Amazon Pulling Out of Texas Over $269 Million Tax Bill 811
ralphart writes with this excerpt from the Dallas Morning News:
"As a result of an ongoing tax dispute with Texas, Amazon.com has decided to take its ball and go home. The online retailer said Thursday that it would shutter its Irving distribution facility April 12 and cancel plans to hire as many as 1,000 additional workers rather than pay Texas what the state says is owed in uncollected sales tax. Texas wants $269 million from Seattle-based Amazon in past-due sales tax. It sent the bill to the company last October."
We've discussed the online retailer's tax battles with other states in the past.
Texas Budget Deficit (Score:5, Interesting)
Re: (Score:3)
Meh. This isn't an onerous business tax. Pretty much all states have this tax. You have a physical presence in the state you pay sales tax. Dell does it. I have no clue why Amazon thought they could skirt it.
Re:Texas Budget Deficit (Score:5, Informative)
Re: (Score:3)
In a way. The Texas legislature only meets every other year, so they were running on the previous two-year budget. That made the budget look overly good, because it assumed higher tax income due to a better economy.
Now they're writing the budget for the next two years, so they're having to face today's reality.
Re:Texas Budget Deficit (Score:5, Informative)
Companies don't PAY sales tax, they COLLECT it. The people in Texas that order from Internet retailers like Amazon are the ones who pay, or don't pay, sales tax. Amazon just collects the tax from the customer, and then pays it to Texas.
One difficulty is that if a Texas consumer wants to buy an item online, and they pay sales tax when ordering it from Amazon.com but not tax if ordering from (e.g.) buy.com, then Amazon will lose business. So it's in Amazon's best interests to NOT collect sales tax from Texas customers if they can avoid it.
There is no clear answer here. On the one hand, you have the Streamlined Sales Tax movement (http://www.streamlinedsalestax.org/) that is trying to enact legislation in as many states as possible requiring retailers to collect tax from customers, regardless of whether the retailer has a presence in that state. The intent is to "level the playing field" and close the no-tax loophole of ordering from out of state - allowing in-state merchants to compete fairly with out-of-state merchants. If this were enacted, Amazon would collect the tax and so would everyone else - so no one would be at an advantage or disadvantage in that regard.
That sounds well and fine, but the difficulty is the mechanics involved. Sure, Amazon and Wal-Mart and other big companies can code their web sites & shopping carts to figure out where the customer lives, and collect sales tax appropriately. The problem is that setting up a web site to do this is expensive - there are data subscriptions and a lot of coding involved. Over hundreds of thousands or millions of transactions, the cost is minimal. But the effort required by Amazon is really not much different from the effort required from doggiechewtoys.com or any other mom-n-pop operation - except that the little guys don't have the transaction volume to dilute the up-front costs. So it is VERY hard on small businesses to make this kind of change.
What to do? Beats me.
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The problem is that setting up a web site to do this is expensive - there are data subscriptions and a lot of coding involved. ...
What to do? Beats me.
Create a (federal) government run site to manage sales-tax related data, and offer an API that can easily integrate with all major services. The coding required for individual vendors would be minimal - when the user clicks the "checkout" button, create a connection to the API requesting the most recent applicable tax rates for the customers address, and apply them to the total. Even a script kiddie could slap together the required code in about 5 minutes. Larger sites could store a local cache of the en
Re:Texas Budget Deficit (Score:5, Informative)
This sounds easy on the outside, but in reality it is not if you are doing it right. (FYI: I have experience adding a third party sales tax vendor (similar to the API you write about) into ecommerce websites.) It definitely does not take 5 minutes and I wouldn't suggest that any script kiddie do it. (You are dealing with real money here.) In the real world, you have to deal with all sorts of things like:
*) Taxes that vary depending on the type of item being bought. (Meaning you have to make sure your items have the various classifications for all the various laws.)
*) Need to then deal with crediting taxes on order cancels/returns/changes, which can be even more fun when you are doing it for a split quantity returned.
*) Error handling when remote API goes down
*) Validating user inputted address matches up with a valid tax address.
*) Shipping is taxable for some areas and others not. So again, you get to deal with this headache every time there is an order return or other order changes.
It's definitely doable, just not near 5 minutes doable and is definitely a cost to be considered by smaller sites.
Re:Texas Budget Deficit (Score:4, Informative)
A general site is going to be very complicated, and knowing the sales tax is only part of the problem.
Sales taxes are not necessarily X% on every sale. Different localities have different rules on what gets taxed and what doesn't, or can vary the taxes depending on the type of merchandise. These taxes can also vary from day to day, as some localities have holidays for particular things. It would be necessary to create a taxonomy of merchandise based on the laws of every state, county, city, metro area, school district, or mosquito control district that collects sales taxes. The job of matching address to taxing entities is also large, but that can be handled at the federal website level, with the caveat that shipments to post office boxes are best effort guess for municipality.
Once joesobscuremerchandise.com has calculated the taxes, and billed appropriately, Joe owes various entities the taxes he has collected. The paperwork on that alone could be prohibitive for a small site.
The only thing that would make collecting sales tax feasible for the small business is a massive reform effort to make sales taxes uniform, and that will face a lot of opposition.
Re:Texas Budget Deficit (Score:4, Informative)
> State, zip code and tax rate?
Bzzzt. Sorry, nice try, but wrong answer. Zipcodes don't correlate to municipal taxing boundaries. They're usually *close*, but legally that's not good enough. Just to give one example, the city of South Miami, Florida is a "patchwork city". After the first real estate crash in Florida (during the 1920s, when the combination of the Great Depression and 1926 Hurricane more or less destroyed South Florida physically AND economically), the city of South Miami went bankrupt and couldn't provide municipal services any longer. Some influential residents got the Florida legislature to allow individual landowners to secede from such municipalities. Many did. As a result, to this day, not even the city's police and fire departments can tell for sure whether or not any given square foot of land is or is not within the city limits. The net result is that nothing short of a geocoded database that resolves down to every street address in America can definitively assign every order to its proper taxing authorities. And even then, the database could become invalidated if a city changes a law and fails to notify whomever maintains the database.
