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Why Amazon Fights State Sales Tax, But Supports It Nationally

timothy posted about a year ago | from the clashing-motives dept.

Government 165

cagraham writes "The Wall Street Journal reported this morning that Amazon will begin charging customers in Connecticut, Massachusetts, and Wisconsin sales tax today, after fighting against it for years. Amazon now charges sales tax in 16 states, affecting roughly 163 million Americans. Yet despite Amazon's continued fight against sales tax on the state-level, they support a Senate bill that would allow all states to tax online retailers. It seems like a contradiction, but it's actually a calculated move to undercut rivals like eBay (who would have a far harder time dealing with sales tax laws), and even an unequal playing field (many states that tax Amazon don't tax other online retailers)."

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Duh (3, Insightful)

Desler (1608317) | about a year ago | (#45306737)

Is anyone actually surprised about this? Of course Amazon did this to hurt it's competition. It's also why they sell books at far below other places. It's not because they care about you, it's because they want to drive out everyone else.

Re:Duh (1)

Desler (1608317) | about a year ago | (#45306745)

*Its* competition, I should have said.

Re:Duh (0)

aaronb1138 (2035478) | about a year ago | (#45307841)

Couldn't possibly be that they want to increase the standard of living for all. Everyone should be like Apple and promote exclusivity and class warfare.

Nobody has every been killed over a Kindle. Apple for example, can't say the same for their products, both domestically in the US and abroad.

Re:Duh (0)

Anonymous Coward | about a year ago | (#45309215)

True, but lots of people have been killed over old Nokia J2ME phones and those are even cheaper than the Kindle.

Re:Duh (5, Insightful)

ShanghaiBill (739463) | about a year ago | (#45308031)

Of course Amazon did this to hurt it's competition.

Of course, but that doesn't make them wrong. Taxes should be fair. If I buy something, the tax on it shouldn't depend on who I bought it from, or where they are located. Capitalism works best when companies compete to deliver value to their customers, rather than competing to avoid taxes.

Re:Duh (3, Insightful)

fl!ptop (902193) | about a year ago | (#45308721)

Taxes should be fair. If I buy something, the tax on it shouldn't depend on who I bought it from, or where they are located.

How do you define "fair?" Is it fair, for example, that I can drive across my state line and buy groceries and clothes and pay no sales tax? Shouldn't my state be allowed to compete by lowering or eliminating their own sales taxes?

Gasoline tax is also lower in my neighboring state, and I buy gas there whenever I can. Most of my driving is in my own state, causing wear-and-tear on the roads that's not being paid for by my gas tax. Is that unfair?

Avoiding taxes is one factor companies consider when deciding to locate somewhere. It's also a tool states can use when competing with each other to lure businesses to locate there. That seems pretty fair to me.

Re:Duh (0)

Anonymous Coward | about a year ago | (#45309487)

Actually, you probably owe use tax to your state in your listed scenarios. Not that anyone pays it, but it's comforting to know you're breaking the law, right?

Re:Duh (0)

Anonymous Coward | about a year ago | (#45309665)

For buying stuff in another state and paying (not paying) taxes there? No, he's doing just fine, there is no law against it.

Re:Duh (2, Informative)

Anonymous Coward | about a year ago | (#45309689)

Check your state laws. In almost every case, if a state charges sales tax then that state *also* has a use tax. The use tax is negated by paying your state's sales tax.

Otherwise, the use tax applies. It typically applies to anything purchased out of state (or that has been purchased but your state's sales tax hasn't been paid, if your state's sales tax would have applied to that purchase) that is put into use in your state.

Buying dinner out of state and consuming it out of state? No use tax due to your home state.
Buying a grill in another state and taking it home to your state? You owe use tax. Typically, you can deduct sales tax paid to another state from your state's use tax bill.

So, yes, essentially everyone is breaking the law. No doubt you are too, unless you live in a state without use tax.

Re:Duh (2)

duke_cheetah2003 (862933) | about a year ago | (#45309717)

Having lived in a "use tax" state... it's pretty much unenforced.

It's next to impossible to enforce even if they tried. I don't think they try. Unless you're a fairly decent sized business importing materials and goods from out of state.

Average American I bet has no idea what a 'use tax' is, and even less declare it on their state taxes.

I ran a small business in that state for several years, and we never paid use tax on anything we bought online for our business. No one noticed, no one cared.

Re:Duh (0)

Anonymous Coward | about a year ago | (#45309863)

Unenforced != legal.

I don't disagree with your points (given that they echo my own), but I will reiterate: everyone who lives in a use tax state is breaking the law in these scenarios that were described.

My overall point is that people should realize they are, by definition, criminals thanks to idiotic laws. It would be nice if we repealed unenforceable and noxious laws like this, because otherwise people are going to become conditioned to break the law when they feel like it (it happened during Prohibition, and it is happening now with marijuana laws).

Back on topic: in my state a few years back they released stats on the number of use tax returns they received. A vanishingly small number. I cross checked with the public records regarding number of employees in the state department of revenue. It was far larger. Heh.

Re:Duh (1)

rhodium_mir (2876919) | about a year ago | (#45309697)

In many states there is. It's called a use tax [wikipedia.org] .

Re:Duh (1)

wvmarle (1070040) | about a year ago | (#45309751)

So... if I want to sell you something and you're located in the US, you say I should pay US sales tax, even though my locality (Hong Kong) doesn't have a sales tax at all?

Doesn't sound exactly fair to me. And then I'm not even contemplating the nightmare of having to charge customers taxes, based on where they are located, and then manage to pay it to the relevant overseas governments.

Re:Duh (1)

dkf (304284) | about a year ago | (#45309823)

So... if I want to sell you something and you're located in the US, you say I should pay US sales tax, even though my locality (Hong Kong) doesn't have a sales tax at all?

Doesn't sound exactly fair to me. And then I'm not even contemplating the nightmare of having to charge customers taxes, based on where they are located, and then manage to pay it to the relevant overseas governments.

