Amazon and Taxes

RAMSTORIA

RAMSTORIA

CAGiversary!
Feedback
34 (100%)
Amazon is back in the news this week after California passed a budget (sigh) that includes taxing internet business like Amazon and Overstock.

Amazon has always kept their word when it comes to severing ties with states that pass such taxes. They did it with Illinois earlier this year, and are now doing it with California. This causes thousands of affiliates to lose money on revenues they got in the past. Several states have passed similar laws recently, which have lead to lawsuits arguing whether the taxes are constitutional or not.

Amazon has threatened to close a distribution center in Texas over taxes and recently made a deal with South Carolina to get a tax exemption to open a distribution center in the state.

So what do you think? States need the revenue, big box (and small businesses) say online retailers have an unfair advantage, affiliates and other small businesses lose revenue and there's ongoing lawsuits on whether the whole thing is even constitutional.


Background Links

California's Law
http://techland.time.com/2011/06/30/california-to-collect-sales-tax-on-web-purchases-amazon-miffed/

Illinois' Law
http://www.reuters.com/article/2011/03/17/usa-states-salestax-idUSN1719407020110317

Texas Fight
http://seattletimes.nwsource.com/html/businesstechnology/2015383772_amazontexas22.html

South Carolina Exemption
http://www.businessweek.com/ap/financialnews/D9NNRRO80.htm

Lawsuits
http://www.reuters.com/article/2009/01/13/us-amazon-lawsuit-idUSTRE50C5UN20090113
http://www.wired.com/epicenter/2011/06/amazon-conn-ark/
 
As I've said in past threads on the topic, I personally don't have any issues paying my state's sales tax for things I buy on time.

Working for a public university, I see how the tight budget is having negative impacts first hand, so I'm supportive of things to raise revenue even when it hits my wallet directly. Which this does as I order a ton online.

That said I'm not much of a cheap ass/bargain shopper these days anyway. I don't order online because there's no sales tax or even prices are cheaper (I usually don't check local prices first). I order online as it's super convenient and saves me a trip to the store and hassling with city traffic, idiot retail reps and customers etc. :D

When I want something I usually just go to Amazon and order it as long as I'm ok with the price. I seldom check prices anywhere else since I like Amazon's service, have Prime for 2 day shipping and like getting the triple points on my Amazon Visa.
 
Jeff Bezos' (and Amazon's) stance is that the idea of states imposing taxes on online retailers is unconstitutional. Yes? No?
 
[quote name='IRHari']Jeff Bezos' (and Amazon's) stance is that the idea of states imposing taxes on online retailers is unconstitutional. Yes? No?[/QUOTE]

Yes. They say that interstate commerce laws mean that for taxes to be charged in states where Amazon (or another company) does not have a physical presence it would need to be a federal tax. States cannot impose the tax.
 
Certainly a federal solution would be best, as it always, always is. The physical distribution centers being owned by subsidiaries sounds like bullshit to me. Then again, I never met a tax I didnt like.

Amazon's position is not really that a federal solution would be the best. They just want to avoid taxes. If the federal solution was to impose a uniform tax rate across the country equal to whatever California is trying do, for example, they would be all out against it.
 
The state really gains nothing by doing this. At least the Texas governor is smart enough to see what happen to other state and veto the bill. Of the top 20 internet retailer, California already tax from 19 of them since newegg is in California.

If they really want to tackle the issue they need to do it at the federal level, but I am sure amazon will take it to the Supreme Court.

Also 2 of the biggest lobbyist are Best Buy and Walmart. They don't want their website to be at an disadvantage.
 
[quote name='RAMSTORIA']Yes. They say that interstate commerce laws mean that for taxes to be charged in states where Amazon (or another company) does not have a physical presence it would need to be a federal tax. States cannot impose the tax.[/QUOTE]

And even when they do have a physical presence, it's not 'them', it's some subsidiary so they can say 'we're not really here'.
 
