14 ms·

Amazon joins Walmart in push for online sales tax

38 points by hadronzoo 14y ago

Surio 14y ago
The crux of the article is this: Amazon joins Walmart in push for online sales tax not out of some newfound concern for "marketplace fairness," but because Amazon's business model is changing in such a way that now Amazon stands to benefit from this tax. In order to provide faster shipping, Amazon is building warehouses throughout the country. These warehouses constitute a "physical presence," which requires them to collect sales taxes, in any event. So, if Amazon is going to have to collect sales taxes under the existing "physical presence" doctrine, it may as well try to expand online sales taxes to whack its smaller competitors who don't have a 50-state network of giant warehouses. Sigh!
- Rudism 14y ago
  I'm not sure if I'd be unhappy about paying sales tax on Amazon purchases if it meant free same-day shipping as a Prime member (or free next-day shipping for non-Prime), which is what I recall they're looking at switching to once their network of warehouses is ready.
  - unabridged 14y ago
    I just want Amazon Fresh, then I never have to leave the house.
    - maaku 14y ago
      That's more or less what they're working towards. Although Safeway.com can already deliver that.
      - malandrew 14y ago
        Yeah, but the online interface and experience is atrocious. Tried it a few times and it simply doesn't compare to going to the store.
    - zacgarrett 14y ago
      As someone who uses Amazon Fresh, there are still things you want to leave the house for such as produce. Fresh has different categories for freshness, but I've found it not to mean that the produce is going to be ready to eat anytime soon. I've found myself using Fresh for basic things, which the vast majority are on amazon's normal site.
- deleted 14y ago
  [deleted]
- lurker14 14y ago
  Amazon really doesn't have any competitors in the mail order business. Any would-be competitors are partners/clients.
  - harlanlewis 14y ago
    That businesses may use Amazon services like FBA does not mean they aren't directly competing with Amazon's B2C.
- e40 14y ago
  It's the same as when Wal Mart pushed for higher minimum wage. The target they argued for was below their own minimums, and it would only serve to decrease profits at other stores where they paid the actual current minimum wage.
- h1srf 14y ago
  The article doesn't mention one important historical factor. For years, Amazon was fighting to not collect taxes until more and more states started passing laws saying online retailers must collect sales tax at the behest of B&M merchants. Rather than fight a losing battle, they decided to beat those merchants at their own game: "Fine, you want us to collect sales tax? We'll build warehouses everywhere and have same day delivery instead of having warehouses in only a couple of states." I live in NY where Amazon already collects sales tax so it doesn't really matter to me.
speeder 14y ago
Yay for using government to blast competition to little bits!
- jdechko 14y ago
  Not that this is anything new. The government has granted a duopoly in almost all markets for cable/ internet services, and local governments are being sued for attempting to bring in their own networks. As much as it sucks, money is power.
jackmoore 14y ago
Just noting that this article is from last August.
- hadronzoo 14y ago
  Note that the Marketplace Fairness Act has been reintroduced in the Senate: http://www.reuters.com/article/2013/02/13/us-usa-tax-online-sales-idUSBRE91C1IC20130213 http://www.reuters.com/article/2013/02/13/us-usa-tax-online-...
deleted 14y ago
[deleted]
jivatmanx 14y ago
Bad from an environmental perspective: Mail delivery uses a fraction of the carbon of driving to the store.
- streptomycin 14y ago
  Even if that's true, solving an environmental problem by applying different sales tax depending on how you buy something is wacky and undoubtedly fraught with inaccuracies and unintended consequences. A much better and more direct solution for the externality of carbon emissions is a carbon tax.
  - SoftwareMaven 14y ago
    Because carbon taxes have no weird, unintended consequences.
    - jessaustin 14y ago
      Just because you don't like the consequences doesn't mean the carbon tax supporters don't intend them. At least carbon taxes are better than cap'n'trade. That scheme is corruption on wheels. I actually wouldn't mind carbon taxes if I could believe that they would completely forestall cap'n'trade.
      - ShawnBird 14y ago
        What is wrong with cap and trade? I don't have a strong understanding of the proposed law but it stands to reason that the free market would be able to find the most efficient method of reducing emissions.
        euroclydon 14y ago