What actually tends to happen (based on experience with countries that do have national sales tax systems like VAT) is that as a foreign customer you don't pay the sales tax, but you instead have to pay any local import duties. Now, they might be zero in your country/area, but that's not the exporter's problem.

The other way that technically works is that you have to pay the sales taxes and you're free to take your business elsewhere. That's what happens if you buy the goods/services in person. (Again, you might be allowed to reclaim the taxes on exit from the country, particularly in the case that they were levied on goods that are leaving with you, and again you may well be liable for import duties. I wouldn't expect to be able to reclaim tax on services, as they're not exportable in the same sense.) This has been demonstrated to work without excessive bureaucracy.

What sucks is where you've got thousands of overlapping taxing jurisdictions, each with their own rules as to what is taxable and at what rate. It'd be an absolute nightmare to code up such a mess, and to keep it up to date. Which is why Amazon would be very happy to see a national sales tax system: almost any amount of complexity in the rules there would be less onerous on them than what they're putting up with (and "minimising") now.

Supreme court quote (0, Troll)

girlintraining (1395911) | about a year ago | (#45306757)

I'm reminded of a supreme court quote:

The power to tax is the power to destroy.

Just Hateful (-1)

Anonymous Coward | about a year ago | (#45306777)

Ohh... That feeling ... of getting screwed by the very people that are supposed to represent you...

Now, what are they going to do with their ill gotten gains? Moar monee 4 Edukation? Moar Roads?

I don't need any of that!

Nothing beneficial is going to come from this and I'm stuck with the bill!!!!

Grrrr Connecticut! Blast you Malloy!!!!

Re:Just Hateful (4, Insightful)

Runaway1956 (1322357) | about a year ago | (#45308167)

Ill gotten gains?

Pal, I don't like paying taxes any more than the next guy. But, county, city, and state governments do require money to operate. Your county almost certainly has roads to maintain. Someone has to pay for it. Your schools cost money. Everything costs. So, how are you going to pay for it?

Each state has different formulas for funding things at the local level. Maybe your state doesn't use any sales tax for education, but the next state over uses most of sales tax for education. So, I can't know where YOUR sales taxes went 30 years ago, or today.

But, the fact is, 30 years ago, almost everything sold at retail WAS TAXED. The county and the state both had a sales tax, and they got their cut on just about everything. With today's internet, both are simply cut out of about half (or more) of their revenues.

Do I WANT to pay my county a few cents every time I make an online purchase? Not really. But, I do need my roads. I like having the parks cleaned up and maintained. And, the kids need stuff at school. Horatio has been wanting to do some much-needed work at the Horatio High School's football field. The money has to come from SOMEWHERE.

What I do NOT LIKE, is the fact that local and state governments have become more reliant on federal funds for everything, from school funds, to highway funds, to local infrastructure improvements. Local governments should be independent of Washington's money. Sales tax was a large part of that financial independence.

Re:Just Hateful (0)

Dan667 (564390) | about a year ago | (#45308287)

if you were really worried about that you would be pressuring state and local governments to stop throwing your tax dollars away subsidizing rich companies that don't need it.

For the record (5, Informative)

Anonymous Coward | about a year ago | (#45306787)

Amazon has supported a national sales tax since the late 90s. Their position hasn't changed, just people's false memories.

They don't support having to figure out 10,000 taxing jurisdictions each with their own weird rules. And there is no justification for Amazon to collect sales tax below the state level anyway, unless they are shipping to a state where they have a presence or nexus.

The supreme court has already ruled on this in 1992, and their ruling was quite clear. So either Congress gets off their butts and passes a law, or Amazon can just keep fighting it out in district courts for years.

That does not absolve people from paying use tax, which most don't. But use tax was never meant for consumers, and states have little power to enforce it on anyone except businesses. So a national sales tax makes the most sense in this case, which is why Amazon supports it.

Re:For the record (1)

osu-neko (2604) | about a year ago | (#45306911)

The supreme court has already ruled on this in 1992, and their ruling was quite clear. So either Congress gets off their butts and passes a law, or Amazon can just keep fighting it out in district courts for years.

The Wikipedia article on the case you're referring to [wikipedia.org] indicates there has been some congressional action on the matter, or attempted action at least. I wouldn't count on this congress actually managing to get real legislation done, though...

Re:For the record (4, Insightful)

iamhassi (659463) | about a year ago | (#45306915)

They don't support having to figure out 10,000 taxing jurisdictions each with their own weird rules.

This x9000.

Back in the day I worked with a company that provided a very popular ecommerce shopping cart that online shops could use to easily peddle their goods online. I remember when they rolled out the ability to charge sales tax and OMG the nightmare it created for support. Because remember, it's not just the State sales tax, often individual cities and counties charge a tax, AND on top of that tax different items can be taxed at different rates, like alcohol and certain foods. We had a company that would automatically update the database of taxes for everywhere and we allowed the stores to put in their own rates but it didn't stop them from calling non-stop complaining that some places were too low or too high and they didn't want to figure out the rate themselves and blah blah blah

Re:For the record (1)

colinnwn (677715) | about a year ago | (#45307251)

Not only different tax rates for different products, but different tax rates for the same product depending on how it is prepared or packaged. For example a coke out of a fountain intended for onsite consumption can be taxed differently than a coke in a can meant to be carried out, or coke in a 12 pack meant to be taken home.

Re:For the record (3, Interesting)

margeman2k3 (1933034) | about a year ago | (#45308021)

You think that's bad?
I worked at a cafe in Ontario, and we had so many tax rules that the company writing our POS software couldn't even get it to work properly.

It looked something like this:
Non-food items are charged 13% tax
Some non-food items are charged 5% tax
Most food items are charged 13% tax
Some food items are charged 5% tax
Other food items are tax free
If you spent less than $4 on certain food items, it was tax free
If you were buying "bakery" items (bagels, etc), then they were tax free if you were buying at least 6, but the total had to be under $4, and you couldn't buy a drink with it.