It gets worse when you consider how the IRS (if it were tasked with the job) would almost certainly go about doing it -- they'd "privatize" it to a third-party that would turn around and charge anyone smaller than Wal Mart or Amazon $3 to do a "taxing-district analysis" (kind of like how when you renew your license plates in Miami, you're going to get hit for a minimum of $3 above and beyond the alleged cost of the plates/sticker themselves, because you MUST renew through a private "tag agency", and there's literally no way to pay the renewal fee that doesn't involve payment of ADDITIONAL fees for the "service" of collecting your payment and handing you the sticker to put on your plate (or the plate itself)).
Re: (Score:3, Informative)
Amazon DOES do it. Customers living in Washington have to pay sales tax when they buy things on Amazon.
Re:Texas Budget Deficit (Score:4, Insightful)
Except, that Dell does it. Toys R. Us does it. Barnes and Noble does it. Amazon can do it. It's not onerous.
The point wasn't that it was onerous for Amazon, the point is that it is onerous for the part time, virtuemart, ubercart, oscommerce, and zencart distributions.
If there was a free feed established that every state that wanted the sales tax collected contributed to. Then this would not be unreasonable. As it is now, it requires a small staff just to keep up with the tax information.
If the states want this tax collected, then need to play ball and put their tax info on line in a standard format.
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The company that owns the warehouse isn't selling anything, they're just distributing packages.
Re:Texas Budget Deficit (Score:4, Informative)
The tax rate is 8.25% for many of the residents.
Plus property taxes are about $1,000 per $50,000 home value.
Our problem is the Perry sucks as governor in the same way Bush did.
Instead of being a true conservative, he was a spendthrift.
Dan Patrick (who is too socially conservative for my tastes) *may* be a true fiscal conservative which would be nice.
Re:Texas Budget Deficit (Score:4, Insightful)
The tax rate is 8.25% for many of the residents.
Plus property taxes are about $1,000 per $50,000 home value.
Our problem is the Perry sucks as governor in the same way Bush did.
Instead of being a true conservative, he was a spendthrift.
Dan Patrick (who is too socially conservative for my tastes) *may* be a true fiscal conservative which would be nice.
True, the myth of lower taxes in Texas is false. I moved from Texas to Colorado (generally assumed to be a less conservative place), bought a more expensive house, and make more money, but my overall taxes somehow went down. The services I receive have improved too.
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I didn't say I liked him or he was perfect. I said he *might* be a fiscal conservative.
Your pointing out that he is making spending cuts only agrees with that perception.
Everyone can say "oh we need cuts but in some other area".
In the end, the cut has to happen somewhere. We have a huge deficit coming up because of overspending and lack of wisdom about the economy never getting worse.
Re:Texas Budget Deficit (Score:5, Informative)
"retardican", that's good. I've had this argument with similarly unenlightened people before. The argument goes:
Them: No public money for research unless it is medical research.
Me: Hmmm....quantum mechanics and relativity, modern techno-stuff is built on it, couldn't get funded these days.
Them: Uh...uh...yeah, but I'm talking about pie in the sky research.
Me: That was pie in sky, so was group theory, which underpins transaction security you can buy stuff on-line.
Them: Yeah, well, they could point to something useful.
Me: No they couldn't, Galois died in 1932.
Them: Oh, okay, but not social research.
Me: So, you don't want to know what social problems have solutions, like failure of schools?
Them: Okay, you made your point.
Two months later:
Them: No public money for research unless it is medical research.
Me: Recall we had this argument 2 months ago and you admit you lost.
Them: What was your reasoning again?
You see, there's no talking sense to these people, they cannot keep anything abstract in their heads for longer than a gnat's attention span.
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Let's not get abstract.
We have 100% of the pie to split.
All the advanced math in the world doesn't change that for the states.
And it really doesn't change it for the federal government indefinitely.
Understand, I'm fairly liberal by most standards-- I even support higher taxes on myself to provide better government.
But it's unwise to spend money you don't have and to play funny money with the books- and EVERYONE can make a good argument why their area shouldn't be cut.
i.e., I'm glad you want theoretical rese
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But your basic issue with the particular terms is fine.
I have to specify myself.
Socially Liberal
Fiscally Liberal
Socially Conservative
Fiscally Conservative
That's a lot of typing.
I wish we could call them
SL's
FL's
SC's
FC's
I prefer an FC, SL government.
Hmmm interesting .. .there could be 8 forms.
SLFC Social concerns important, and fiscally conservative Aka, benefits then budget.
SLFL Social concerns important, and also fiscally liberal
SCFC
SCFL
but also
FCSL Fiscal concerns first, and then socially liberal (Kans
Every state but one has a 'budget deficit' (Score:5, Insightful)
The only state that's NOT having budget problems is North Dakota. Ellen Brown [webofdebt.com] says North Dakota is sitting pretty because they own the Bank of North Dakota [wikipedia.org].
See How the Nation’s Only State-Owned Bank Became the Envy of Wall Street [motherjones.com].
All the other states are slaves to their financiers on Wall Street. For example, the City of Phoenix (Arizona) borrowed a billion dollars over the past 5 years to build out the water system. Now the water department wants to raise an extra $24million a year by raising water fees... 'Cause the usury always gets paid first.
I calculate that the interest charge on a billion dollars a year (at 5%) is $50million. If Arizona owned a bank like North Dakota, the Bank of Arizona would have financed the Phoenix water expansion (at, say, 3%). Most of the $50million the city is now bleeding out to Wall Street would instead be flowing into the state's treasury.
The financial crisis is easily fixable, with the right solutions. Money and the Crisis of Civilization [realitysandwich.com], and ... Richard Clark's A Bailout for the People [richardccook.com] are also on my recommended reading list.
Re:Every state but one has a 'budget deficit' (Score:4, Insightful)
And who is Ellen Brown and why should we believe her? (And I note you link not to her - but to an article that lays North Dakota's solvency on an entirely different cause.)
What does raising more money have to do with having borrowed money? (I.E. correlation is not causation.) That could be just as easily explained by unexpected costs (as is the case with my local water department, heavier than normal winter storms caused damage), or by poor planning (as I've also seen with my local water department).
