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June 22, 2012 05:00 AM UTC
24 Comments
The reason the Colorado law was made as stupid as it was was because under current laws, Amazon only has to pay real the tax themselves if they have a physical presence in the state, and they vowed to pull all of their affiliate programs who operated in Colorado if the state attempted to collect directly from Amazon.
So yes, they did object to just paying the tax.
I WAS an affiliate. I know how that worked, from personal, real-life experience.
Amazon did not and does not owe the CO use tax, just like the cigar company in Missouri in this story did not owe the CO use tax. It is the customer who owes the tax.
The state of Colorado has been, and continues to be, spectacularly incompetent in making this issue into something fair, logical and workable.
It seems to me that one of the things that complicates understanding is that some people are bound and determined to consider Amazon as the literal embodiment of pure evil. Any hint of a suggestion to the contrary might as well be couched in ancient Mandarin, for all the comprehension it gains.
If you read the article, it’s clear that this person was only notified because of special attention paid to tobacco sales. That’s different from any online purchase being tracked.
And I agree with PR. Colorado’s law was an attempt to level the playing field for local business. Amazon would not cooperate and has attempted to make the situation as difficult and contentious as possible. Sorry about this guy’s cigars, but it would be better if EVERYONE who bought something online got a notice they owe use tax. It would be better still if online retailers would just remit the tax.
Your complaint is like getting mad at the kid being bullied because of the hassle of cleaning up his cuts and bruises. You’re unwittingly helping the bully.
Is if the state of Colorado came up with a use tax system that was not designed for the 1800’s. The problem is not the money paid, it’s the overhead of the system.
Why I think this is a problem is that any of us who have bought anything online, from a cheap t-shirt on up, is technically in violation of this Colorado tax statute. The guy in the article was not notified about the normal tax in a workable time frame — he was fined 500% for not knowing he owed the tax and therefore not paying it. Guess he’s lucky they didn’t slap on a fine for his psychic powers being non-operational to boot.
I won’t claim to know what Amazon’s reasons were for their actions, either at first when they were resisting or later when they joined the unified tax cause. I will speculate that they indeed saw the handwriting on the wall long ago, and were avoiding getting sucked in to a 50 state melange of varying tax codes; it appears that during the avoidance part they were working on getting their code in order behind the scenes. They do have a drop down box for associated sellers (not the same thing as affiliates) that asks them to choose a description code for tax assessing purposes, and I believe in some cases they are in fact collecting sales tax.
I’m afraid I don’t follow your last paragraph, though. I kind of thought I was complaining about the stupid actions of the lege and the state treasury department. Don’t we do that here anymore?
points others here think are correct.
There definitely seems to be a divide here on this issue – between those that have to handle the overhead of sales tax (business owners) and those that work for the government (payment recipients).
I was just thinking about you, Neon. Hope you are doing well.
I’m doing well, just feeling a little overwhelmed from time to time. Thanks for the shout out!
A warm “howdy” to ya. Glad to hear I’m not the only one feeling a little “buffeted”.
Think…RAIN.
Allowing customers to cheat on their taxes by buying amazon gives amazon an unfair advantage over local businesses that support our community in many ways. Amazon loves that unfair advantage and will do everything in their power to keep screwing local businesses.
First off Amazon is not cheaper for many items.
Second, the big Amazon advantages are convenience and breadth of selection. I don’t shop online to save money, I shop online because it’s faster and I can find exactly what I want. As PCG pointed out, if it was price Zappos would have failed.
Third, speaking as a business owner, I have no downside to my customers paying sales tax (our customers are not price sensitive). What is a giant downside is the overhead of getting sucked into the morass of all the various taxing districts we would need to report to. Especially since many can’t give us a clear answer to the question of if some of our “products” are taxable.
Take an average sales tax for each state, comprised of the aggregate of state and local taxes, say, 6 percent for Colorado. That’s a bit less than the 7.1 you’d pay in Denver, more than you’d pay in an unincorporated area. That would basically level the retail playing field between local businesses and internet businesses. I’ll happily give up exactitude for simplicity in this case.
Collect that state tax on all internet sales: i.e., 6 percent on Colorado sales, 7 percent on New Jersey, etc.
Every quarter, send the taxes to the 50 state treasurers involved. Let the state divide the proceeds between state and local government, using their own formula based on local tax rates, population, etc. — or use the old revenue sharing formula. For simplicity’s sake, exempt any company with less than $1 million annual internet sale from collecting the tax.
That is easy, and simple. Amazon won’t do it because it is a greedy, vicious competitor that seeks every possible unfair advantage over the local, tax-paying businesses with which it competes. It fights every effort to come up with a fair and simple internet sales tax so it can oppose collecting any tax on the grounds that it is unfair and complicated. Your claim that Amazon’s tax avoidance policy has no impact is , to be blunt, unworthy of your intelligence. The fact that a price advantage created by unfair tax policy is not the only factor in Amazon’s success doesn’t mean it isn’t a big factor.
Click on Amazon’s used books sometime and see the prices on the identical book: the one selling for 3.99 usually beats the one for 4.99, after adjusting for shipping, if any. Add 7 percent to the price a of any of the books and watch them lose sales to tax avoiding retailers. On the other hand, if the tax is uniformly applied, then the competitive advantage disappears and business can compete as it should compete, quality, value, service, etc.
You do have a reasonable issue with the complexity of the existing tax district — even ZIP plus four doesn’t calculate everything. Most of the RTD district ( 1.0 percent) is in the stadium district (0.1 percent) but not quite all. So, that’s why we need a uniform internet sales tax with a flat rate per state. Unfortunately, only Congress can create such a system and they won’t act because they cower before the political and monetary power of the Internet Overlords. Look how they groveled when
Google cleared its throat.