And this was just for a coffee shop.
I can see why Amazon would be willing to charge X% nationally, as long as they don't need to deal with crap like that.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45308415)

Yow! One argument I've made over the years in postings and letters to the editor is that a bricks-and-mortar store has to deal with only *one* set of rules--the rules for where the business is located. I point out the issue becomes several orders of magnitude worse when you have not only to keep that straight for thousands of taxing authorites, but having to do a reliable mapping from an address to a taxing district. I never imagined that the rules for a single taxing authority would be that complicated.

By the way, here is another complicating factor: sales-tax holidays. For the past several years (but not every year), here in Florida we've had a back-to-school tax holiday. The dates vary, and of course the rules for what is tax free vary from year to year.

I love it now that I've got a new metaphor for byzantine complication and that it applies to the sales-tax thing: the requirements for doing the internet sales-tax calculation makes healthcare.gov seem like a walk in the park.

Re:For the record (1)

colinnwn (677715) | about a year ago | (#45308739)

I know it's crazy. My wife is a sales tax accountant (dealing a lot with Canada right now) and when she talks about things like this it just makes me mad. She's no fan of one of the provinces in Canada, and Denver Colorado, because they have especially strange tax rules. I looked it up and in the US I believe there are 40,000 different taxing entities and each one can have hundreds or thousands of rules in law and special considerations in private letter rulings.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45309347)

On the bright side: think of all the jobs these laws have created!

Re:For the record (1)

CastrTroy (595695) | about a year ago | (#45307429)

The problem is, is that they were probably collecting the taxes, to make it appear on the outside like they were doing the right thing, but they probably weren't remitting them to the government. Sure a good ecommerce system can ensure with somewhat decent accuracy that the correct amount is being collected, but it doesn't help you with actually transferring that money to the correct entity. I don't think a system exists that tells you how to remit taxes to the thousands of different tax jurisdictions in the United States.

Re:For the record (1)

PTBarnum (233319) | about a year ago | (#45307703)

You have to collect the correct taxes for every jurisdiction, but you submit them to the states, not to local jurisdictions. The state then distributes the funds according to the data in your filing.

Re:For the record (1)

colinnwn (677715) | about a year ago | (#45308773)

That depends completely on the state. My wife has told me how many do this vs. remit to the jurisdiction and I don't remember the ratio right now. For example in Louisiana you remit it to the parish tax collector, and in many cases you can't make the check out to "x parish tax collector" but to the tax collector's name personally.

Re:For the record (1)

colinnwn (677715) | about a year ago | (#45308841)

There are a couple companies in the US that attempt to do this (determine the correct tax by sales location and nexus then distribute your payment to them from your company's ERP system). They're expensive and still make mistakes though. It requires active participation from the companies contracting them. It isn't a problem you can just hand off to them with a wad of cash and walk away from.

Re:For the record (0)

hawk (1151) | about a year ago | (#45308369)

The solution has been obvious for more than a decade.

Each zipcode gets a tax rate. If it crosses jurisdictional lines, either the jurisdictions resolve the split between themselves, or it stays in trust until a court resolves the split.

This is a *very* small array for an electronic report.

The company writes a single check, with a monthly electronic report breaking it down by zip code.

Re:For the record (4, Insightful)

colinnwn (677715) | about a year ago | (#45308819)

It just doesn't work this way. First tax jurisdictions aren't divided by zipcode as you allude to. You remit taxes to the state, county, city, and special taxing jurisdiction. As I recall there are 40,000 different "jurisdictions" in the US that can collect tax, but hundreds of thousands of different combinations of those overlapping jurisdictions. Some states will distribute the funds for you as long as you submit a report of what amounts should go where, other states the individual jurisdictions collect their own tax. In addition each of these jurisdictions have hundreds or thousands of tax laws or private letter decisions on how their code should be interpreted.

Now if you are saying our tax code should be set up the way you suggest, then I agree. But right now it is not set up in any manner where you can do that.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45309903)

Even if tax jurisdictions fell cleanly along zip code boundaries, you wouldn't end up with a tax rate per zip code but more like 200 tax rates and several dozen exceptions and subjective if-then rules based on things like total purchase amount, carton size, resale intent, edibility, nutrition content, etc.

Re:For the record (2)

Creepy (93888) | about a year ago | (#45308053)

A national sales tax will not happen - it is unconstitutional and a right reserved for states. Collecting sales tax on behalf of the states has been proposed, but some states don't collect sales tax and again, it probably would be struck down as unconstitutional based on state's rights to collect the tax.

And the reason you get between 2000 and 19000+ jurisdictions (depending on who you ask) that change daily is because taxes need to be collected in the location of the buyer if the business doesn't have a presence in the state. That means you need to know state, county, and municipal taxes for every resident of the state. Any attempts to collect the tax in one location has been shot down because the rest of the state thinks it is getting robbed out of deserved taxes (but technically you'd still owe this tax and would be responsible for paying it, just like Sales and Use taxes today).

States have the right to request records of names and amounts of purchases made through catalog and internet sales to their state, and could easily be picking a few out of state vendors and nailing people for tax evasion. I don't think it would take many arrests and either fines or jail time to get massive amounts of people to pay taxes just because they're scared not to.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45308149)

90% of what the federal government does is already unconstitutional so what difference does it make

Re:For the record (1)

Runaway1956 (1322357) | about a year ago | (#45308205)

Income tax is unconstitutional as well. Yet, we have an IRS enforcing the collection of income taxes.

Whether a federal sales tax ever be enacted or not, that doesn't preclude an administrative agency enabling the states and local jurisdictions to collect their taxes. It could be set up in any number of ways.