Maybe they could have, maybe they couldn't have - interest rates are a function of the cost of the money the bank loans to the water dept, not a function of numbers you've pulled out of your ass.
The only interesting thing there is that you didn't link to a gold bug site as well.
Re:Oregon does not have sales tax. (Score:5, Interesting)
Oregon does not have sales tax. They do have an inventory tax. The inventory tax is not only on your product, but on your furnishings and equipment. States to provide incentives to attract businesses. A couple of the largest businesses in the state are Nike and Intel. Nike distributes shoes mostly made overseas. Their inventory is relatively low and their inventory value is relatively low.
On the other hand, Intel does manufacturing in Oregon as well as a good portion of R & D. If Intel was taxed at the same rate for inventory as Nike, they would not be in Oregon at all. The equipment for manufacturing IC's is several million dollars each. Intel negotiates with Oregon for a break on the inventory tax and brings to the table the rates they pay on other locations such as New Mexico, Ireland, Israel, etc. Oregon is well aware if they didn't offer this incentive, Intel would no longer be in Oregon.
http://www.oregonlive.com/opinion/index.ssf/2010/10/oregon_intel_inside.html [oregonlive.com]
Oregon is well aware that Intel contributes way more to the state of Oregon than Nike. Trying to "Tax them fairly" will result in the loss of Intel in Oregon. Intel is by no means getting no taxes. Intel contributes heavily to the local infrastructure and education.
It sounds to me like Texas has attracted Amazon with a temporary deal and it has expired. Amazon has not been able to extend the deal. Now the party is over.
Amazon may owe Texas a quarter billion dollars, but this is the last year. They are not remaining as Texas expected them to.
Texas expected they were too big to fail. Surprise..
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I remember hearing about this a while back though, and I believe it all actually started before the budget crisis.
That said, I live in Texas, and am pretty incensed that my state is trying to do the same thing a few other states have to companies that do business on the internet. The end result is they've cost quite a few jobs, meaning they've actually eliminated some tax revenue (no state income tax, but jobless people buy fewer things, so less sales tax). Also, that when I buy something from Amazon it's
Re:Texas Budget Deficit (Score:5, Interesting)
Personally, I think there is a class of Republicans who hate government enough to get in power, purposefully screw up, and force things like this because of the damage they deliberately inflict and then blame on "big government" which they created in the first place. He runs up a bill for billions, then cuts education and social programs left and right, leaving in subsidies for the rich. It wasn't an accident, it wasn't an unforeseen shortfall, it was deliberate sabotage in order to force hard choices while they are in power to remake it in their image.
Why did Bush push through NCLB? Because he knew that unfunded federal mandates over state matters was the core of the big-government Republican image. He knows that NCLB will shackle school districts, increasing cost and wasting resources. He knows NCLB will harm children all over the country. And he's happy to hurt the children. Why? Because when the education system comes crashing down, the vouchers he really wants will then look like a good idea.
Not that I'm trying to imply the Democrats are any better. I'm just pointing out the "capitalist" Republicans are massively supporting socialism. Take from everyone and give to the needy businesses (and every business is needy). And the small government Republicans are passing massive sweeping legislation to take away states rights and purposefully harm children to further push taxing everyone to pay for religious schools with direct government funding of religious organizations (as nearly all private schools are religious).
And for anyone wondering, I was born in TX and lived there under GWB (and a few before him) and left just after (but not because) Rick got the job.
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Couple that with the fact that they take actions in opposition to their stated goals (growing the budget for years) then taking one consistent with their stated goals (cutting education and social services while increasing business subsidies), and I couldn't care less if the 9 years of growing the budget was incompetence or a master plan, it all worked out in the end very conveniently for him to do what he wanted to do.
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Mostly right, but the problem is that in most states with a sales tax there isn't a sane way of consumers paying their sales tax if it isn't collected by the store. What I mean is that it pretty much involves keeping track of the receipts yourself and then there has to be some way of sending the money and the receipts in to the state.
I'm not aware of any state that actually advertises the process or enforces compliance. Really the best thing would be to just cave and provide a system for telling retailers h
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That's a good question. Where did you see that this facility was something other than a subsidiary of Amazon? The article made it sound like this was Amazon's distribution center, not a 3rd party fulfilment house on contract with Amazon.
Furthermore, the analogy to FedEx doesn
Re:Texas Budget Deficit (Score:4, Insightful)
It is not a loophole. It is a provision of the US Constitution that Amazon does not have to pay these taxes. Amazon has careful set up their ownership structure to avoid these taxes. Commerce_Clause [wikipedia.org] This clause has been around 224 years so Texas should be aware of it.
It is the states that are trying to grab taxes that aren't theirs to grab. Texans are free to buy from Texas based merchants and pay the sales tax. Texas has a use tax so Texans are supposed to send in a sales tax equivalent when they buy from out of state. So blame the problem on Texans for choosing out of state vendors and then not sending in their use tax. I also suspect if the money grubbing states would ever put their use taxes up for a vote, they would all be immediately repealed since they are highly unpopular and hardly anyone obeys them.
The U.S. Constitution provides an essential protection against burdensome State regulation. The Commerce Clause uniquely empowers Congress “[t]o regulate
Commerce among the several States” and, as interpreted by the Supreme Court, bars States from burdening interstate commerce without specific Congressional approval. On the matter of State sales taxation, the Supreme Court has held, in the National Bellas Hess and Quill decisions, that the Commerce Clause bars States from requiring out-ofstate (a.k.a. “remote”) sellers to collect taxes on sales to residents within that State unless a remote seller has “substantial nexus” with the State. Otherwise, held the Court, the current sales tax regime is so complicated that such a requirement would impose an unconstitutional burden.
Amazon Tax [netcaucus.org]
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It is not a loophole. It is a provision of the US Constitution that Amazon does not have to pay these taxes.
