CA taxes internet, Amazon says no thanks

[woolfe9999]

I've never understood why etailors, who already have an advantage ove B&M on the cost end, get a free pass on taxes as well. Do we really want to turn our commercial zones into ghost towns? B&M is more labor intensive - and that's one of the reasons it is hard for them to compete - but that also means it creates more jobs per $ of commerce. I don't get why companies like Amazon are entitled to his kind of corporate welfare, and to give them an advantage over their competition no less.

 

[werepossum]

ok, how about chain grocery stores, supermarkets, fast food joints?
there's one of those in every town. over here, i probably have 3 shop rites within a 10 mile radius.

so what you're saying is if we lower taxes, it makes it more attractive for businesses to set up shop there, which in turn creates more jobs and generates more tax revenue and stimulates economic growth?
why haven't those elected to office thought of this yet? in fact, why do i hear more cry to raise corporate taxes?

does the opposite hold true? e.g. raise taxes, forces businesses to close/move, jobs lost, tax revenue decreased?

That's a good point about chains; many of them do have multiple presences within medium size or larger towns. I would think that very few actually have a presence in every sales tax jurisdiction, but of course etailers retain serious advantages in not paying multiple property taxes and the many fees that propagate everywhere government exists.

As to lower taxes creating a more business-friendly environment and higher taxes creating a less business-friendly environment, that's undisputed, and everyone in government (perhaps excepting the dimmest bulbs) knows it. Any place one can lower one's expenses without lowering one's revenue, that place is more attractive to business, which also makes it more attractive to workers and consumers. The prize for government is to make taxes just low enough to attract enough business to replace the lower corporate tax revenue with other, additional revenue from the increased economic activity. Obviously not every state and local can have the lowest taxes, so some also compete for business with higher taxes that fund better infrastructure and services, on the theory that a better educated, better serviced populace will also attract businesses who will be willing to accept higher costs to compete for a more affluent customer base. Both approaches can work, and both can fail. An area with an illiterate populace and nonfunctional infrastructure will fail even with super-low taxes. An area with a highly literate, technical populace and world class infrastructure will fail if its taxes increase to the point that businesses cannot make a profit of that highly literate, technical populace.

As to why you hear more cries to raise corporate taxes, I suspect you are surrounding yourself with progressives. Progressives believe that tax money is a Magic Cupboard; it will never run dry, and no matter how much government takes, the economy will only improve because people in government are so much smarter than the rest of us. (If you believe that government can take more taxes from the high earners without reducing economic activity, you too are a progressive.) Progressives also believe that corporate taxes are invisible to the consumer, which is actually true to other progressives. But even progressives notice when the American-produced product gets more expensive than its foreign competitor's, and being "citizens of the world" feel no need to buy American. So while raising corporate taxes raises revenue in the short term, it also reduces the number and competitiveness of businesses, and lowers sales means lower tax revenue. Increasing corporate taxes means chasing an ever-decreasing revenue train. The rest of the world knows this, but the USA, with the highest corporate tax rates in the First World, mostly cares about punishing the rich and getting that short term buzz of increased tax revenue.

 

[werepossum]

I've never understood why etailors, who already have an advantage ove B&M on the cost end, get a free pass on taxes as well. Do we really want to turn our commercial zones into ghost towns? B&M is more labor intensive - and that's one of the reasons it is hard for them to compete - but that also means it creates more jobs per $ of commerce. I don't get why companies like Amazon are entitled to his kind of corporate welfare, and to give them an advantage over their competition no less.

One reason is that large etailers strike deals at the state level, whereas the job losses are at the local level.

 

[Craig234]

You show them your receipt. Not any different than when you claim charity donations.

Huh? I think you misunderstood my question.

Charity is when you are claiming a *deduction* - not paying an extra tax.

 

[BlahBlahYouToo]

That's a good point about chains; many of them do have multiple presences within medium size or larger towns. I would think that very few actually have a presence in every sales tax jurisdiction, but of course etailers retain serious advantages in not paying multiple property taxes and the many fees that propagate everywhere government exists.