Fact is, I suspect that sometime soon, online retailers WILL be collecting sales taxes, and that the funds will be distributed according to some really arcane formula that few of us can claim to really understand.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45308309)

How exactly is the income tax unconstitutional? Not only do we have the Supreme Court saying it is constitutional after the passing of the 16th Amendment, we have them saying it is BEFORE the 16th Amendment.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45308327)

And before the cries of "BUT POLLOCK..." start, I am well aware of what Pollock v. Farmers' Loan & Trust Company says. I also know what the ones surrounding it say because there were almost 20 years between it and the 16th amendment.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45308371)

Income tax is unconstitutional

No, no, it isn't. Really it isn't. There is even a constitutional amendment to support it, that in many people's views is redundant, but was passed just to stop whining income tax opponents from pretending the constitution doesn't allow it.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45309331)

It doesn't allow it, you fucking retard. Can you pig fuckers even read the English language?

Re:For the record (1)

hawk (1151) | about a year ago | (#45308413)

>Collecting sales tax on behalf of the states has
>been proposed, but some states don't collect sales
>tax and again, it probably would be struck down as
>unconstitutional based on state's rights to collect
>the tax.

Speaking as a lawyer . . .

you're just plain wrong on this.

The Supreme Court has made it clear that while states cannot force out of state entities to collect sales tax for them, it is for Congress to find a solution. It is not that states *cannot* tax the purchases, but that they cannot tax *out of state* entities. Congress indisputably has the power to handle the issue.

hawk, esq.

Re:For the record (1)

squiggleslash (241428) | about a year ago | (#45308433)

A national sales tax will not happen - it is unconstitutional and a right reserved for state

Actually if the sales tax is strictly limited to being imposed on interstate commerce (which, uh, it is, at least, I don't see anyone proposing it needs to be for anything more than that, it certainly isn't being proposed as an alternative to local taxation) then it's 100% constitution. As in there's even a clause in the constitution specifically authorizing the Federal government with powers in this aea.

Re:For the record (1)

lxs (131946) | about a year ago | (#45309695)

Stop treating your constitution like it is the Bible. Constitutions get amended all the time. When the world changes, laws need to follow.

Re:For the record (0)

Anonymous Coward | about a year ago | (#45308461)

That's assuming that the legislation Amazon is supporting is a National Income Tax (as in a flat rate nationwide), which it isn't at all. They support legislation that would simply grant all states the authority to charge sales tax for online goods. So every state will still be imposing different rates on Amazon (i.e., it's really not about simplify their accounting).

And remitting tax too (1)

Sycraft-fu (314770) | about a year ago | (#45308767)

Another big problem with all the different taxes is that you have to remit them all separately as well. If the states were organized well enough to be able to collect all the taxes for all the various organizations in the state, I guess that isn't horrible only 50 places to pay it to. However let's be realistic you are going to need to end up remitting taxes to individual counties and cities as well and that becomes a complete nightmare. You not only need to know how much tax to collect at each level, you need to know where it goes and then to make those payments and it isn't as though you get to do it just once, or even once per year.

It's just a nightmare on every level.

Haven't used Amazon in over a year (1)

Snotnose (212196) | about a year ago | (#45306819)

There are other places to get stuff from where you don't have to pay the California extortion. B&H, J&R to name 2 off the top of my head. I'd rather my money go to UPS and FED-Ex than the bozos in Sacramento.

Re:Haven't used Amazon in over a year (2)

hawguy (1600213) | about a year ago | (#45307059)

There are other places to get stuff from where you don't have to pay the California extortion. B&H, J&R to name 2 off the top of my head.

I'd rather my money go to UPS and FED-Ex than the bozos in Sacramento.

Of course, you're still required to pay the tax even if the retailer doesn't collect it.

Re:Haven't used Amazon in over a year (-1)

Anonymous Coward | about a year ago | (#45307187)

Maybe if the retailer did collect it I wouldn't buy it at all because I couldn't afford it? You should call your representatives and demand a 100% sales tax, because it's probably going to cost tens or even hundreds of thousands of dollars to punish me for not giving the government a couple of hundred dollars that I earned.

Re:Haven't used Amazon in over a year (2)

hawguy (1600213) | about a year ago | (#45307313)

Maybe if the retailer did collect it I wouldn't buy it at all because I couldn't afford it?

That's pretty much the argument from brick and motar retailers for forcing online retailers to collect sales tax. Otherwise, if you can't afford it at Best Buy, you're more likely to buy from B&H because it's x% cheaper there without the sales tax. And for a big dollar item (the kind that's expensive for retailers to keep in stock because it is so expensive), the savings often far exceeds to cost of shipping.

You should call your representatives and demand a 100% sales tax, because it's probably going to cost tens or even hundreds of thousands of dollars to punish me for not giving the government a couple of hundred dollars that I earned.

As a private citizen (as opposed to a business) there's probably a very slim chance of non-payment of sales/use tax being discovered, even during an audit, Unless you're making any large deductions of items that you should have paid tax on. I have significant self-employment income and deduct everything legally possible, which includes significant out of state purchases, so I do track and pay my use-tax accordingly. The savings from the business deduction is worth more than the savings from not paying the use tax.

California has a simple use-tax table that seems would get you off the hook for use tax liability by paying the tax in the table [ca.gov] for all purchases less than $1000. For larger purchases you should still itemize.

Re:Haven't used Amazon in over a year (1)

CohibaVancouver (864662) | about a year ago | (#45307337)

because it's probably going to cost tens or even hundreds of thousands of dollars to punish me for not giving the government a couple of hundred dollars that I earned.

Sure, but that's the case with all non-violent crimes. Some guy steals something and you spend $250K to lock him up for five years, not to mention the cost of prosecuting him. That's just how it is.

Re:Haven't used Amazon in over a year (0)

Anonymous Coward | about a year ago | (#45307289)

Ahem, it's *Bezos*, not bozos.

Re:Haven't used Amazon in over a year (0)

Anonymous Coward | about a year ago | (#45308545)

There are other places to get stuff from where you don't have to pay the California extortion. B&H, J&R to name 2 off the top of my head. I'd rather my money go to UPS and FED-Ex than the bozos in Sacramento.

