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Rumpus Book ClubThe Rumpus Continues Its War Against Amazon
We here at the Rumpus are pretty open in regards to how we feel about Amazon, so we think it’s time to take a stand on Amazon’s shady tax dodging in California, and elsewhere.
Amazon recently ended its commission programs in Rhode Island, North Carolina and Hawaii when the states tried (or, in North Carolina’s case, have plans to try) to collect sales taxes from the company. Many states, including cash-strapped California, hope to follow suit and have been working to pass legislation that would allow them to collect taxes on all Internet transactions. Legislation that was vetoed recently by Governor Schwarzenegger, giving the Internet giant a competitive advantage over locally owned bookshops.
Amazon has been fighting these sales tax drives despite the modest impact they would have on their business.
Amazon has taken a different stance in trying to avoid paying taxes in New York. The online book giant is playing dumb, saying that keeping track of all the different sales taxes is too complicated.
While in many states sales tax rules are a bit murky (“the buyer of [a] book from Amazon technically owes the tax to New York State, but Amazon isn’t required to collect it for them, according to a 1992 Supreme Court ruling”) Amazon’s excuses turn out to be nothing but a load of bull, as spelled out by Netflix chief executive Reed Hastings:
As a point of reference, we collect and provide to each of the states the correct sales tax. There are vendors that specialize in this (we use Vertex). It’s not very hard.
In these economic times, when states need money for schools, hospitals, and other basic services, not only isn’t it hard, it’s the right thing to do.
PS: Amazon recently acquired online shoe seller Zappos.com “for 10 million shares of Amazon stock, worth nearly $900 million at its current level.” So do your state a favor and avoid buying any shoes from Zappos.
July 24th, 2009 at 3:43 pm
The problem is, if you tax Amazon et al., you will also be taxing everyone else who does business online, and the kind of service Netflix uses is likely far too expensive for the small and medium online retailers to use.
It would help if people would stop and think before they get all flowing with righteous indignation about huge companies, who are but a handful, not “paying their share” and remember the majority of business would be delighted to have 0.001 of Amazon’s revenue stream. These are the ones who will really suffer if a punitive sales tax law–and let’s be honest, that’s exactly what most people are talking about–is passed. A law, I’ll point out, that’s actively being lobbied by such mom-and-pop businesses as Barnes & Noble and Wal-Mart.
July 24th, 2009 at 10:16 pm
That’s ridiculous. Everyone should pay taxes.
July 25th, 2009 at 5:33 am
I’m not following your logic here, Elizabeth. Sales taxes aren’t paid by retailers–they’re collected by retailers and passed along to (generally) state and local governments. The main reason why internet transactions were exempted from sales taxes was as a way for the federal government to encourage the growth of the online economy–it was a way to let online retailers compete with brick-and-mortar retailers without handing out subsidies, and it worked. Online retailers are a major part of the economy. Netflix really isn’t a good example because they don’t sell much in the way of a product–they sell a subscription service primarily, and that would fall under a different section of tax law as I understand it.
Now, maybe there’s an argument to be made that it’s too onerous a burden to ask e-tailers to keep track of all the various sales tax laws in the 50 states and numerous municipalities, but if the worry is that you’re going to unduly affect small businesses, then we can write in an exemption for companies that make less than a certain amount, or for sole proprietorships, or something along those lines. I don’t think the person selling handmade clothing on Etsy ought to be subject to the same sales tax requirements that Amazon ought to be.
July 25th, 2009 at 9:36 pm
The whole not keeping track of sales tax things is kind of bogus. You pay sales tax to buy things online at Urban Outfitters. I have a hard time believing that they were able to figure this complicated system out and Amazon couldn’t.
July 27th, 2009 at 6:55 pm
Are any of Amazon’s affiliates/vendors independent brick-and-mortar stores?
If yes, how many?
How many CA affiliates does Amazon works with (overall–that is, including affiliates with **no** brick-and-mortar stores)?
Approximately how much CA state revenue would be generated if Amazon’s CA transactions were subject to sales tax?
July 27th, 2009 at 6:56 pm
Make that “How many CA affiliates does Amazon WORK with … “
July 27th, 2009 at 11:03 pm
The tax would bring in about $150 million dollars, not all from Amazon, of course.