As to lower taxes creating a more business-friendly environment and higher taxes creating a less business-friendly environment, that's undisputed, and everyone in government (perhaps excepting the dimmest bulbs) knows it. Any place one can lower one's expenses without lowering one's revenue, that place is more attractive to business, which also makes it more attractive to workers and consumers. The prize for government is to make taxes just low enough to attract enough business to replace the lower corporate tax revenue with other, additional revenue from the increased economic activity. Obviously not every state and local can have the lowest taxes, so some also compete for business with higher taxes that fund better infrastructure and services, on the theory that a better educated, better serviced populace will also attract businesses who will be willing to accept higher costs to compete for a more affluent customer base. Both approaches can work, and both can fail. An area with an illiterate populace and nonfunctional infrastructure will fail even with super-low taxes. An area with a highly literate, technical populace and world class infrastructure will fail if its taxes increase to the point that businesses cannot make a profit of that highly literate, technical populace.

As to why you hear more cries to raise corporate taxes, I suspect you are surrounding yourself with progressives. Progressives believe that tax money is a Magic Cupboard; it will never run dry, and no matter how much government takes, the economy will only improve because people in government are so much smarter than the rest of us. (If you believe that government can take more taxes from the high earners without reducing economic activity, you too are a progressive.) Progressives also believe that corporate taxes are invisible to the consumer, which is actually true to other progressives. But even progressives notice when the American-produced product gets more expensive than its foreign competitor's, and being "citizens of the world" feel no need to buy American. So while raising corporate taxes raises revenue in the short term, it also reduces the number and competitiveness of businesses, and lowers sales means lower tax revenue. Increasing corporate taxes means chasing an ever-decreasing revenue train. The rest of the world knows this, but the USA, with the highest corporate tax rates in the First World, mostly cares about punishing the rich and getting that short term buzz of increased tax revenue.

you know, i thought this was all common sense until i read posts on these forums, other articles, watched and listened to political shows/debates, etc. stating otherwise.
thinking this was so obvious, i couldn't even comprehend that there was another school of thought.

how could people not realize this?

 

[Thump553]

There's a lot of nonense in this thread about raising corporate taxes. This is not corporate taxes-it is sales tax. Sellers collect sales tax as trust funds for the state-it is a tax born by the ultimate consumer, not the seller. Do you people honestly believe it is fair to require local sellers to collect sales tax while allowing megagiant internet sellers to compete unfairly because they don't have to collect the taxes?

And it is also pure nonsense that the internet sellers could not come up with an efficient means of collecting sales tax for all jurisidictions if they had to. People and businesses can come up with amazingly ingenious solutions to problems if they have to.

 

[Muse]

Why shouldn't internet purchases be taxed at the same level as non-internet purchases?

They should both be zero. IMHO, sales taxes should be illegal. They already have federal and state income taxes. Sales taxes are double jeopardy and lack the graduated system of federal and state taxes and are therefore relatively unfair to poorer folks.

 

[Muse]

Because they have no presence in the state and therefore the retailer is not required, via supreme court ruling, to collect sales tax.

So, Amazon will not start adding sales tax for sales to California residents? I bought a couple of things today on Amazon because I read a story that the law CA just passed concerning online purchases being taxed would go into effect "immediately," i.e. tomorrow (Friday).

 

[Slew Foot]

Amazon should start a new company called FuckyouCA and set up huge distribution centers in CA where they contract out the shipping of Amazons goods. This corporation would be set up to lose money so that CA wouldnt see a dime and Amazon still wouldnt have a presence in the state.

 

[dawp]

looks like amazon may have to collect taxes after all since they have labs in CA:

http://news.cnet.com/8301-31921_3-20075651-281/california-targets-kindle-lab-in-amazon-tax-spat/

 

[Thump553]

They should both be zero. IMHO, sales taxes should be illegal. They already have federal and state income taxes. Sales taxes are double jeopardy and lack the graduated system of federal and state taxes and are therefore relatively unfair to poorer folks.

Double jeopardy is a constitutional protection regarding criminal prosecutions and has absolutely nothing to do with taxation.