Depends on what you are buying, of course. But in addition to the reliable and timed shipping, Amazon does have better prices

Staples sent out a $20 (or $25) coupon offer just a few days ago, on toner and related. Well, it turns out that even with this discount at Staples, Amazon was cheaper at normal prices...

When it'll hurt (0)

smitty_one_each (243267) | about a year ago | (#45306883)

. . .is after Bezos completes his government takeover, and, a la ObamaCare, starts taxing you for NOT shopping Amazon.

Kickbacks (0)

Anonymous Coward | about a year ago | (#45306923)

Amazon fights state sales tax only until it can setup a sweetheart deal and get a kickback.
http://yro.slashdot.org/story/12/05/21/0247237/amazon-poised-to-get-cut-of-ca-sales-taxes

It supports a national tax because it is an even playing field, everyone would have to implement it. On the state side, most everything is patchwork and only "big" companies have to implement it.

Companies often don't care much at policies as long as they are even for everyone. Look at the previous big box minimum wage law in Washington D.C. Very few companies would be against it if all companies had to follow it, but the law basically said, if you are Walmart, you have to pay ~50% more to your minimum wage employees.

New Hampshire (2, Informative)

J'raxis (248192) | about a year ago | (#45306929)

Yet another reason [freestateproject.org] to live in New Hampshire: No sales tax.

In praise of New Hampshire (4, Informative)

Okian Warrior (537106) | about a year ago | (#45307141)

Yet another reason [freestateproject.org] to live in New Hampshire: No sales tax.

In further praise of New Hampshire note that we also don't have an income tax and, unlike California, we're not bankrupt. Also, the unemployment rate [unemployme...ension.org] is pretty low - currently 5%.

(We have high property taxes, but one of the lowest overall tax burdens [modernsurvivalblog.com] , so having high property taxes isn't as important as you might think.)

Re:In praise of New Hampshire (1)

dkleinsc (563838) | about a year ago | (#45308917)

Also very relevant to this is the direct democracy in much of the state at the local level, and one of the lowest constituent-to-representative ratios in the world in the state government. That makes it one of the most responsive governments you'll find anywhere, where you can in fact convince the powers that be to change policy if you're right.

Other interesting fact: New Hampshire has the longest-serving Secretary of State in the country, who took office in 1976 and has stayed there ever since. The reason? He's demonstrably good at his job, and in the NH government that counts more than party affiliation.

1% (1)

xvent (2615755) | about a year ago | (#45306961)

Doesn't change the fact that sales tax is regressive. Once again the 1% fucks the everyman. When's it gonna be our time to violently ass rape Mr. Monopoly?

Re:1% (1)

hawguy (1600213) | about a year ago | (#45307091)

Doesn't change the fact that sales tax is regressive. Once again the 1% fucks the everyman. When's it gonna be our time to violently ass rape Mr. Monopoly?

Well, it's not entirely regressive. A low income person will spend a higher portion of his income on food and housing than a higher income person -- things that are generally exempt from state tax. The higher income person will be eating out more, buying more "toys", buying an expensive car, etc and generally making more purchases that are not exempt from tax.

Re:1% (1)

CastrTroy (595695) | about a year ago | (#45307469)

This is something that a lot of people forget. The amount of money you spend on sales tax is often largely optional. Most necessities like groceries don't have sales tax in most areas. I actually find that sales taxes affect me very little, even though my sales tax rate is 13% (Go Canada), as I tend not to actually buy that much stuff.

Re:1% (2)

pepty (1976012) | about a year ago | (#45307609)

A low income person will spend a higher portion of his income on food and housing than a higher income person -- things that are generally exempt from state tax. The higher income person will be eating out more, buying more "toys", buying an expensive car, etc and generally making more purchases that are not exempt from tax.

In the worst states the poor pay 7% of their income in sales/excise taxes vs 4.6% for middle incomes and 0.9% for the wealthiest. from ITEP:

States’ consumption tax structures are highly regressive with an average 7 percent rate for the poor, a 4.6 percent rate for middle incomes, and a 0.9 percent rate for the wealthiest taxpayers. Because food is one of the largest expenses for a low-income family, taxing food is a particularly regressive tax policy; five of the ten most regressive states tax food at the state or local level. Excise taxes on things like gasoline, cigarettes or beer take about 1.6 percent of the income of the poorest families, 0.8 percent from middle income families and 0.1 percent of income from the most well-off.

http://www.itep.org/pdf/whopayses.pdf [itep.org]

Re:1% (1)

deego (587575) | about a year ago | (#45308881)

>> In the worst states the poor pay 7% of their income in sales/excise taxes vs 4.6% for middle incomes and 0.9% for the wealthiest.

Exactly. All complex regulation is made in the name of "helping the poor" but ends up achieving precisely the opposite.

Good insight (0)

Okian Warrior (537106) | about a year ago | (#45307801)

Good insight, thanks!

Re:1% (0)

Gothmolly (148874) | about a year ago | (#45307143)

And why is a regressive tax bad? People love to complain about regressive taxes, but the argument why they're bad always falls back to "because its bad!". I find that opponents of regressive taxes always prefer progressive taxes, as if that's somehow better. Why?

Re:1% (2)

hawguy (1600213) | about a year ago | (#45307519)

And why is a regressive tax bad? People love to complain about regressive taxes, but the argument why they're bad always falls back to "because its bad!". I find that opponents of regressive taxes always prefer progressive taxes, as if that's somehow better. Why?

Because it puts an excessive burden on the poor, who are least able to afford it. The assumption is that the rich got rich from the work of the poor. Which is probably not so true today as it was when we had a more industrial economy.

Now the rich get rich in increasingly complex financial schemes to extract more and more money from the underprivileged. I don't think it's sustainable in the long term - the 1% has an enormous portion of the wealth in this country, and the class of poor is expanding as the middle class contracts. As more and more of the poor are unable to support themselves, someone's got to pay for them, and the rich carefully protect their riches to make sure it's not them. So who is left to pay taxes when the poor are too poor to pay taxes, the middle class is virtually non-existent, and the wealthy have made sure that they pay very little?