Just to point out a matter of terminology: paying taxes and remitting taxes are different things. These aren't taxes that Amazon really owes; their customers who are citizens of Texas do. This cannot really be disputed from a legal standpoint; Use Tax or Sales Tax is mandatory ... you have to pay one or the other. According to Texas, Amazon was supposed to collect the sales tax on behalf of the state then remit them to the state on behalf of the customer. Amazon disputes that they had an obligation to d
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the Commerce Clause bars States from requiring out-ofstate (a.k.a. “remote”) sellers to collect taxes on sales to residents within that State unless a remote seller has “substantial nexus” with the State.
For having such a good reading of the Constitution, you have an exceedingly poor reading of this issue. Texas is not violating or ignoring the Commerce Clause. Texas agrees 100% with your reading and interpretation. They are claiming that having an Amazon distribution center in the state is a "substantial nexus." The issue is that Amazon claims that if they just outsource it to someone who claims to be Amazon (via invoices included in the packaging, the packaging marked as "Amazon" and such) then they d
Re:Texas Budget Deficit (Score:4, Informative)
Obviously Amazon is within their legal rights to seek out favorable tax havens to operate within the United States, but hardball tactics like this make them appear to be quite evil.
It is Texas that is using hardball tactics. They had previously exempted mail order/etc companies from sales taxes.. until one day they noticed that they got a lot of suckers to move their businesses into Texas.. then they changed the rules overnight and sent out bills to many such companies.
You know that Texas is up to know good because they didnt perform an audit of Amazon's activities in the state, but instead simply made up a figure and demanded it.
Enough of this (Score:5, Insightful)
I can't blame Amazon at all for this.
This whole tax from the state it comes from/tax from the state you live in needs to be decided (federally) and set in stone once and for all. Same goes for who collects it and when.
Re:Enough of this (Score:5, Interesting)
IANAL, but I've done a lot of tax programming for major retailers over the years.
While I agree that sales taxes are ridiculous and hard and all that, I feel it's important to point out that Amazon actually has a presence in Texas, and therefore when they sell product to Texans they actually do need to be collecting sales tax and remitting it to the State of Texas. This is commonly known as "nexus" in sales/use tax circles. This is what Texas is asking for - sales/use tax from sales to Texans from Amazon (who has a presence in Texas and is therefore subject to the laws of Texas with regards to their sales in Texas).
If Amazon was being told they needed to collect on behalf of, for example, Maine, they have the absolute right to tell Maine's comptroller to go straight to hell. In fact, as a citizen of Maine, I'd love to be able to listen to that conversation. I'll never be able to tell our comptroller to go to hell, so it'd be great to be able to hear someone else say it.
Amazon has no presence here in Maine, therefore they have no obligation to follow Maine's regulations surrounding sales/use taxes, which are intrastate law, not interstate. The sales/use tax on things I buy from Amazon is my responsibility to track as a Mainer doing business with a company outside the state, and I owe that money to Maine at the end of the year (and we have a system called "Alternative Use Tax" where I pay a small stipend based on income tax to cover any incidental out-of-state purchases I happen to make if I don't want to track them all, which I use).
But Amazon has a presence in Texas. In the same way that the company I currently work for has to start collecting and remitting State sales taxes every time we open our first store in each State (or call center, or warehouse, or business office, or whatever), Amazon really does owe that sales tax to the State of Texas, whether they have been collecting it from their customers or not.
Now, they can certainly choose to pull out of Texas in order to avoid having to collect taxes there, that's within their rights. But they still owe the State of Texas $269 million (plus whatever other sales they make before they finish the pullout), because they were supposed to be collecting that money from their customers who live in Texas for the entire time they've had a presence there.
Note to Amazon: Please come to Maine. We could use the jobs. I'll happily pay sales tax on purchases made from you.
Re:Enough of this (Score:5, Interesting)
The main issue seems to be that the states are changing the definition of "presence", sometimes seemingly retroactively. It used to be if your headquarters was situated in the state, then people buying from you needed to pay income tax. Then it was if it was shipped from that state. Then if the company had any offices whatsoever, so even if Amazon had some offices serving only internal customers, then they would have to collect tax on everything bought by the state. Now, states like NY and Texas are saying that if any company they are "partners" with are in the state, then the partner company has to collect tax. Amazon hires a company in NY to do some coding, then Amazon has to collect taxes on stuff bought by New Yorkers.
Really, this is all just mail order and things should have been settled and stabalized with Sears back in the days of the wild west. However, states are looking for more money and changing the agreements and telling companies to pray they don't change them any more.
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The crux of this argument is that Texas is demanding taxes which were never collected. Amazon cannot go back in time and collect 6.5% from every item shipped to a Texan over the years, so the state is effectively asking for a handout.
Ultimately this plays into the greater debate about sales tax being a regressive tax, which then plays into an even greater debate over the fact that government is just a collection agency for the obscenely wealthy.
Re: (Score:3, Interesting)
Failure to collect taxes doesn't absolve you from the liability of paying for them. I live in Texas, and I occasionally sell products to Texans. I collect sales tax for those purchases. But even if I didn't, I'd still owe just as much to the state based on the total amount I sold to Texans, pure and simple.
Just because Amazon did the wrong thing doesn't mean Texas is "asking for a handout."
Imagine if your employer didn't withhold federal income tax from your paycheck. Now it's tax time, and you owe all t
Re:Enough of this (Score:4, Insightful)
I collect sales tax for those purchases. But even if I didn't, I'd still owe just as much to the state based on the total amount I sold to Texans, pure and simple.
Just because Amazon did the wrong thing doesn't mean Texas is "asking for a handout."
From what I understand, Texas is asking for $250M in taxes from before Amazon had a presence in the state, during which time they were absolved of being required to collect them. In that case, it's just like any other mail order business where the purchaser is required to report those taxes and pay the taxes himself. So, no. It's not the same thing.
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One state and only one state does get the sales tax. It's determined by where the seller has a nexus and where the buyer is at. If the seller has a nexus in the same state as the buyer, the order is taxed at the local and state sales tax rate.
