Desperate Amazon tries to buyoff California

[spideygirl]

<p>BunsenBurner

Spidey, sorry, I do not agree with your statements. Amazon used to be an innovator. As in the past tense.

</p>

<p>We are not disagreeing on that, but you missed my point. Amazon was innovative in designing a new business model, and now the game is being changed. They followed the rules, became profitable, and now the rules after the fact are being adjusted. This is what ails American business today. When people start a business they typically bet everything they own. Why would you do that if you cannot get a handle on what the rules will be right around the corner? In purely practical terms, how can a business plan and succeed when the rug can be pulled out from underneath it at any time (meaning game-changing government interference through taxes and regulations, not typical threats to business success such as competition)? This is an awful environment for business, and it is probably the biggest reason why we can’t seem to raise our economic head out of this slump.</p>

<p>Businesses are born and expand (thereby increasing our tax coffers and creating jobs) when taking a risk seems like a good idea. When uncertainty reigns, business sits on the sidelines. When entrepreneurs see something like this happen to a company like Amazon, they do a lot less of what it is that they do best.</p>

[TatinG]

<p>With a sales tax nearly 10%, that’s a savings of 10 dollars on a 100 dollar textbook purchased through Amazon. It adds up.</p>

[spideygirl]

<p>Kluge, I really cannot move to new material when theft is really the issue at hand. The whole mindset of big government being this given, with private enterprise and individuals obligated to keep feeding it, is absurd. </p>

<p>

Letting Amazon sell goods at what amounts to a 6 -10% discount compared to other retailers is “helping Amazon.”

It certainly is not “helping Amazon” when Amazon entered into the marketplace and made business plans with a different set of rules. Internet and B and M retailers do not have the same strengths and weaknesses. The game is not identical, but of course I know you believe that Big Government is great at leveling all playing fields. This is probably the fundamental difference between us.</p>

<p>The bigger the government, the smaller the citizen. California does not need more taxes, it needs to cut spending. The last thing California needs is to become less of a business-friendly environment.</p>

[spideygirl]

<p>notrichenough

Throw in the fact that there are something like 70,000 sales tax jurisdictions in the U.S., all with different rules about what is taxable, how much the tax is, when something is taxable, how to register to collect the tax, how to remit the tax, who to remit it to, what the audit process/appeal process is, etc, and you have an unreasonable burden on a business. A company the size of Amazon can afford to have an army of people to deal with this if they have to; for a small business trying to sell on the internet, it would be impossible. I imagine there are software services to calculate the tax these days, but that is only one small piece of the problem.

</p>

<p>And this is why Amazon is forced to put all of those affiliates out of business. It just destroys the business model.</p>

[turbo93]

<p>

With a sales tax nearly 10%, that’s a savings of 10 dollars on a 100 dollar textbook purchased through Amazon. It adds up.

</p>

<p>Not when price differences are 30% or more… </p>

<p>Amazon and most mail order places win out because local merchants simply stick to MSRP and hope for the best (in things like electronics or cameras). Buy a DSLR locally vs from B&H and the like and see what kind of difference we’re talking about.</p>

<p>They also win out in sheer convenience. When I accidentally wiped out one of Mrs. Turbo’s crystal goblets getting a replacement took 20 minutes. No local store could possibly match this. Or, for the obscure drawing Sharpies DD1’s Architecture class requires that have to be made from the ink of purple squids or some such. </p>

<p>Local merchants go for high volume and the heck with what people want. DD1 swears by Staedtler drawing pencils - and none of the local art supplies stores carry them (they used to). So, what’s an aspiring artist to do? </p>

<p>There are entire sectors of the economy that are too specialized to buy local. Other sectors where the mail order places have significant cost savings. And the occasional item where it’s a toss-up. </p>

<p>In most of these cases sales tax is hardly the issue.</p>

[BunsenBurner]