The problem in the USA isn't that there are too many poor people, it's that there are too few wealthy people - locking up the wealth in a tiny class of super rich does not make for a healthy economy.

So the solution is... (1)

Okian Warrior (537106) | about a year ago | (#45307771)

Because it puts an excessive burden on the poor, who are least able to afford it.

So which is better: adjusting the tax rate, or subsidizing the poor?

Adjusting the tax rate is communism: it relies on the perfect wisdom and incorruptibility of the ruling class to set the right rates. It's subject to personal bias, extrapolation from incomplete knowledge, and outright malfeasance.

It's also an indirect solution, which leads many people (myself included) to suspect ulterior motives. If your purpose is to help the poor, then why adjust the tax rate? A better solution is to identify and subsidize the poor through grants: food coupons, rent assistance, and so on.

The targeted solution is straightforward, and lends itself to measurable goals with oversight and efficiency. For example, legislators can define a measure for poverty and the amount of assistance warranted. The effects can be measured from case studies and adjusted as needed. Specific requirements (food, medicine, particular circumstances) can be directly addressed with specific remedies.

Changing the tax rate allows no such insight or specificity. You might infer general trends from population studies, but it's not as efficient or immediate or specific as a targeted approach.

Identify your goals and implement a direct solution which can be measured. It's the best way.

Flat tax is better for the poor.

Re:So the solution is... (1)

colinnwn (677715) | about a year ago | (#45308869)

If I followed the thread right, parent posts didn't reference flat tax. We currently have a progressive taxation scheme with so many loopholes and deductions that in actuality it is regressive. So if the choice is to not change the status quo, or to make our current tax law less regressive, I'll pick the latter.

But if the option were to tear up the entire system and institute a flat tax with almost no deductions (except maybe one standard deduction per person) and then provide direct subsidies to the poor, then I agree that is most preferable and arguably the most efficient.

Re:So the solution is... (1)

Zynder (2773551) | about a year ago | (#45309055)

Adjusting the tax rate is communism

WHAT?

Let me get this out of the way in case you think I'm trolling you- I also would prefer a flat tax. I also believe we should help the poor through subsides as you mentioned. Now that's out of the way...
WHAT? Adjusting taxes is communism? And you throw that out there like you want to point out communism is bad. You then follow that up saying we should provide Food Stamps & Section 8 housing. ----- THAT is communism! (socialism actually but most equate the 2). I also don't disagree with it at all. I have had to make use of both of those programs a couple times when I was younger and am thankful they were there. Anti-socialism folks tend to want to end those programs and stop the handouts (unless they come from a church). I just wanna say I think you are confused about your platform and you might wanna double check it. You sound an awful lot like a liberal and I'm pretty sure that is not your normal stance on here. Hey if you did change sides though, Welcome to the Club!

Heh. (1)

Okian Warrior (537106) | about a year ago | (#45309231)

I chose the term "communism" on purpose because that's how the MSM sways groupthink - by linking things to hated concepts so that people will reject an idea out of habit without thinking. I'm experimenting with message delivery. Like you say, people equate communism with socialism, and I was trying for a knee-jerk reaction. (Your post wasn't one, BTW.)

I'm actually *for* helping the poor, and to a greater extent than we currently do. More than mainstream democrats, I think. I'm a big fan of doing it more effectively, though.

I'm not on the side of conservatives or liberals, mostly I'm on the side of insight. If this seems anti-liberal, that's only because they are in power ATM and government is a hive of incompetence. I was against the previous conservative government as well.

To sway public opinion, we should learn from the techniques that others use. That's my current focus.

(P.S. - Nice likeable reply. Kudos.)

Re:Heh. (1)

Zynder (2773551) | about a year ago | (#45309385)

Bravo! You totally got me :D
I like the cut o yer jib matey! It's political piracy!

Re:So the solution is... (1)

andymadigan (792996) | about a year ago | (#45309587)

Adjusting the tax rate is communism: it relies on the perfect wisdom and incorruptibility of the ruling class to set the right rates.

legislators can define a measure for poverty and the amount of assistance warranted.

Sorry, how is having the ruling class define poverty any better than having them set tax rates? For that matter, since you mention food coupons and rent assistance, you're having the ruling class perform budgeting for the poor by forcibly allocating funds, while the rest of us get to decide what to spend our money on.

Further, while you might be able to pick some specific measure for any given program (housing benefit can measure the number of people with housing, food benefit can measure the number of people who are suffering from lack of food) your measurements are unlikely to calculate overall level of suffering. Perhaps you build housing for the poor and provide it at low rent with income limitations, thus reducing homelessness. However, other housing in the area increases in rent because the low end of the market is now monopolized by income-limited housing, and so the poor can now only afford to live in public housing. In addition, the schools in the area where you build happen to have worse outcomes than the areas they were forced out of. You've provided better shelter for 5% of the poor, while damaging the future of 15% of their children. The first statistic gets printed in the newspaper, the second is lucky to make it to a scientific journal (since no study will ever be funded by the government).

The best way to help the poor is to give them cash and let economics take its course. Will you have some people that spend it on things society doesn't approve of? Sure, but overall you'll help more people and avoid market distortion.

Re:1% (0)

dkleinsc (563838) | about a year ago | (#45309009)

The assumption is that the rich got rich from the work of the poor. Which is probably not so true today as it was when we had a more industrial economy.

It's just as true today as it was back in the day. There are 2 reasons why it's still true:
- The poor are still being horrifically exploited for industrial labor, but in China, Nicaragua, Columbia, Bangladesh, and other dirt-poor countries rather than in the US. People are being killed and maimed and given horrible diseases so your plastic doohickeys from Walmart are nice and cheap. It used to be those people were living not too far from you, now they're halfway around the world, so it's easier to pretend that they don't exist.
- Without the (relatively) poor in the US and Europe spending more money on consumer purchases than they're earning in wages, the entire system of Wall Street collapses. That difference between consumer purchases and wages is most of corporate earnings, which drives the stock and bond prices, which is the rich's primary source of income.