Good for California, all these items arrive using the same network of roads, air and seaports that every other box store uses and items should be taxed appropriately.
 
Amazon doesn't want them to be able to charge taxes because they know a lot of people buy from them because they don't have to pay taxes. It's an advantage they know they have and it's obviously unfair, which is why I don't have a problem with them being taxed (though honestly I think it would be better to eliminate sales taxes and tax income or whatever for the difference anyway, but as it stands now it's an unfair advantage online retailers have).

Yay for the market that Amazon has the power to manipulate state governments.
 
I'm actually more of a fan of sales tax than income tax.

There are too many loopholes in taxes that lead to the wealthiest paying low taxes since most of their income is capital gains.

But they largely can't dodge sales tax if they want to spend all that money.

So I wouldn't mind seeing income taxes reduced and supplemented with a federal sales tax on non-essential goods (i.e. everything but food, medicine and clothing under a certain amount--designer shit should be taxed).
 
You can raise capital gains taxes as well and close loopholes. I just don't like that sales taxes are regressive, whereas you can make income taxes progressive (and there are also property taxes and other things). It is harder to enforce income taxes and whatnot though, I understand how it's much easier to implement sales taxes.

The kind of compromise that they have here in PA and other states where they just tax nonessential items (no taxes on groceries, clothing, whatever) is pretty good though, I think that works out pretty well. That way you're not putting as much of a burden on poorer people. That revenue has to be made up through other taxes though.
 
Yep, essential items should never be taxed as that's too regressive.

I have no problems with taxing non-essential items. Sure, it hits the lower classes harder, but they shouldn't be buying so much non-essential shit anyway when they struggle to afford essential goods. Non-essential goods are luxuries to be bought with disposable income. If you don't have disposable income you should be doing without them.

Not that I think higher sales taxes would keep them from wasting money on non-essential things since they still blow tons of money on alcohol and tobacco which are heavily taxed.

Sorry, just personal rant from having a lot of poor, rural white trash in my extended family who are on food stamps yet have Dish Network, pound beers and chain smoke along with buying all kinds of other junk like DVDs, CDs etc.! :bomb:
 
I really don't think Amazon has so much of an unfair advantage. First off if I am buying something under $25, I have to pay shipping which could be $3-4 dollars sometimes, now if I would have to pay tax on that as well, it would really suck. When I buy something off amazon it's usually something I can't find in a store anyway. I mean sure stores can argue that for some name brand items Amazon is cheaper, and that's ok, but for other things like CD's and such, they really don't have an excuse if they never have any CD's I want.
 
[quote name='Sir_Fragalot']I really don't think Amazon has so much of an unfair advantage. First off if I am buying something under $25, I have to pay shipping which could be $3-4 dollars sometimes, now if I would have to pay tax on that as well, it would really suck.[/QUOTE]

You do have to pay tax. You just choose not to. Amazon's lack of a duty to collect it from you is irrelevant.
 
[quote name='dmaul1114']Sorry, just personal rant from having a lot of poor, rural white trash in my extended family who are on food stamps yet have Dish Network, pound beers and chain smoke along with buying all kinds of other junk like DVDs, CDs etc.! :bomb:[/QUOTE]
Now I have a better idea of where you're coming from. That said, I don't think that poor people should have to live their lives in complete misery. Frankly, I could care less if someone on food stamps eat filet mignon and lobster for a week, lives in section 8 or a project, while getting a welfare check. You know why? Because if I'm working in a job with a livable wage, I can eat that stuff for more than a week and not starve(food stamps only provide enough money for a few meals of filet and lobster in which case you would starve for the rest of the month), I live in a better neighborhood with better schools, access to better public services, have a newer car that requires less maintenance, and all sorts of other crap that subsisting on less than $18k a year can provide.

Despite those "luxuries," I'm sure you'd disagree that they are much better off than you are just because they have dish network.
 