The gray area here seems to be that it wasn't Amazon itself that has the nexus in Texas, but rather a subsidiary fulfillment company. The "sale" is between the customer in Texas and Washington-based Amazon.com, not with the fulfillment company. Or at least that's wh
Normally (Score:4, Insightful)
(Note: it is true you can soften the blow of a sales tax somewhat by exempting things like food, things that poor people buy; but then it's a hump tax, where the middle ends up paying the highest percentage. That's not equitable either).
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the middle class always gets humped, sans lube.
Re: (Score:3, Funny)
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>> hump tax
Called such because the middle class is getting fucked.
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Good. Sales tax is a regressive tax, meaning poor people pay more than rich people.
Yeah, cause the poor buy SO much more than the rich...
Re:Normally (Score:4, Interesting)
They might. When I buy a £100 pair of trail running shoes, they last until the sole wears through - but cheaper shoes I've had in the past have sometimes only lasted a few weeks. I'm sure this applies to more than just shoes. When you can afford quality products, you don't have to buy stuff so often. Being rich means you can buy stuff more often if you wish to of course, but then again, I'm sure some rich people are now rich because they have saved, then invested wisely.
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When you are living paycheck to paycheck it is often impossible to save up that extra money even when you recognize that in the long term it may cost less. You can however usually manage to scrounge together enough for a cheap item by doing something like not eating lunch for a week or two.
It is the same principle behind outrageous check cashing fees and similar financial charges that affect the poor more than the people who have savings. Sure it may cost you a significant percentage of your income but th
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Oh, I forgot the most obvious example: the one that applies to me.
If I were rich, I could easily afford the deposit on getting a loan to buy my own house (or just buy the house outright if I were really rich of course). But as it is, I've not been saving as wisely as I could, and so it's taking a while to get the deposit. Plus, I just hate the idea of having the responsibility of having a large loan hanging over my head. Anyway, in reality all of this time, I'm bleeding money in rent that I could otherwise
Re: (Score:3)
This is one reason I always buy from Land's End. I've bought 8 shirts from them, and 3 pairs of pants, and several pairs of socks. One of the shirts started to fray and really break down after about 2 months; I didn't know Land's End had a "Guaranteed, period" policy and would replace the shirt because, frankly, it just didn't hold up like every other fucking shirt I got from them.
Three years in now, I have some slightly yellowed socks that are identical to the brand new ones I just bought, albeit much o
Re:Normally (Score:5, Insightful)
Yes actually. the poor spend near 100% of their income on basic goods and necessities and outnumber the wealthy 10 to 1.
A wealthy person only buys so much crap. A hypothetical 10% sales tax takes ~10% of a poor persons income while the same 10% sales tax may take 0.01% of a wealthy persons income.
The only way for sales tax to be close to "flat" is if you charged it on the purchase of financial instruments like stock.
Re:Normally (Score:5, Interesting)
I accept your rejection of the implicit assumptions. Many people make those implicit assumptions. But I have reason behind my perspective.
The accumulation of wealth is supported and enabled by a well run society respecting personal property. The wealthy are those who reap the greatest benefits of society as a whole. Progressive taxes are (or at least can be) fair for this reason.
Regressive taxes place an onerous burden upon those least capable of bearing it. Taken far enough and it recreates the state of slavery where a person no longer works for their own gain, but for the gain of a master.
When you add categories for exception to a flat tax based on necessity, you are creating a system that is in effect progressive in relation to income. It is merely a matter of implementation.
Personally I would prefer a limited exemption flat income tax (including all income, capital gains, etc). Exemptions would be limited to a fixed multiple of household size.
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As a percentage of their incomes? Yes, yes they do.
Re:Normally (Score:4, Insightful)
Amen to that. It amazes me how some people think a flat tax is worse for the "poor". Um, if taxes were higher for the rich they would likely buy a little less. Less goods sold = less jobs provided. It's called trickle-down. And that kind of thinking does hurt the poor as they are the class usually employed in production lines.
No, not really. Rich people don't buy very much stuff, in proportion to their income, as it is. There's a limit to how many things a person wants, or needs, or is prepared to deal with. A rich person might have a nice tv or two, but they won't have a thousand of them; a billionaire could afford a different car for every day of the year, but will likely only drive one on a day to day basis. No one really needs more than one cellphone or PC; some people might have more than one, but it really becomes a hassle to deal with. Even if you could afford to buy a thousand iPhones, you'd only ever carry around one, so why bother?
In short, give wealthy people more money, and they probably will not spend it on goods, because they already have all the goods they want. And trickle-down economics have never, ever worked. (Well, except to benefit the wealthy at the expense of everyone else, but that's not a good thing)
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It's amazing but not really, that most of /. participants have not a clue about economics.
Neither do a lot of economists. Practitioners of the dismal science never seem to come to much agreement about anything.
The only correct way to fund a government is through consumption taxes.
I.E. you want government to be funded by the poor and the middle classes, who not only consume far more than the wealthy do, but who also consume a larger proportion of their overall income, keeping them in their place. The wealthy only consume a small proportion of their income, and you'd allow them to not only enjoy their wealth, but by freeing up the bulk of it from taxation, they can g
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Good. Sales tax is a regressive tax, meaning poor people pay more than rich people. Even if you want to stick it to Amazon, in a very real way, sale tax is passed on to the consumer. The sooner we can get rid of that awful tax and move to a more equitable tax system, the better..
I assume you're speaking as a relative percentage of entire income, because if you mean that in absolute terms, it's a pretty silly statement. I think it's a pretty safe bet that "rich" people purchase a good bit more than "poor" people do, and thus pay significantly more money in sales tax. In the unlikely event that such a statement isn't true, and that rich people aren't buying more than poor people... well maybe that's why the poor people are poor, maybe they should spend less?
I know, I know, rich man k
Re:Normally (Score:4, Interesting)
I know is that I've met many "poor" people in my life who when they get that income tax refund or birthday gift of cash etc, go out and buy a couch or a tv instead of paying their credit card bill.
Like Hell they do - they get an income tax loan in January with a 30% effective interest rate, and buy a new big screen or pair of running shoes long before that refund check arrives!
It's amazing how financially ignorant people can be - my younger self definitely included. There's just no educational system to teach better ways: if you don't learn from family, you're stuck learning the hard way.