Another way of looking at it:
1. An average person produces, at most, $50 worth of a product per hour. A really smart and hardworking person might make double that, or $100 per hour.
2. There are 5840 hours per year where a person could reasonably be awake. To be generous, I'll round it up to 6000. Such a person would be ridiculously diligent, doing nothing but working any moment they were awake and pushing themselves beyond their physiological limits.
3. That means that any annual gross salary higher than $600,000 has an earnings source other than the stuff somebody produced.
4. Ergo, if you're earning more than $600K a year, you're a thief of some kind or another.
The numbers might not be exactly right, but the point remains: There is some point at which what you make is higher than what you actually earned.

Re: 1% (0)

Anonymous Coward | about a year ago | (#45309431)

Uh, no. Just no.

One person can be responsible for the production of many other people like CEO, president, engineers, even sales and marketing. So they rightfully get a cut which even a small percent from thousands will be more than your magical $100 per hour. If somebody does marketing for you then they deserve to be paid right? So if they do marketing for a thousand companies then they can get a thousand times that amount which should still be reasonably to a sane person. The ones producing the product are paying for the knowledge and experience to make the product sale which is required for it to be worth any thing. It is only worth what you can get out of it.

Also the $100 is erroneous because if somebody famous (ex president, actor, musician, etc) and can get 10000 people to pay $20 to listen to them talk for 15 minutes then by definition they are worth $800000 per hour. And there are plenty of rich people who have paid more for private shows especially to musicians. There really is not an upper limit of what one can be worth per hour, just a limit on what others can afford to pay.

Can't understand how they are still in business (0)

Anonymous Coward | about a year ago | (#45306979)

I never bought anything from Amazon, simply because they want to charge me the additional 27% VAT of my own country, while on the Internet they should charge none and I'd pay it at the customs when it arrives. If I paid them, would they return the tax money to our government later? I don't think so. Also, if the sellers location is in the EU (where I also live), the tax rate should be decided by the sellers country, not mine, as far as I know.

Re:Can't understand how they are still in business (1)

harlows_monkeys (106428) | about a year ago | (#45308989)

I never bought anything from Amazon, simply because they want to charge me the additional 27% VAT of my own country, while on the Internet they should charge none and I'd pay it at the customs when it arrives. If I paid them, would they return the tax money to our government later? I don't think so.

Yes, they would turn the tax money over to your government.

Can we have a recall election (0)

TwineLogic (1679802) | about a year ago | (#45306985)

Who elected Jeff Bezos to the position "King of Each State's Tax Laws," anyway?

collects, not charges (1, Interesting)

gerardrj (207690) | about a year ago | (#45307023)

Merchants collect sales taxes, the government charges the taxes.

And the tax is really on the buyer in most states; that way the tax isn't a cost of doing business.

Yay, corporations terraforming our legal system! (1, Funny)

He Who Has No Name (768306) | about a year ago | (#45307057)

A few more decades like this, and you won't be able to tell this nation ever had flesh-and-blood inhabitants just from looking at our statutes and caselaw!

Re:Yay, corporations terraforming our legal system (1)

Phil Urich (841393) | about a year ago | (#45307111)

Heh, that's actually a pretty good metaphor for it, "corporations terraforming or legal system", I like it. I mean, I hate that it's happening, but that's a great way of putting it.

This is Ridiculous (5, Insightful)

Anonymous Coward | about a year ago | (#45307489)

Amazon fights local sales tax because they don't like the notion that any municipality with 3 pigs and a mayor can impose their own laws on Amazon despite Amazon having no physical presence there. If you were running a website, would you want to care about every law that some nut job five states over dreams up?

Re:This is Ridiculous (1)

lennier1 (264730) | about a year ago | (#45308275)

That's basically the problem in a nutshell.

Re:This is Ridiculous (0)

Anonymous Coward | about a year ago | (#45308529)

You're confusing state and local sales tax. State sales tax applies to any purchases made in the entire state, whereas local sales tax is actually added on top of that. State sales tax (which is the one we're talking about) is set by the state legislature.

Re:This is Ridiculous (1)

Anonymous Coward | about a year ago | (#45309427)

Right, how do you explain Amazon charging me 8% Sales Tax because they're in San Bernardino while my local sales tax is 7%? Do I get that 1% back?

Re:This is Ridiculous (0)

Anonymous Coward | about a year ago | (#45308609)

Not anymore. That was the old Amazon when they used to fight it but now they are promoting exactly that. They actually want you to be subject to local sales tax in any one of the 9600 tax jurisdictions in the US. The piece of legislation Amazon is promoting is called the Marketplace Fairness Act.

They realized rather than fight it they can provide a service for businesses by providing sales tax collection services and make money of interest before remittance. They call it Amazon's billion dollar pay day if it passes.

Re:This is Ridiculous (0)

Anonymous Coward | about a year ago | (#45309097)

Great opportunity for a B2B tech startup! Mr. Merchant, we'll figure out the tax for you and take care of the paperwork in return for a surcharge of 0.5 percent.

Re:This is Ridiculous (1)

dkf (304284) | about a year ago | (#45309881)

Great opportunity for a B2B tech startup! Mr. Merchant, we'll figure out the tax for you and take care of the paperwork in return for a surcharge of 0.5 percent.

They already exist. They're expensive, very expensive.

The problem isn't feeding the details into a spreadsheet and getting a value out, the problem is partially maintaining that spreadsheet (well, really a bit more complex than that) and partially that tax collection laws are very divergent in the details.

Why is sales tax based on the buyer's location? (1)

Anonymous Coward | about a year ago | (#45307533)

Shouldn't sales tax be based on the seller's location, not the buyer's? That would certainly simplify the collection issue, since as a seller you would only have to comply with one set of laws.

When I travel to another state and buy something there, I pay sales tax to their state government, not to mine. Why is it different online?