The nature of your business is probably not very price sensitive. But a lot of what Amazon sells is price sensitive. And when I say their opposition to a fair and simple leveling of the playing field is based on pure greed, it’s this simple: Either they are incredibly stupid or incredibly greedy. I quick look at their bank accounts will show what category they fall in. Amazon makes the Koch brothers look public spirited.
For someone who purchases solely on price yes, the difference on collecting tax is a competitive advantage. But the majority of people do not purchase solely on price, they look for a source where the prices will be low and they can trust they will get a level of service they want. Charging sales tax will not reduce Amazon’s profit much – and they know that.
What scares the crap out of Amazon and every other online retailer (like me) is the cost of the overhead of collecting. We don’t pay the tax, but we do pay the cost of the overhead. And that is substantial compared to a physical store. The physical store only has to collect at a single rate and report to 2 tax authorities.
You are correct that they need to come up with a simple automatic system for collecting & remitting tax. And if they do then we’ll all complain a little about the hassle of connecting in, and do it. But they need to make it a single system for all 50 states. Amazon can easily afford to work with 50 departments of revenue, but smaller companies will be killed by that.
As to Congress grovelling when Google, Wikipedia, etc. asked their users to contact Congress – of course they did. For the first time ever they had millions of politically inactive voters calling them on an issue. It’s not supposed to work that way, it’s supposed to be the person with the larger checkbook gets their bills passed. How dare the people in this country influence legislation – the horror, the horror.
You already have to check the state you’re sending it to, after all. How tough is it when I check Colorado on my king size clothing order for them to instntly add 6 percent sales tax. An eight-year-old could program that.
I would not, however, object to a single federally collected, locally shared, internet sales tax rate of, say, 6 percent. Send the proceeds to the feds once a quarter, let the feds send it to the states by the revenue sharing formula.
But you are simply wrong to say Amazon is scared of the overhead of collecting. Amazon is scarred of losing its unwarranted advantage of lower prices than locally based retailers because it offers the bring benefit of cheating on its taxes. If charging taxes wouldn’t lower Amazon’s profit, they wouldn’t fight it as ferociously as they do.
And I gotta say about your obescience to the Lords of the Internet
that you are the first person I know to proclaim that Google is a little guy!
What next: the Koch brothers are populist heros?
It’s that there are issues interfacing with each system. There are questions about what category to put a give product in (Colorado could never give me a unequivocal answer on our combined support/updates charge). And each has different forms that have to be filled out to get set up.
Imagine a web start-up of 5 people having to work things out with 50 organizations has screwed up as the Colorado DoR. That would be a giant start-up (and job) killer. I can’t speak for Amazon’s true intentions (nor can you). But from my point of view as the owner of an online company, I’d rather have my income tax go up (out of my pocket) than have to process sales tax (tax out of my customers pocket, but overhead out of mine).
Forcing online companies to collect sales tax under the present system does not level the playing field, it upends it damaging or killing all but the largest online companies. It’s a giant new job killer.
First off, I think Wikipedia had a bigger impact than Google. And they truly are a crowd-sourced operation. Google actually resisted participating and to a large degree felt they had to.
And it succeeded not because Google, Wikipedia, etc. told people to do it and individuals blindly followed. They had to sell people on how bad the bills were. That is how democracy is supposed to work.
At no point did they offer any kind of balanced discussion, no reason to suggest that Congress might act to redress any kind of problem. It was raw, naked, power acting, as it usually does, in its own self interest. Absolute power, as Lord Acton said, corrupts absolutely.
Amazon does not sell used books. They list books sold by independent booksellers and take a cut of the sale. And of course if you can buy the same book through the same system at 2 prices – you select the lower price. Same thing in a retail store.
but you order it via amazon, so same difference.
Amazon has no influence on pricing. Your whole argument is that Amazon’s concern for the lowest price drives it. In fact, as the agent Amazon wants it selling for the highest price.
Suppose we had two Coffee shops, side by side on the Boulder mall. Ewegen Coffee gets a pass from the government NOT to charge sales tax. Thielen Coffee has to charge sales tax. On a $5 latte, customers save 40 cents buying from me.
Sounds fair to me, and given your assiduous sucking up to the would-be monopolists at Amazon, it must be fair to you, also.
See you in bankruptcy court, where you may then display a better understanding of economics than you do now.
they have multiple rates for multiple kinds of toothbrushes and they hadle that just fine. But, we do need to remember that much, if not most, of the sales tax is due to munis and they need it badly.
I think also that there is no good reason to give onliners a discount on sales tax.
Amazon is cheaper on almost everything I buy.
As a place to buy stuff, I think Amazon has a lot going for it. E.g. I needed a full size air mattress this past weekend for a camping trip (a queen size doesn’t fit my tent, and a twin is too small for two restless sleepers…). I went to local stores – twin and queen only. So I went to Amazon – in stock, and the comparable twin and queen mattresses were cheaper there than at the local stores. And thanks to Amazon Prime, it was on my doorstep 1.5 days after I ordered it, just in time for the camping trip.
As a company, Amazon has shown repeatedly that one of their prime concerns is not paying sales taxes. I understand that may be changing, but they’ve ditched their affiliates in several states over the state tax issue, and yes, NN, they did threaten it here – teh Google has many articles on it if you want to refresh your memory.
He is a retired attorney who loves to tinker, so he is into some spendy tools and stuff. He raves about Amazon and buys almost everything he can online.
I am not so inclined, but that is his feeling.