        I think cap and trade establishes some type of baseline ownership of pollution rights. For instance, some company who's been in business for a while, say an electrical power generation company, gets an initial allotment of credits. If they need more, they buy them from another company. If they have too many, they sell them. The corruption happens during the initial allotment, and the law will probably also be written to favor established interest who own an exchange where they will charge fees for every transaction. A tax is just money going into the Treasury, plain and simple. Then you at least have a chance to curb corruption before the government spends it.
tomjen3 14y ago
The lobbyists are going to be the death of the United States. I can't blame Amazon though, just looking out for themselves which is the same as the rest of us do.
- shpxnvz 14y ago
  > The lobbyists are going to be the death of the United States. I can't blame the lobbyists either, they're just looking out for themselves the same as the rest of us do. I can blame the legislators. They're the ones with a monopoly on force wielded against us for their own gain.
  - ataggart 14y ago
    I can't blame the legislators either, they're just looking out for themselves the same as the rest of us do. I can blame the electorate. They're the ones granting the power and the legitimacy to the force wielded against us.
    - jessaustin 14y ago
      I can't blame the electorate either; they're just looking out for themselves the same as the rest of us do, because they are in fact the rest of us. There is no candidate now alive who will not rapidly succumb to the temptations of the lobbyists if given the opportunity. The problem can't be solved by voting for "good" people. I don't know who the hell to blame. It's the system man!
      - abawany 14y ago
        I can't blame the system either - it exists because of those darned corporations, lobbyists, politicians, and the electorate.
nathanb 14y ago
Takeaway: you will already be paying sales tax on your Amazon purchases in the future, and Amazon want to force other retailers to do the same in order to keep the playing field level.
- PavlovsCat 14y ago
  That's an interesting definition of "level".
- georgemcbay 14y ago
  I'm not so sure this is a playing field leveling as much as it is someone who grew massively from eating a certain fruit scorching the field the fruit grows on after he's grown into a giant. (I say this as a fan of Amazon -- I use them all the time and will continue to do so, but this is a purely shrewd corporate move and shouldn't be confused with making things fair).
jessaustin 14y ago
So much for Amazon's risible old saw that "sales taxes vary so much among jurisdictions that calculating taxes would be an onerous burden for us". There is some business size at which that is true, but Amazon has never been that small. Lots of folks use Vertex: http://www.vertexinc.com/solutions/indirect/sales-tax.asp http://www.vertexinc.com/solutions/indirect/sales-tax.asp Since Amazon has been growing its SaaS business for some time now one had to expect they were eventually going to want to make operating shopping cart checkout by yourself as tricky as possible. They might start lobbying municipalities to pile on the complications now that they're on the "right" side of this dispute.
deleted 14y ago
[deleted]
Hawkee 14y ago
I'm surprised this article made no mention of the affiliate nexus laws that have been passed over the past few years. The law was first passed in New York requiring Amazon to collect sales tax from NY customers. NY claimed Amazon's NY "associates", affiliates earning commissions for sending customers to Amazon, represented a physical nexus. Amazon agreed to collect the tax in this case, but it opted not to collect tax in other states who enacted a similar law. Instead Amazon effectively "fired" all of the affiliates living in those states. In one case Fat Wallet, a major player in the online affiliate industry, moved their company out of Illinois because they lost many of their affiliate partners. Illinois didn't gain anything and lost a source of income tax. This has been a major issue in the affiliate industry as it cuts off huge sources of revenue for affected affiliates. Amazon is pushing for the federal government to step in partly because they don't want to lose their online marketers. Secondly, they don't want to maintain a database of tens of thousands of tax jurisdictions across the country.
- jessaustin 14y ago
  maintain a database of tens of thousands of tax jurisdictions across the country. This was always a red herring. Vertex (and presumably others, although I've only worked with Vertex) already maintains this database, and will help any company calculate taxes for a reasonable fee. Corporations with far lower revenues than Amazon have been taxing in many jurisdictions for decades.
IgorPartola 14y ago
Having just filed my taxes, and gone through the "so how much tax free stuff did you buy online?" rigmarole this would actually make my life easier. The article calls all but eBay and Overstock.com "Mom and Pop" shops. A real local store that happens to sell stuff online will actually benefit from this law. States will benefit, since this law will actually level things. The only places that will suffer are Amazon's smaller competitors, which otherwise would just turn around and try to crush the local brick and mortar small shops.