I agree sales taxes are regressive and in a perfect world would not exist. But my beef is so long as states and localities do rely on sales taxes to pay for governmental services then those taxes should be collected from ALL sales and ALL retailers instead of the huge advantage currently given internet sellers.

 

[RisenZealot]

Well I'm on Amazons side here. I realise that the world isn't fair and so I could care less how mich B&M stores scream and whine over this. It's a flat out excuse they use as to why they are starting to lag behind online sites.

I'll tell ya what's not fair. The idiots working at B&M stores like Best Buy who tell people who have no clue that this $500 HDMI cable will make their tv look better then the $5 cable they can buy online.

Fact is online retailers are better regardless of the tax you may or may not pay. Therefore I support ANYTHING that makes it easier for them to grow.

 

[BlahBlahYouToo]

Well I'm on Amazons side here. I realise that the world isn't fair and so I could care less how mich B&M stores scream and whine over this. It's a flat out excuse they use as to why they are starting to lag behind online sites.

I'll tell ya what's not fair. The idiots working at B&M stores like Best Buy who tell people who have no clue that this $500 HDMI cable will make their tv look better then the $5 cable they can buy online.

Fact is online retailers are better regardless of the tax you may or may not pay. Therefore I support ANYTHING that makes it easier for them to grow.

that's the consumer's responsibility to research the right product to use, and the right price to pay.
i have no sympathy for those who get ripped off because of ignorance.

with internet access as prevalent as it is, there's no excuse to not be able to be armed with basic knowledge of the product before you go shopping.

 

[BlahBlahYouToo]

Double jeopardy is a constitutional protection regarding criminal prosecutions and has absolutely nothing to do with taxation.

I agree sales taxes are regressive and in a perfect world would not exist. But my beef is so long as states and localities do rely on sales taxes to pay for governmental services then those taxes should be collected from ALL sales and ALL retailers instead of the huge advantage currently given internet sellers.

the argument is that with all the taxes that are collected, we have nothing to show for it. and they have the audacity to tax more and more.

all the tax money we pay just ends up in the pockets of govt workers and welfare recipients.
phuck that.

 

[Linflas]

I've never understood why etailors, who already have an advantage ove B&M on the cost end, get a free pass on taxes as well. Do we really want to turn our commercial zones into ghost towns? B&M is more labor intensive - and that's one of the reasons it is hard for them to compete - but that also means it creates more jobs per $ of commerce. I don't get why companies like Amazon are entitled to his kind of corporate welfare, and to give them an advantage over their competition no less.

They don't get a free pass. States pass sales and use tax laws and generally as part of that law they add a caveat stating that if their residents happen to be thinking individuals that can drive to a neighboring state that doesn't tax a good the same way their home state does that individual is responsible for reporting the purchase to their state and paying the appropriate tax. Obviously the percentage of people that actually do this is close to 0. The states are really in a position not unlike that of the MPAA or RIAA when it comes to the internet. People have been making and swapping recordings for decades before the internet came along and changed the magnitude of the problem. Ditto for avoiding state sales taxes by going to neighboring states whenever it was possible to purchase goods at a lower/no tax rate.

No matter how clever the states try to get regarding trying to shift the burden of collecting these taxes onto businesses rather than individuals there is only so much they can do absent Federal legislation. I guess it is conceivable that they could attempt to monitor mail order deliveries much like Virginia and Maryland used to station undercover cops outside DC liquor stores to try and catch their residents buying cheap booze in DC but the backlash they would face make that choice unpalatable for now.

 

[PokerGuy]

if retailers with B&M stores in multiple states like best buy, walmart, target, etc. do it all the time, i don't see why it would be any more difficult for an online retailer.

1) they only have to do it for wherever they actually have a store, not all the jurisdictions. Internet vendors theoretically have to then collect taxes for every possible jurisdiction.
2) the internet inherently makes it easier for someone without the resources of a major corporation to be a vendor. It's much harder for them to comply with a myriad of rules and regulations.

 

[PokerGuy]

I've never understood why etailors, who already have an advantage ove B&M on the cost end, get a free pass on taxes as well.

