “loophole” gave Amazon a huge head start. Think the article confuses sales and income/capital gains tax. Being in a small market was an advantage from a sales tax perspective. Being in WA or NV was advantage from income/capital gains tax perspective. The latter gave Amazon an advantage in hiring. And, later when successful, allowed Jeff and early employees to realize more wealth from their stock/options. Nevada, on both fronts, would have been as much of more efficient. But, I’m guessing, the difficulty of recruiting great technical talent (which was needed in the early days of Internet ecommerce) would have swamped those advantages.
- grogenaut 6y ago
  Don't forget being able to poach from Microsoft
  - dpeck 6y ago
    you misspelled hire
    - grogenaut 6y ago
      No pretty sure candidates poached in a hot tub for a few hours beforehand
jsolson 6y ago
I assume that's supposed to be state/local income tax -- Nevada is one of the few states other than Washington without one. For much of Amazon's early history, the sales tax in Washington was only relevant if you happened to live in Washington. The set of areas where Amazon must collect taxes has grown, and at this point for all I know might be everywhere in the US.
- ghaff 6y ago
  Yes, South Dakota v. Wayfair a couple years ago basically overturned Quill v. North Dakota and requires companies over a certain size to collect sales tax wherever they are. (Prior to that a few states had independent agreements with Amazon to collect tax.)

by raldi 6y ago

eastdakota 6y ago

Was about where consumer base/population was. In Amazon’s early years, you only paid taxes in state where you were located. If they’d setup shop in CA then they’d pay sales tax on all shipments to CA (~20% of early sales). By setting up outside CA/NY (their two earliest markets) they’d have a competitive pricing advantage over any competitors set up in either. Arguably, this regulatory “loophole” gave Amazon a huge head start. Think the article confuses sales and income/capital gains tax. Being in a small market was an advantage from a sales tax perspective. Being in WA or NV was advantage from income/capital gains tax perspective. The latter gave Amazon an advantage in hiring. And, later when successful, allowed Jeff and early employees to realize more wealth from their stock/options. Nevada, on both fronts, would have been as much of more efficient. But, I’m guessing, the difficulty of recruiting great technical talent (which was needed in the early days of Internet ecommerce) would have swamped those advantages.

grogenaut 6y ago
Don't forget being able to poach from Microsoft
- dpeck 6y ago
  you misspelled hire
  - grogenaut 6y ago
    No pretty sure candidates poached in a hot tub for a few hours beforehand

jsolson 6y ago

I assume that's supposed to be state/local income tax -- Nevada is one of the few states other than Washington without one. For much of Amazon's early history, the sales tax in Washington was only relevant if you happened to live in Washington. The set of areas where Amazon must collect taxes has grown, and at this point for all I know might be everywhere in the US.

ghaff 6y ago
Yes, South Dakota v. Wayfair a couple years ago basically overturned Quill v. North Dakota and requires companies over a certain size to collect sales tax wherever they are. (Prior to that a few states had independent agreements with Amazon to collect tax.)