6 ms·

Amazon Tells States: 'Drop Dead' Over Sales Tax

60 points by spottiness 15y ago

maeon3 15y ago
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 15y ago
  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 15y ago
    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 15y ago
      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.
      - mkr-hn 15y ago
        Wal-Mart wanted $30 for a 10 foot USB cable. I got the same cable down the road for $10 at Radio Shack. Wal-Mart should be cheaper due to larger bulk discounts and their famed logistics. A $20 difference can't be accounted for with a 6% sales tax. And it was still cheaper than online once I added shipping.
      - iwwr 15y ago
        For its part, Amazon supports the Streamlined Sales Tax project, which aims to harmonize and clarify states sales tax laws across the country. and “The sales tax collection is very complicated. The right place to fix this is with federal legislation.”
      - patrickgzill 15y ago
        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?
        esrauch 15y ago
        It is unconstitutional for a state to force a corporation out of state to collect sales tax, but it is certainly not unconstitutional to tax individuals in your state based on almost any concievable action the individual chooses to do.
- davweb 15y ago
  I'm not sure roads is the best example to give here. Doesn't Amazon benefit from the state maintained roads since it would be difficult to get its order delivered without them? Although as his been said, Sales Tax is usually regarded as a tax on consumer consumption rather than a tax on business which is why business to business sales are often exempt from sales taxes.
  - nhebb 15y ago
    Presumably, the delivery trucks are already subsidizing the state road maintenance through gas taxes and vehicle registration fees. Still, if 100% of the sales to Connecticut residents were through affiliates I could see your point, but since that's unlikely, I view it as the states using affiliates as a loop hole to get around the 1992 Supreme Court ruling.
- dhyasama 15y ago
  Amazon doesn't pay the tax, their customers do. Connecticut requires Amazon to collect the tax from consumers then give it to the state.
DanielBMarkham 15y ago
“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.)
- deleted 15y ago
  [deleted]
- atacrawl 15y ago
  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.
ansy 15y ago
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 15y ago
  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 15y ago
    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.
smackfu 15y ago
Hey Wired, what's up with using quotes around something no one said?
- wmeredith 15y ago
  The same thing that's up with using single quotes outside of double quotes. They don't write well.
  - chc 15y ago
    That's a question of style. Specifically, it's common in England.
dolvlo 15y ago
Fake quotes like this strip any sort of credibility away from wired.
protomyth 15y ago
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.
- miccotech 15y ago
  Burdensome is an understatement. Between cities, counties and states levying sales tax, there are thousands of taxing entities. In some cases, it's impossible to determine the proper tax rate without a nine-digit zip since city boundaries may split zip codes, meaning city+county or just county might apply in different parts of a zip code area. Forcing the customer to enter a nine-digit zip and then possibly choose between multiple tax options when it's still not clear leads to an incredibly high friction checkout. The main winners in this fight are the companies that provide sales tax computation components or APIs for web services. However, I think having a sales tax based on location of seller rather than buyer doesn't make as much sense. The big companies like Amazon would find loopholes that allowed them to originate from low/no tax areas and smaller sites without the ability to relocate would be stuck with most of the burden. This just changes the fight from big box vs. internet to small site vs. big site.
- wiredfool 15y ago
  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 http://taxrates.dor.wa.gov). And that's just Washington State.
  - protomyth 15y ago
    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.
- 15y ago
Symmetry 15y ago
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.
bugsy 15y ago
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".

60 points by spottiness 15y ago

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 15y ago
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 15y ago
  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 15y ago
    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.
    - mkr-hn 15y ago
      Wal-Mart wanted $30 for a 10 foot USB cable. I got the same cable down the road for $10 at Radio Shack. Wal-Mart should be cheaper due to larger bulk discounts and their famed logistics. A $20 difference can't be accounted for with a 6% sales tax. And it was still cheaper than online once I added shipping.
    - iwwr 15y ago
      For its part, Amazon supports the Streamlined Sales Tax project, which aims to harmonize and clarify states sales tax laws across the country. and “The sales tax collection is very complicated. The right place to fix this is with federal legislation.”
    - patrickgzill 15y ago
      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?
      - esrauch 15y ago
        It is unconstitutional for a state to force a corporation out of state to collect sales tax, but it is certainly not unconstitutional to tax individuals in your state based on almost any concievable action the individual chooses to do.
davweb 15y ago
I'm not sure roads is the best example to give here. Doesn't Amazon benefit from the state maintained roads since it would be difficult to get its order delivered without them? Although as his been said, Sales Tax is usually regarded as a tax on consumer consumption rather than a tax on business which is why business to business sales are often exempt from sales taxes.
- nhebb 15y ago
  Presumably, the delivery trucks are already subsidizing the state road maintenance through gas taxes and vehicle registration fees. Still, if 100% of the sales to Connecticut residents were through affiliates I could see your point, but since that's unlikely, I view it as the states using affiliates as a loop hole to get around the 1992 Supreme Court ruling.
dhyasama 15y ago
Amazon doesn't pay the tax, their customers do. Connecticut requires Amazon to collect the tax from consumers then give it to the state.

DanielBMarkham 15y ago

“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.)

deleted 15y ago
[deleted]
atacrawl 15y ago
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.

ansy 15y ago

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 15y ago
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 15y ago
  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.

smackfu 15y ago

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

wmeredith 15y ago
The same thing that's up with using single quotes outside of double quotes. They don't write well.
- chc 15y ago
  That's a question of style. Specifically, it's common in England.

dolvlo 15y ago

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

protomyth 15y ago

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.

miccotech 15y ago
Burdensome is an understatement. Between cities, counties and states levying sales tax, there are thousands of taxing entities. In some cases, it's impossible to determine the proper tax rate without a nine-digit zip since city boundaries may split zip codes, meaning city+county or just county might apply in different parts of a zip code area. Forcing the customer to enter a nine-digit zip and then possibly choose between multiple tax options when it's still not clear leads to an incredibly high friction checkout. The main winners in this fight are the companies that provide sales tax computation components or APIs for web services. However, I think having a sales tax based on location of seller rather than buyer doesn't make as much sense. The big companies like Amazon would find loopholes that allowed them to originate from low/no tax areas and smaller sites without the ability to relocate would be stuck with most of the burden. This just changes the fight from big box vs. internet to small site vs. big site.
wiredfool 15y ago
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 http://taxrates.dor.wa.gov). And that's just Washington State.
- protomyth 15y ago
  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.
15y ago

Symmetry 15y ago

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.

bugsy 15y ago

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".