38 points by hadronzoo 14y ago

Surio 14y ago

The crux of the article is this: Amazon joins Walmart in push for online sales tax not out of some newfound concern for "marketplace fairness," but because Amazon's business model is changing in such a way that now Amazon stands to benefit from this tax. In order to provide faster shipping, Amazon is building warehouses throughout the country. These warehouses constitute a "physical presence," which requires them to collect sales taxes, in any event. So, if Amazon is going to have to collect sales taxes under the existing "physical presence" doctrine, it may as well try to expand online sales taxes to whack its smaller competitors who don't have a 50-state network of giant warehouses. Sigh!

Rudism 14y ago
I'm not sure if I'd be unhappy about paying sales tax on Amazon purchases if it meant free same-day shipping as a Prime member (or free next-day shipping for non-Prime), which is what I recall they're looking at switching to once their network of warehouses is ready.
- unabridged 14y ago
  I just want Amazon Fresh, then I never have to leave the house.
  - maaku 14y ago
    That's more or less what they're working towards. Although Safeway.com can already deliver that.
    - malandrew 14y ago
      Yeah, but the online interface and experience is atrocious. Tried it a few times and it simply doesn't compare to going to the store.
  - zacgarrett 14y ago
    As someone who uses Amazon Fresh, there are still things you want to leave the house for such as produce. Fresh has different categories for freshness, but I've found it not to mean that the produce is going to be ready to eat anytime soon. I've found myself using Fresh for basic things, which the vast majority are on amazon's normal site.
deleted 14y ago
[deleted]
lurker14 14y ago
Amazon really doesn't have any competitors in the mail order business. Any would-be competitors are partners/clients.
- harlanlewis 14y ago
  That businesses may use Amazon services like FBA does not mean they aren't directly competing with Amazon's B2C.
e40 14y ago
It's the same as when Wal Mart pushed for higher minimum wage. The target they argued for was below their own minimums, and it would only serve to decrease profits at other stores where they paid the actual current minimum wage.
h1srf 14y ago
The article doesn't mention one important historical factor. For years, Amazon was fighting to not collect taxes until more and more states started passing laws saying online retailers must collect sales tax at the behest of B&M merchants. Rather than fight a losing battle, they decided to beat those merchants at their own game: "Fine, you want us to collect sales tax? We'll build warehouses everywhere and have same day delivery instead of having warehouses in only a couple of states." I live in NY where Amazon already collects sales tax so it doesn't really matter to me.

speeder 14y ago

Yay for using government to blast competition to little bits!

jdechko 14y ago
Not that this is anything new. The government has granted a duopoly in almost all markets for cable/ internet services, and local governments are being sued for attempting to bring in their own networks. As much as it sucks, money is power.

jackmoore 14y ago

Just noting that this article is from last August.

hadronzoo 14y ago
Note that the Marketplace Fairness Act has been reintroduced in the Senate: http://www.reuters.com/article/2013/02/13/us-usa-tax-online-sales-idUSBRE91C1IC20130213 http://www.reuters.com/article/2013/02/13/us-usa-tax-online-...

deleted 14y ago

[deleted]

jivatmanx 14y ago

Bad from an environmental perspective: Mail delivery uses a fraction of the carbon of driving to the store.

streptomycin 14y ago
Even if that's true, solving an environmental problem by applying different sales tax depending on how you buy something is wacky and undoubtedly fraught with inaccuracies and unintended consequences. A much better and more direct solution for the externality of carbon emissions is a carbon tax.
- SoftwareMaven 14y ago
  Because carbon taxes have no weird, unintended consequences.
  - jessaustin 14y ago
    Just because you don't like the consequences doesn't mean the carbon tax supporters don't intend them. At least carbon taxes are better than cap'n'trade. That scheme is corruption on wheels. I actually wouldn't mind carbon taxes if I could believe that they would completely forestall cap'n'trade.
    - ShawnBird 14y ago
      What is wrong with cap and trade? I don't have a strong understanding of the proposed law but it stands to reason that the free market would be able to find the most efficient method of reducing emissions.
      - euroclydon 14y ago
        I think cap and trade establishes some type of baseline ownership of pollution rights. For instance, some company who's been in business for a while, say an electrical power generation company, gets an initial allotment of credits. If they need more, they buy them from another company. If they have too many, they sell them. The corruption happens during the initial allotment, and the law will probably also be written to favor established interest who own an exchange where they will charge fees for every transaction. A tax is just money going into the Treasury, plain and simple. Then you at least have a chance to curb corruption before the government spends it.