[quote name='Magus8472']You do have to pay tax. You just choose not to.[/QUOTE]

Sorry but as I can't afford an accountant to tell me what taxes to pay and which ones I can avoid I'll have to do the best I can.

Maybe they should make the system simpler with less loopholes, but until then.........
 
[quote name='Magus8472']You do have to pay tax. You just choose not to. Amazon's lack of a duty to collect it from you is irrelevant.[/QUOTE]
Ding dong! You sir have hit the jackpot.

[quote name='benjamouth']Sorry but as I can't afford an accountant to tell me what taxes to pay and which ones I can avoid I'll have to do the best I can.

Maybe they should make the system simpler with less loopholes, but until then.........[/QUOTE]
Why do you need an accountant to add up all your out-of-state purchases and calculate state tax on it? ;)

And I guess the honor system is a loophole!:lol:
 
[quote name='dohdough']Ding dong! You sir have hit the jackpot.


Why do you need an accountant to add up all your out-of-state purchases and calculate state tax on it? ;)

And I guess the honor system is a loophole!:lol:[/QUOTE]

That's what I was thinking, if you're from PA, the only thing you don't have to pay taxes on is food and clothing.
 
[quote name='dohdough']
Despite those "luxuries," I'm sure you'd disagree that they are much better off than you are just because they have dish network.[/QUOTE]

Of course. They still lead miserable lives.

My frustration is they could improve their overall quality of life if they were more frugal and saved up to move to a better home, better school clothes for their kids etc. instead of blowing so much money on tobacco, alcohol and satellite tv.

It's frustrating as hell to see their kids have dirty, worn out clothes they're wearing to school, while the parents are chain smoking and getting drunk all the time. And I'm not exaggerating their--that's a real situation with several households in my extended family (cousins etc.) and rampant in general in rural hell holes like WV.

Too many people just have no sense of priorities or frugality. It's not just a lower class thing either, hence why so many middle class and up households lose their homes to foreclosure etc. People are just fucking irresponsible idiots in general.
 
[quote name='perdition(troy']do you keep every single receipt of every purchase you make dohdough?[/QUOTE]

Moot point for online purchases as you can always look up past orders on the store's website for the most part. As well as having the automated e-mail's in your inbox if you don't delete them.
 
And the thing I always wonder about when this gets brought up is what will happen to people like us that sell two or three games a year on the amazon marketplace...
 
[quote name='nasum']And the thing I always wonder about when this gets brought up is what will happen to people like us that sell two or three games a year on the amazon marketplace...[/QUOTE]

That should be moot most of the time as you're selling the items at a loss usually. Since you're not making a profit, there's no taxation on the sale of second hand items.

Now if you're selling rare games for more than you paid for them, you technically should be reporting the profit as income.
 
[quote name='perdition(troy']do you keep every single receipt of every purchase you make dohdough?[/QUOTE]
I love strawmen...but you should be more creative next time cause this one's gonna blow up in your face.

Anytime you buy an item online, there is a record with the seller, the financial institution, and a confirmation email. If you delete the email, you can call the financial institution which certainly has a record and the seller does as well. So not only do I have a copy of all my receipts, but so do you and everyone else when it comes to online purchases.

Whether or not I keep a receipt from every purchase is irrelevant to this issue because we're discussing not paying sales tax on out-of-state purchases.

And for the record, I do keep all my receipts.
 
[quote name='dmaul1114']That should be moot most of the time as you're selling the items at a loss usually. Since you're not making a profit, there's no taxation on the sale of second hand items.

Now if you're selling rare games for more than you paid for them, you technically should be reporting the profit as income.[/QUOTE]

no tax on second hand items? Are you on glue? Tell that to Gamestop next time you go there. Tell that to the pawn shop when you buy something there. Tell that to Goodwill when you pick up some new wine glasses etc... There be tax on second hand goods sir.
 