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Most people don't understand debt. they don't know what "17% APR" actually means. They don't understand that compound interest works against them if they owe money just as strongly as it works for them if they invest money. It's easier to blame "the man" than learn simple math. Really this stuff is based on like 7th grade math.
I got my first credit card at age 33, solely because I needed to build a credit rating in order to purchase a house. I had a "0" credit score until age 32. Apparently the idea that "I
Re:Normally (Score:4, Insightful)
So, you would suggest that rich people should pay sales tax in relation to their income? So if the poor person buys a pair of shoes and pays $3 sales tax on them, the same pair of shoes should rack up $300 for the rich person? In what world does that seem fair to you? That's massively penalizing success and encouraging failure. how is anybody supposed to succeed if success is penalized?
The whole idea of making more money is that you get to keep more of it, so your expenses are lower relative to what you earn. it sounds to me that you want to arbitrarily raise expenses based on what you earn, which of course defeats the entire purpose of attempting to better one's place in life. Maybe that's the idea comrade?
Re:Normally (Score:4, Insightful)
So, you would suggest that rich people should pay sales tax in relation to their income? So if the poor person buys a pair of shoes and pays $3 sales tax on them, the same pair of shoes should rack up $300 for the rich person?
Hey, way to take it to the logical extreme there! Let's look at this from another angle. Under our current system, the economy has grown by about 20% in the last ten years. And yet, the wages of the lower and middle classes have been virtually unchanged. Guess where all of that wealth is going? Tell me, how is that fair for the middle class, to whom this country owes most of its productivity gains? And you want to make it *worse* by lowering taxes on the rich and raising them for everybody else? That's what these so-called Fair Tax proposals do.
I'll tell you what, when taxes on the rich are increased to a point where the country's increase in wealth is distributed properly to the people responsible, you go right ahead and quit trying to be productive. I'll gladly step in and take the raise.
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A world I can only hope for.
Oh, yes; let us rend our clothes and beat our breasts, mourning for the now-extinct American Multi-Millionaire.
Re:Normally (Score:4, Informative)
The whole idea of making more money is that you get to keep more of it, so your expenses are lower relative to what you earn. it sounds to me that you want to arbitrarily raise expenses based on what you earn, which of course defeats the entire purpose of attempting to better one's place in life. Maybe that's the idea comrade?
Do you seriously believe raising taxes on the wealthy is going to make them say "Well, that didn't work out. I guess I'll try being poor now?" Of course not.
You know why a graduated tax system is used just as much as I do. Because the people who need services can't afford them. They aren't being paid enough by the people you seem to admire.
Pure socialism may not work, but pure capitalism is nothing more than a pyramid scheme.
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There is no such thing as "a raise". There is no such thing as "being a success". There is no success. No matter what you do, you can never get any better. You can never advance. There is nothing better to advance to. How bleak.
You think that success can only be measured in terms of money? That advancement is strictly a matter of one's pay? I don't think that most people would agree with you. We need some money to live reasonably on, and luxuries are nice, I'll grant you. But there's a lot more to life than money.
Additionally, as I keep pointing out, society has already tried that economic system many times, and it keeps failing as it is contrary to human nature (on the large scale). It's called communism.
No, communism is considerably different. All we're talking about is a tax system implemented on a fairly generic regulated capitalist economy.
And in any event, you seem to think that I'm in favor of a seriously progressiv
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You describe the situation of a young adult with little in the way of responsibilities. Once you finish growing up, the reverse happens.
If you are making $30/hr, you will feel less pressure to make money, because your basic needs are already met and you're able to save more money for a rainy day. So you will give yourself leisure time.
If you're making $15/hr, your basic needs might be met, but you'll be more inclined to work extra so you aren't living paycheck-to-paycheck.
Substitute whatever numbers and b
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I pulled myself up by my bootstraps from about as far below the poverty line as you can be and still live in the USA
All it takes is one catastrophic medical problem to put you right back down there, irretrievably. Yes, lower economic status people can tend to make poor economic decisions. But the number 1 primary cause for individual bankruptcy in the US for a number of years has been catastrophic medical bills. Maybe instead of sneering at all those lazy and stupid poor people, you should be a little more thankful that your health and native abilities gave you the necessary tools to allow your hard work to pay off.
Re:Normally (Score:5, Insightful)
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You worked your ass off, AND GOT LUCKY.
You didn't get sick,
This is normal, not luck.
or have to take care of a relative.
This is normal, not luck.
You had no financial misfortune to overcome.
Again, normal.
You were born intelligent enough to take advantage of opportunity when it came.
This is also normal.
These are all normal traits that that vast majority of people have.
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All taxes are regressive. The lie of the left is taxes can be progressive at all. Everyone pays all the taxes. Hiding taxes among the 'rich' doesn't help people realize this, as the taxes just get hidden, and passed down to the little guy in the form of higher prices, lower wages and so on.
But this suits the "progressives" because it creates class warfare upon which to win elections. And when you pit the 'rich' against the 'poor' the people in the middle get screwed the most. If everyone were to realize how
Re:Normally (Score:4, Interesting)
You can see this with Cigarettes. Legal, taxed to death, and we don't have nearly the problem with second hand smoke as we used to.
As opposed to when cigarettes were illegal? Except they weren't. In your theory, the higher the taxes, the lower the smoking, but this is just another form of punishment. Empirically, if your theory were correct, European countries with high taxes on cigarettes would have low smoking rates, and yet they don't.
If everyone were to realize how much of what they buy is "tax" they throw a fit and toss all the bums out of the legislature and executive branches of government.
Ultimately around 20% of the GDP goes to the federal government in taxes. I'm paying around 30% of my income, that means someone else is not paying their fair share.
Hiding taxes among the 'rich' doesn't help people realize this, as the taxes just get hidden, and passed down to the little guy in the form of higher prices, lower wages and so on.
It's a fallacy to think that 100% of a tax gets passed down. If that were true, in 1946, when the top tax rate was 94%, then the government would have gotten around 94% of the money. And yet, it only got 20% of GDP or so. Check it out, these figures are easily available on the web.