<p>If folks complain that the sales tax is going to kill them, maybe it is time to reevaluate spending habits and cut back on the Amazon addiction? What do people buy on Amazon that they cannot live without? Food, medicine, shelter? Those are generally exempt from sales tax.</p>

<p>“Quote:
With a sales tax nearly 10%, that’s a savings of 10 dollars on a 100 dollar textbook purchased through Amazon. It adds up.”</p>

<p>Savings? Aren’t we supposed to report this on our tax return? ;)</p>

[tom1944]

<p>notrichenough- you wrote A company based in state A with their servers in state B, customer service reps in state C, and a warehouse in state D sells to a customer who lives in state E but placed the order in state F and had it delivered to state G. Who gets the tax?</p>

<p>The answer is easy- no tax is due. You have not shown that company A has nexus in either State E, F or State G. They have nexus in A,B,most likely C and D. If they deliver the goods into A,B, D and most likely C they should charge the tax. If the customer service reps are their employees they have to charge the tax.</p>

[notrichenough]

<p>

The answer is easy- no tax is due. You have not shown that company A has nexus in either State E, F or State G.

Yes, this is true now.</p>

<p>The states are trying their hardest to create nexus where none existed before - making affiliates cause nexus, for example, or arbitrarily deciding some level of sales from within a given state cause nexus (e.g., “economic” nexus).</p>

<p>Your proposed this:</p>

<p>

That is why I would like to see a low rate say 2% but on every transaction -nothing exempt.

Now you’ve got the problem.</p>

<p>If you could get buy-in into SST (Streamlined Sales Tax) from every state with a sales tax, and make it a Federal law… yeah, good luck getting that to happen.</p>

[BCEagle91]

<br>

<p>MA’s income tax form has a line to report Use tax, and it provides a
safe harbor - rather than track all your OOS purchases, you just pay
a small amount based on your income, and this safe-guards you from
additional penalties in case you are audited. For most people it is
less than $50/year. If you are cheating on your taxes by not paying
your use tax, why should the onus be an a business that has no
presence in your state to enforce this?</p>

<br>

<p>That’s pretty interesting. So you could go to Nashua, NH or Salem, NH
to buy a MacBook Pro for $2,000 and avoid the $120 in sales taxes and
then pay $50 for the safe harbor use tax?</p>

[tom1944]

<p>notrich- economic nexus is a stretch. I do not think it holds water. Affiliates is another matter and so far I am not sure where I fall. Following Scripto there may be a case to be made. Additionally I would need to see the relationship between the site and the affiliates what is the nature of the relationship, what does each of them get and give the other. That said Amazon is an entirely different story they want to be exempt and still have an actual physical presence.</p>

[turbo93]

<p>Yet in my own state Amazon is still tax free (or they’re not charging it) and they operate 2 or 3 warehouses…</p>

<p>But, as I said, the price differential is not small enough to make one choose local vs mail order. For most things, mail order is significantly cheaper depending on items.</p>

<p>In essence, and this is Turbo’s view, nothing substantiated by reality :-), brick and mortar retailers pay for the ‘privilege’ of having many stores, yet rarely carrying what people want at decent prices.</p>

<p>Classic examples can be found in every corner. I was looking for a micro USB headphone set for DD2’s new phone (the $80 savings on the Freestyle forgotten since we returned two different phones with horrible problems). Nobody carries microUSB headphones these days. If they do, and they don’t, $25 or so. Bleep that. Mail order is $10. A no brainer.</p>

<p>Then, you get into stores that have both a bricks and mortar and online presence. Rarely will you find the good value items available in stores. Check out electronic accessories at Walmart vs Walmart.com. All the expensive stuff at the stores, all the good values online. And I’m supposed to reward this practice with buying local?</p>

<p>Local stores have flooded the market - expecting us to pay their inflated prices without a second thought. Best Buy survived for many years in my large city with two or three stores. Now they have what, eight? are prices any better? no. Someone has to pay for all the expensive retail space, employees, etc. We have but a single Fry’s near by. Much better prices in general.</p>