Re:Why is sales tax based on the buyer's location? (1)

psycho12345 (1134609) | about a year ago | (#45307975)

In that case, Amazon simply declares itself to be "in" a state with 0% sales taxes and everyone avoids sales tax, thus reducing every state sales taxes to basically 0%?

Re:Why is sales tax based on the buyer's location? (0)

Anonymous Coward | about a year ago | (#45308211)

Sounds good to me!

Re:Why is sales tax based on the buyer's location? (0)

Anonymous Coward | about a year ago | (#45308479)

It's not. But when Amazon establishes distribution centers in a state, they can then start taxing purchases made by residents. Of course it also brings jobs, so the state and Amazon usually come to an acceptable middle ground. Amazon has to keep expanding into every state to make sure it's shipping times are always decreasing.

Re:Why is sales tax based on the buyer's location? (0)

Anonymous Coward | about a year ago | (#45308697)

I've made this argument many times. Let's look at some cases.

Suppose I live in a state with a low sales tax and travel to one with a higher rate. I pay with a credit card, just as I would if I were at home making a payment to an online reseller. Do I get charged my home-state tax rate? NO. Does the tax the seller collects at least get remitted to my own state? STILL NO. Why does nexus suddenly follow me around? Well, maybe that's the argument: nexus is determined by where I am.

OK, then. Let's assume I'm still travelling and this time make an online purchase for a music download from an outfit in a third state. Funny, this time nexus DOESN'T follow me: they tax me according to where I live. What about if I'm staying in that second state for a few weeks and this time the third-state purchase is for a physical product delivered to where I am staying? From what I understand, nexus is still back in my home state.

This stuff is far from clear-cut.

Re:Why is sales tax based on the buyer's location? (1)

harlows_monkeys (106428) | about a year ago | (#45309017)

Suppose I live in a state with a low sales tax and travel to one with a higher rate. I pay with a credit card, just as I would if I were at home making a payment to an online reseller. Do I get charged my home-state tax rate? NO.

It depends on the states. If you are a resident of Alaska, Colorado, Delaware, Montana, New Hampshire, Oregon, American Samoa, Alberta, the Northwest Territories, Nunavut, or the Yukon Territory and you are visiting Washington, you are not charged sales tax on tangible personal property, digital goods, and digital codes purchased in Washington if they are for use outside Washington. You show the merchant picture ID that shows your address, and they ring up the sale without sales tax.

Re:Why is sales tax based on the buyer's location? (1)

colinnwn (677715) | about a year ago | (#45308915)

It is based on whether the seller has nexus in the buyer's location. If it has nexus it is the seller's responsibility to collect sales tax and remit it, if it doesn't then it is the buyer's responsibility to remit use tax to their taxing jurisdictions. The problem Amazon is having is jurisdictions trying to expand the concept of nexus.

One thing states have been doing is saying if someone in for example North Dakota posts a link to a product on their blog, that constitutes nexus in North Dakota for Amazon even if they have no other operations there. I don't agree with that one.

The other problem they are having is Amazon does not own their distribution centers. They set up a separate company to own and operate these locations that their parent contracts with. They want to use this corporate structure to avoid nexus in places like Texas and other states. This I think is a sketchy dodge, but on the other hand it is a slippery slope to say it is nexus when in fact they are separate companies.

Should have no sales tax, anywhere (0)

Anonymous Coward | about a year ago | (#45308111)

Problem solved.

Re:Should have no sales tax, anywhere (1)

duke_cheetah2003 (862933) | about a year ago | (#45309737)

Got that backwards pal. There should be no INCOME tax anywhere and federal sales tax everywhere, on everything. Income taxes are so grossly unfair.

costly legal and technical burden (2)

sometwo (53041) | about a year ago | (#45308797)

Have any of you attempted to build a professional shopping cart and tried to get accurate sales tax working for states like California, Texas, and New York?

It's amazing how costly it can be because there's no easy way to map zip codes or any other easily looked up value to a tax rate. Zip codes can cross county lines and if a mall is built on a county line, there could be different sales tax rates within the same building. And yet, the states are no help in helping online stores to easily comply with the varying sales tax rates, even though they stand to make more money if people can more easily comply.

Even Paypal, Amazon Payments, Google, and other payment providers will not calculate sales tax for you, likely because it's so easy to get it wrong- The liability of miscalculating sales tax must be huge- Amazon has the money to fight the state tax offices but not a mom and pop online store.

There are several companies that exist solely to help shopping cart builders comply with the sales tax burdens of the different states, but the fees for using paid APIs can be high. One of these companies has map illustrating the problem [avalara.com] .

Re:costly legal and technical burden (1)

nnull (1148259) | about a year ago | (#45309457)

And that website still gets the tax rates wrong. It lists my area with 8% tax when it's 7.75%.

As a longtime Amazon customer (0)

Anonymous Coward | about a year ago | (#45308829)

I probably give them over $1K in personal business every year. But I fully support making them collect sales tax, which here in Mass. is 6.25 percent. Why? Because I want Barnes and Noble, Best Buy, Radio Shack, and other vendors (especially chains) to stay in business. We saw what happened to Amazon's music CD prices after they successfully drove their bricks and mortar competitors out of business. More importantly, I don't want a local economy where everyone does most of their business online, except for grocery shopping, restaurants/entertainment, dry cleaning and personal grooming. That's boring and would turn even more urban areas into ghost towns (the ones that have survived Wal-Mart).

frost pisT (-1)

Anonymous Coward | about a year ago | (#45308883)

guys 4re usually

Makes sense (1)

duke_cheetah2003 (862933) | about a year ago | (#45309725)

(many states that tax Amazon don't tax other online retailers).

This seems quite unfair. Should definitely be fixed. I call BS on a state that taxes Amazon ONLY and leaves everyone else alone. That's plainly unfair, surprised they can get away with that.

Didn't think you could pass laws to tax specific business entities. Learn something new every day!

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