How do they get a "free pass"? They are not responsible for paying the taxes, and the supreme court made it quite clear that if they don't have a presence in a state they are NOT responsible for collecting the state taxes for that state either. What free pass are you referring to?

The answer is, there has to be some sort of federal legislation to address the issue. Individual states don't have a good mechanism for dealing with this, and they are starting to go to absurd overreach mode trying in vain.

 

[PokerGuy]

The other issue I haven't seen anyone address is that in theory, this has nothing to do with B&M versus internet. For example, you can have a B&M in state A that sells an item (by mail or by having the customer come by) to a customer in state B. In that scenario, the B&M store in state A is also not responsible for collecting sales tax for state B.

The internet is just a technology that makes interstate transactions easier, but there really isn't a difference between internet vs B&M with regard to having to collect or not collect taxes.

 

[Thump553]

The other issue I haven't seen anyone address is that in theory, this has nothing to do with B&M versus internet. For example, you can have a B&M in state A that sells an item (by mail or by having the customer come by) to a customer in state B. In that scenario, the B&M store in state A is also not responsible for collecting sales tax for state B.

The internet is just a technology that makes interstate transactions easier, but there really isn't a difference between internet vs B&M with regard to having to collect or not collect taxes.

If the customer physically stops in to the retailer's store, sales tax is owed (and collected by) the state where the store is located. If the sale is by mail or phone, the same rules as internet sales-no sales tax collected.

One of the big NYC jewelers (Tiffanys as I recall) got into a very embarassing public scandal a few years back with the state of CT. CT customers would come in and buy expensive jewelry and the store attempted to evade all sales tax by claiming it was a phone or mail order sale-going so far as to ship boxes of paperclips to the customer, pretending those were the jewelry.

 

[woolfe9999]

How do they get a "free pass"? They are not responsible for paying the taxes, and the supreme court made it quite clear that if they don't have a presence in a state they are NOT responsible for collecting the state taxes for that state either. What free pass are you referring to?

The answer is, there has to be some sort of federal legislation to address the issue. Individual states don't have a good mechanism for dealing with this, and they are starting to go to absurd overreach mode trying in vain.

Under the current system, they in effect are getting a free pass. Doesn't matter that they aren't responsible for paying the taxes. The fact that their customers, de facto, don't have to pay the tax, gives the etailors a competitive advantage over B&M. Online already has advantages over B&M on the cost end while B&M has the advantage of faster response customer service and returns and more secure transations. Those advantages are part of the free market and fine. We don't need to add differential taxation in to tilt the scales in favor of one sector over the other. You're right that federal legislation is required but that doesn't alter the fact that they're getting a free pass.

 

[piasabird]

This tax compact sounds like collusion to me.

 

[fskimospy]

This tax compact sounds like collusion to me.

so?

 

[abaez]

Under the current system, they in effect are getting a free pass. Doesn't matter that they aren't responsible for paying the taxes. The fact that their customers, de facto, don't have to pay the tax, gives the etailors a competitive advantage over B&M. Online already has advantages over B&M on the cost end while B&M has the advantage of faster response customer service and returns and more secure transations. Those advantages are part of the free market and fine. We don't need to add differential taxation in to tilt the scales in favor of one sector over the other. You're right that federal legislation is required but that doesn't alter the fact that they're getting a free pass.

Their customers actually do have to pay the tax. They need to note their purchases when they pay their taxes and actually pay themselves. But no one does this. The Supreme Court has already said Amazon does not have to pay, so why doesn't CA go after the people who don't note their purchases and pay their sales tax?

 

[readymix]

1/3 of my county budget is from sales tax. i want the street lights working and the beaches open. cops on the beat and the courts functioning. and i'm willing to pay for it. fuck amazon!!!

 

[Brainonska511]

Their customers actually do have to pay the tax. They need to note their purchases when they pay their taxes and actually pay themselves. But no one does this. The Supreme Court has already said Amazon does not have to pay, so why doesn't CA go after the people who don't note their purchases and pay their sales tax?

When did the USSC recently rule on affiliates = nexus?