[quote name='nasum']no tax on second hand items? Are you on glue? Tell that to Gamestop next time you go there. Tell that to the pawn shop when you buy something there. Tell that to Goodwill when you pick up some new wine glasses etc... There be tax on second hand goods sir.[/QUOTE]
I think you missed the "profit" part of it, man.
 
[quote name='nasum']no tax on second hand items? Are you on glue? Tell that to Gamestop next time you go there. Tell that to the pawn shop when you buy something there. Tell that to Goodwill when you pick up some new wine glasses etc... There be tax on second hand goods sir.[/QUOTE]

I only meant for personal sales by individuals,as that's what you were asking about.

Stores are different as they they are selling second hand goods at a profit. Gamestop is selling used games for more than they paid for them, Goodwill is selling items that were donated and so on. So that's the difference.

You don't have to collect sales tax or pay income tax if you're selling your own items at a loss. Be it selling them on Amazon or Ebay or having a Yard Sale. If you sell at a profit, you should be reporting the profit as income and paying income tax on it.
 
Then how would the IRS Audit Amazon for income earned on sales of their own items and for fees earned on sales of marketplace users?

That's the crux of the whole argument. Sure, they can do it and do it easily, but that's not how the world works.
 
I'm sure Amazon has to report the fees they charge as part of their profits, just like they do money earned through sales. The fees would just be added to their income and subjected to any relevant taxes. Though that's totally unrelated to sales tax.

Sales tax currently isn't applicable to individuals selling their own property online or offline. The only relevant tax is income tax if they make a profit on the sale.

The discussion is whether online retailers should have to collect sales tax. Whether individuals selling their own property second hand should have to collect sales tax would be a total different law change. And is one that's unlikely to happen as it's impossible to enforce. Maybe it could be done on major online sites like Amazon and Ebay by requring those kind of sites to add and collect sales tax to every transaction. But you can't enforce it for in person local sales at yard sales, craig's list etc.
 
[quote name='docvinh']That's what I was thinking, if you're from PA, the only thing you don't have to pay taxes on is food and clothing.[/QUOTE]

Pennsylvania's sales tax is full of exceptions. There's an old lady in the western part of the state that sues businesses that incorrectly charge sales tax on tax-free items because by law you can sue in small claims court and get a refund of the tax paid plus a statutory penalty. And good for her, because most people couldn't be bothered to take full advantage of their legal rights.
 
dang, this subforum had gone well over 12 hours without a post and you broke the streak. I thought we were really making progress there for a moment.
 
Who here thinks taxing online businesses is going to help local businesses? I live in New York, which Amazon does collect taxes for, and I still shop quite a bit on there. I also have a feeling New York is probably one of Amazons biggest customers. So that point is moot.

Now the other point is that the state needs the money, however as with two previous cases, this is not a good enough reason to change the constitution.

It is interesting that you guys don't mind forcing out of state companies to collect sales tax, but most of you won't budge on the issue of people abusing the tax free policy of the reservations.
 
If the government wants taxes it should either be at the point of sale or before, not both as it is now.

All the tax talk makes me wonder though...

I wonder if Cheapy pays taxes in the US, Japan or both for CAG? It's a tangent, but I've always been curious about that.
 
Good question. My guess is that he pays both--business taxes since the CAG servers etc. are probably in the US, and if he's a Japan resident he probably has to pay some personal income tax there. Just a guess though, no idea about Japan's tax laws!
 
[quote name='Knoell']
It is interesting that you guys don't mind forcing out of state companies to collect sales tax, but most of you won't budge on the issue of people abusing the tax free policy of the reservations.[/QUOTE]

Hell yeah. How else am I supposed to get my gas cheap.
 
I don't think that any state should have the right to regulate businesses that don't have nexus within that state. The collection and remittance of sales taxes to all individual states (and, let's be honest, if this works, counties, cities, etc. are next) would be a very large bureaucratic burden on businesses.
 
You must log in or register to reply here.
bread's done
Back
Top