Vote on things you don't want society to promote, make it legal and tax those things. Legalize drugs, tax them. Legalize Prostitution, tax it. Legalize whatever you think is a "victimless crime" and tax the activity. You'll end up with far more revenue, far less crime (by definition) and the problems of society become controlled.
This is an interesting idea, but if you think it would close the federal budget deficit, it's probably because you don't understand the magnitude of the problem. Start here [wikipedia.org], look at the numbers until you understand them, figure out how much your proposals would save/generate in income, and then come back to me. In fact I wish everyone who has a method for fixing the budget would do that. There are far too many dumb ideas out there that don't take reality into consideration. In short, the problem with your logic isn't a logic problem at all: it's that you spend too much time thinking and not enough time gathering data.
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All of what you suggest is predicated on the idea that the "rich" can pay taxes, that don't affect anyone else, ever. This is flawed in premise because it is overly simplistic. All taxes are regressive.
When the government set up the progressive "luxury tax" on things like Boats and what not, it just didn't "soak the rich" like the progressives thought. It closed several boat building firms and laid off a bunch of average guys who built them, because the rich stopped buying boats. Tell me, how progressive th
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You missed the point then. Again the point is that taxes are regressive, to society. They are necessary to raise funds for government operations, but ultimately always impact everyone across the board. Yes, some are impacted more than others. The rich avoided taxes on boats by buying
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All taxes are regressive. The lie of the left is taxes can be progressive at all. Everyone pays all the taxes. Hiding taxes among the 'rich' doesn't help people realize this, as the taxes just get hidden, and passed down to the little guy in the form of higher prices, lower wages and so on.
And this is the lie of the rich: conflating "rich" with "businesses." We know what happens when taxes on the rich (not businesses, just the rich) go down: they save more. In President Bush's first term, the highest tax bracket went from 39.6% to 35%. The percentage of income the rich put into savings in the same time from went from 2.2% to 7.6%.
You want my solution to taxes, spending, and so on? It is simple. Vote on things you don't want society to promote, make it legal and tax those things. Legalize drugs, tax them. Legalize Prostitution, tax it. Legalize whatever you think is a "victimless crime" and tax the activity. You'll end up with far more revenue, far less crime (by definition) and the problems of society become controlled.
You can see this with Cigarettes. Legal, taxed to death, and we don't have nearly the problem with second hand smoke as we used to.
Now sin taxes, I fully agree with. I have no problem helping out the poor with more progressive mandatory taxes, but if they want to waste their extra money on en
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My assumption isn't incorrect. Your assumption that taxes stay with the person paying them is incorrect. I didn't say spread evenly. I said it makes all products and services more expensive.
Want to see my point fully? Let say, I want to provide a service, website design. Let us say that I want to earn $20 hour for such a website design service. I can earn a living, pay my bills etc working at $20 hour. Taxes, state, income, fees, licenses etc all add up. In order for my "business" to allow me to "earn" $20/
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Individually, probably not, but how about collectively? How many "rich" people are there? How many "poor"? Depending on the metrics used, there could be something on the order of 50:1 poor/rich. How many pairs of shoes does that 1 rich person have? How many dinners does he eat a night (probably not 50)? How many rolls of toilet paper does he use? Keep on going. If we stick with reasonable items, staples rather than luxuries, then
Taxes (Score:3)
All I know is my state's law (Wisconsin) - basically, with most online sales it is the burden of the purchaser to report the purchases/sales taxes of items bought on the internet at the end of the year with your state income tax filing. However, I believe if you maintain a brick & mortar business in the state then it becomes the burden of the business to file the taxes (probably because they already must pay in their state taxes).
Unfortunately, there is no good solution with state sales taxes. If you put the burden on the purchaser, then the state will have to scrutinize every citizen (which is not practical/possible) - but this problem doesn't go away if you require businesses to collect them. There are thousands of small retailers who would have to file forms with every state they sold in, and the individual states would have to scrutinize every online business for sales (also not practical/possible).
Hmmm... maybe if we did away with a sales tax and made it a disposal tax....
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Technically, Texas has a use tax as well which is identical to the sales tax. Unlike other states, though, we don't have an income tax, and the state constitution makes it practically impossible to impose one. So most Texans don't end up paying the use tax because we have no paperwork to file for income tax, which is how most states collect it.
Texas sales tax is also tricky because the state collects a 6.25% sales tax, and other governmental entities (such as the City of Houston and METRO, the Houston-are
Texas asked for it in the beginning (Score:4, Interesting)
Re:Texas asked for it in the beginning (Score:5, Insightful)
These tax breaks are the great folly of our time. They can bring in a large-looking number of jobs to an area and make a politician look good for a limited amount of time, then the companies bail and often the taxpayers got very little for their money.
It's amazing that everyone thinks that big business is what drives jobs. That's a joke. The real job growth comes with small business. Big businesses will soon just be only the elite people at the top ordering all their stock from the 3rd world sweatshops. They aren't going to save the economy of the U.S. Why aren't we spending our money to support these small businesses that actually care about their communities instead of giving these huge breaks to companies that will leave at the drop of a hat. My guess it all has to do with who have the most lobbyists.
Other States (Score:5, Informative)
http://archive.chicagobreakingnews.com/2010/12/state-to-offer-sales-tax-amnesty-for-online-shoppers.html [chicagobreakingnews.com]
Re:Other States (Score:4, Insightful)
What's the dispute? (Score:2)
The article doesn't say what the nature of the dispute is -- is Texas asking for use-tax owed by all Texas purchasers that were shipped from that warehouse? Tax for all Texas purchasers shipped from any warehouse? Tax for all purchases from that warehouse?
If they are asking for taxes owed by all Texas purchasers, I think Texas has a point -- Amazon has a presence in their state, so probably should be collecting sales tax. Though I'm sure Amazon feels differently. I thought Amazon only put distribution cente
Typical (Score:5, Insightful)
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So what's the penalty? (Score:5, Insightful)
Last I checked, that makes Amazon tax evaders. They broke the law, and are now fugitives from justice. So I assume the state of Washington will be aggressively tracking them down and extraditing them to Texas for trial. Or maybe the state of New York will seize their assets on Wall St to pay the bill. Or maybe the feds will be getting involved and garnishing their profits.