tomjen3 14y ago

The lobbyists are going to be the death of the United States. I can't blame Amazon though, just looking out for themselves which is the same as the rest of us do.

shpxnvz 14y ago
> The lobbyists are going to be the death of the United States. I can't blame the lobbyists either, they're just looking out for themselves the same as the rest of us do. I can blame the legislators. They're the ones with a monopoly on force wielded against us for their own gain.
- ataggart 14y ago
  I can't blame the legislators either, they're just looking out for themselves the same as the rest of us do. I can blame the electorate. They're the ones granting the power and the legitimacy to the force wielded against us.
  - jessaustin 14y ago
    I can't blame the electorate either; they're just looking out for themselves the same as the rest of us do, because they are in fact the rest of us. There is no candidate now alive who will not rapidly succumb to the temptations of the lobbyists if given the opportunity. The problem can't be solved by voting for "good" people. I don't know who the hell to blame. It's the system man!
    - abawany 14y ago
      I can't blame the system either - it exists because of those darned corporations, lobbyists, politicians, and the electorate.

nathanb 14y ago

Takeaway: you will already be paying sales tax on your Amazon purchases in the future, and Amazon want to force other retailers to do the same in order to keep the playing field level.

PavlovsCat 14y ago
That's an interesting definition of "level".
georgemcbay 14y ago
I'm not so sure this is a playing field leveling as much as it is someone who grew massively from eating a certain fruit scorching the field the fruit grows on after he's grown into a giant. (I say this as a fan of Amazon -- I use them all the time and will continue to do so, but this is a purely shrewd corporate move and shouldn't be confused with making things fair).

jessaustin 14y ago

So much for Amazon's risible old saw that "sales taxes vary so much among jurisdictions that calculating taxes would be an onerous burden for us". There is some business size at which that is true, but Amazon has never been that small. Lots of folks use Vertex: http://www.vertexinc.com/solutions/indirect/sales-tax.asp http://www.vertexinc.com/solutions/indirect/sales-tax.asp Since Amazon has been growing its SaaS business for some time now one had to expect they were eventually going to want to make operating shopping cart checkout by yourself as tricky as possible. They might start lobbying municipalities to pile on the complications now that they're on the "right" side of this dispute.

deleted 14y ago

[deleted]

Hawkee 14y ago

I'm surprised this article made no mention of the affiliate nexus laws that have been passed over the past few years. The law was first passed in New York requiring Amazon to collect sales tax from NY customers. NY claimed Amazon's NY "associates", affiliates earning commissions for sending customers to Amazon, represented a physical nexus. Amazon agreed to collect the tax in this case, but it opted not to collect tax in other states who enacted a similar law. Instead Amazon effectively "fired" all of the affiliates living in those states. In one case Fat Wallet, a major player in the online affiliate industry, moved their company out of Illinois because they lost many of their affiliate partners. Illinois didn't gain anything and lost a source of income tax. This has been a major issue in the affiliate industry as it cuts off huge sources of revenue for affected affiliates. Amazon is pushing for the federal government to step in partly because they don't want to lose their online marketers. Secondly, they don't want to maintain a database of tens of thousands of tax jurisdictions across the country.

jessaustin 14y ago
maintain a database of tens of thousands of tax jurisdictions across the country. This was always a red herring. Vertex (and presumably others, although I've only worked with Vertex) already maintains this database, and will help any company calculate taxes for a reasonable fee. Corporations with far lower revenues than Amazon have been taxing in many jurisdictions for decades.

IgorPartola 14y ago

Having just filed my taxes, and gone through the "so how much tax free stuff did you buy online?" rigmarole this would actually make my life easier. The article calls all but eBay and Overstock.com "Mom and Pop" shops. A real local store that happens to sell stuff online will actually benefit from this law. States will benefit, since this law will actually level things. The only places that will suffer are Amazon's smaller competitors, which otherwise would just turn around and try to crush the local brick and mortar small shops.