<p>Even worse, stores like Best Buy and Fry’s have different prices for the same items mail order or online. Punt. </p>

<p>Every once in a while you run into issues with mail order that could have been resolved MUCH better in a physical store. Our Freestyle experience is a good example. A month+ to get a working phone. But, we have a backup, and for $80, it’s worth it. The replacement is $19.95 bought locally. </p>

<p>The bottom line is that mail order is popular for reasons unrelated to saving a few percentage points off sales tax. If the local merchants (from Walmart to Mom and Pop stores) think that by pressuring legislation to tax mail order places will bring local stores more customers they’re mistaken big time.</p>

[tom1944]

<p>I do not think that is what the think. They want a level playing field when it comes to what the government requires. If they get beat on price and service so be it. The government obviously wants the revenue.</p>

[BCEagle91]

<p>I had to go and look up what Amazon Affiliates are as I was unsure of the term. It appears that a website can put a link to a book (or product I guess) from their site and get up to 15% commissions on book sales. MIT OpenCourseWare does this. They have links to Amazon and I guess they receive revenue when someone buys the course textbook from Amazon using the link.</p>

<p>It seems to me to be a stretch calling affiliates agents of the company.</p>

[menloparkmom]

<p>good grief! we sell all our sons old college textbooks through Amazon. I sure as hell dont “work” for them!</p>

[tom1944]

<p>You do not have to “work” for them to create nexus. BC’s posts indicate that the earn money from allowing you to link. Do they handle returns, what happens if a payment bounces? What does Amazon do if you fail to ship to the customer? The affiliates may not create nexus but they may. It also could be that some affiliated generate larger revenue and so their relationship with Amazon is different than yours so some affiliates may create nexus while others do not.</p>

<p>Again the real issue is Amazon wants to avoid nexus even when they have a physical presence- warehouses.</p>

[tom1944]

<p>menlopark- selling your kids books would be considered a casual sale which is exempt from collecting the tax. Similar to holding a garage sale.</p>

[menloparkmom]

<p>^^ ^ I know;</p>

[notrichenough]

<p>

So you could go to Nashua, NH or Salem, NH
to buy a MacBook Pro for $2,000 and avoid the $120 in sales taxes and
then pay $50 for the safe harbor use tax?

For individual items that are more expensive than $1000 you are supposed to separately calculate the use tax on those items, you can’t use the safe harbor.</p>

<p>The safe harbor amount is 6.25% (the state sales tax rate) of 1% of your adjusted income.</p>

<p>

economic nexus is a stretch. I do not think it holds water.

Yet many states are trying to use it, both for sales and income tax. Unfortunately, Quill in 1992 didn’t address other forms of taxes besides sales tax.</p>

<p>I think what these states are doing is unconstitutional, but until the Supremes get involved and resolve it, businesses are left guessing.</p>

<p>I really don’t know what the fuss is about Amazon trying to leverage tax advantages in return for locating business there. Businesses do this every day in every state. In my state they pit town against town, or try to squeeze concessions from the state in return for keeping jobs there. RI is offering all kinds of enticements to get businesses to move out of MA into RI.</p>

[tom1944]

<p>The standards for sales tax and income tax have always been different. Quill was sales tax only. On the other thread I mention Geoffrey and Lanco- do you consider these examples of States using only economic nexus?</p>

[notrichenough]

<p>

Nobody carries microUSB headphones these days. If they do, and they don’t, $25 or so. Bleep that. Mail order is $10. A no brainer.

I went into Best Buy looking for an HDMI cable, and refused to pay $30 for one. Went home and got one on eBay for less than $2, including the shipping - less than what I would have paid in sales tax if I had bought it at Best Buy. Double no-brainer. </p>

<p>Sometimes I wonder how Best Buy stays in business.</p>