Oh, wait. Sorry. That would be if a real person didn't pay a $269,000 tax bill. This is a corporation not paying a $269,000,000 tax bill, so they might get a slap on the wrist.
The beginning of the end for the US (Score:3)
With millions being added to the US debt in minutes now I wonder how long it will take for foreign countries to stop extending credit. Will it be when the debt to gdp ratio reaches over 100% (it's currently 97%) meaning we have about as much debt as product. US governments at all levels are currently bankrupt and it's companies like Amazon, Google and others that are the only thing that's left of the US, they can basically foreclose and take over the US government unpunished.
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We actually went up to 120% back during WWII.
As to who's fault it is that we're inching back up to those kind of levels, I'll refer you to this graph [wikipedia.org].
Sales Taxes as implemented are anti business. (Score:5, Insightful)
They way that sales taxes are collected are really a pain for any online business.
The sales tax varies not just state by state but even county by county. And for an online order where to you charge from? I work in one county and live in another. I if I buy something online at my office do they charge the sales tax of the place where I order or where it is delivered to?
What about when I use my cell phone and I am on vacation and I buy an app or a song?
Should it use the GPS and decide?
If I buy a gift for my mother in law from Amazon should I pay Florida or Texas sales tax?
Sales tax and online sales just don't work well. And if it is a pain for someone like Amazon which probably could deal with it but a nightmare for any small company trying to do business on the internet.
Helped the consumer. (Score:3)
And States do what they can to attract corporations not merely because of whatever tax revenue they can bring in but all the other things they bring. Corporations draw in an educated labor pool. That means more people spending money locally, paying taxes and generally improving the quality of life. And the fact is, for a lot of companies setting up a corporate office is a big commitment, so usually they're in it for the long haul.
A perfect case study is the city where I live. All the neighboring cities are booming because they keep attracting companies. My city despite being centrally located for a lot of people has struggled for years because of ineptitude and corruption. They proclaim victory every time some second-rate retailer or some small-time industrial company opens up shop. But all they do is keep drawing from the same unskilled labor and keep getting screwed when many of these businesses fold or move out within a few years.
So there's a real incentive to keep Amazon around.
I find it amusing that there are those claiming Amazon hasn't paid it's share when it's us, the consumers, who have benefited from this. No one who's bought anything on Amazon has had to pay sales tax. However, if states force Amazon into paying sales taxes then rest assured we will be the ones paying them, not Amazon. The only expense Amazon will incur is from the extra work involved in handling sales tax. It's not like we're talking about tax dodging here; if that had been the case I'd be totally behind screwing them to the fullest extent of the law.
Amazon's prices have been going up for a few years now and in many cases they aren't much better than retail. Outside of hard-to-find items a sales tax would erase any real advantage they currently enjoy.
I can appreciate the value sales taxes provide. However, States also love to device all kinds of schemes to squeeze a bit more money from individuals and businesses. Back when I had my own business I got to learn about the world of charging sales tax for services. It was completely arbitrary what was assessed sales tax and what wasn't. It was very clear that certain industries were able to successfully lobby for no sales tax.
Let's just kick TX out (Score:3)
TX Gov. Rick Perry wants to succeed anyway. The state he bragged (a typical texas behavior, I know, was born and raised there but I got out) was doing so well.
If Texas succeeds the U.S. will save a lot of money after we close the ~15 military bases there, rescind the federal subsidies going to (partial list to make the point): the oil drilling/wells/pumping, processing facilities, natural gas facilities, major airline hubs, highways and roads!, schools, universities and colleges, and god knows what else.
Corporations are greedy. Amazon should buck up, pay the stupid tax and find another way to play after that.
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Tennessee (Score:3)
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Yes, but the Amazonian lawyers (ooh, what a visual) will make Texas burn at least that much to get the money...
One breast, a bow and and a briefcase sends my brain some very mixed messages.
Segfault.
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Yes, but Amazon will no longer have a physical presence in the state, thus Texas will not be able to collect on any future sales tax. Texas needs to cut some sort of compromise deal with Amazon or they will lose out in the long run, but in lost revenue from jobs and physical infrastructure, as well as potential future sales tax.
See the problem is Amazon did not collect sales tax for Texas from those past sales, thus this money has to come out of their bottom line, instead of literally just taking money fro
Re:They still owe texas money. (Score:5, Insightful)
Re:They still owe texas money. (Score:5, Interesting)
No, if every state stood up to parasites like Amazon, they'd go out of business, leaving the field clear for thousands of small businesses to spring up. That's the long-term win, not kowtowing to corporate bastards.
Re:They still owe texas money. (Score:4, Insightful)
You mean like we in WA have been doing with MS? Right now MS owes our state just about enough money alone to plug our deficit. What we really need is for the federal government to step in and start doing something about the mess that is interstate commerce. States aren't going to be able to negotiate when they're faced with what is typically handled like the prisoners dilemma
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Yes, but Amazon will no longer have a physical presence in the state, thus Texas will not be able to collect on any future sales tax. Texas needs to cut some sort of compromise deal with Amazon or they will lose out in the long run, but in lost revenue from jobs and physical infrastructure, as well as potential future sales tax.
See the problem is Amazon did not collect sales tax for Texas from those past sales, thus this money has to come out of their bottom line, instead of literally just taking money from the state population and giving it to the state government when sales tax is tacked on as normal.
They should put a lien on the property and the physical assets for the full amount of the taxes due. Wake them latte drinkin' Internet types up real quick.
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I don't save 5% or 10% online, I often end up saving 30% or more even after taking shipping and handling into account. Remember, the cost to send it via UPS is offset at least partially by the cost of going to the store and picking it up myself.
Charging sales tax won't make physical businesses any more attractive outside of situations where I want the product right now, all it will do is ensure I buy less things from brick and mortar shops to make up the difference.
If local governments want to save money, t
RTFM (Score:3)
The tax Texas want's is for good sold to people in Texas, not other states.