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Amazon Terminates Illinois Affiliates

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Re: Amazon Terminates Illinois Affiliates

#31

Post by erikpukinskis »

bambax wrote: post #27

Amazon in France pays sales tax, just like everybody. Sales tax in France is 20% (19,6% to be precise). Is that a problem for Amazon in France? It doesn't seem so. I can't find a justification why online retailers should be exempt from sales tax; the reason invoked by Amazon US is that sales tax are a local tax, at the state level, and they happen to be located in a different state (they're always in a different stat…

They're not always in a different state. If you live in California, you pay sales tax on online purchases pretty much always.

Re: Amazon Terminates Illinois Affiliates

#32

Post by thematt »

bambax wrote: post #27

Amazon in France pays sales tax, just like everybody. Sales tax in France is 20% (19,6% to be precise). Is that a problem for Amazon in France? It doesn't seem so. I can't find a justification why online retailers should be exempt from sales tax; the reason invoked by Amazon US is that sales tax are a local tax, at the state level, and they happen to be located in a different state (they're always in a different stat…

It's not that the purchase is exempt from tax, it's that Amazon isn't responsible for collecting it. The onus falls on the consumer to pay the sales tax directly to the state. Nobody does though, which is why they want Amazon to collect it.

If you're looking for justification, refer to the Supreme Court ruling that established it, which said that requiring these companies to comply with the varied sales tax rules and regulations of 45 states and some 7,500 different local taxing jurisdictions would burden interstate commerce.

Re: Amazon Terminates Illinois Affiliates

#33

Post by storborg »

erikpukinskis wrote: post #31
bambax wrote: post #27

Amazon in France pays sales tax, just like everybody. Sales tax in France is 20% (19,6% to be precise). Is that a problem for Amazon in France? It doesn't seem so. I can't find a justification why online retailers should be exempt from sales tax; the reason invoked by Amazon US is that sales tax are a local tax, at the state level, and they happen to be located in a different state (they're always in a different stat…

They're not always in a different state. If you live in California, you pay sales tax on online purchases pretty much always.

That's because California has tax-hungry laws concerning what defines a "nexus" (a business's presence in the state). It's difficult for many companies to avoid creating a California presence, so they're stuck collecting California sales tax as if they were based there.

Re: Amazon Terminates Illinois Affiliates

#34

Post by thaumaturgy »

btilly wrote: post #26
thaumaturgy wrote: post #22

Earlier quoted context omitted.

> Amazon is receiving an unfair competitive advantage by not paying taxes... I don't understand this reasoning. They have to pay a shipping tax -- that is, regardless of the price of the item, the buyer is going to have to have it shipped to their home. If Amazon's offering free shipping, that just means they're choosing to absorb the cost, which eliminates a competitive advantage; if the buyer pays shipping, then th…

Here is an explanation. Residents of Illinois owe sales tax on their purchases. The state knows that people won't choose to pay this, so the state makes merchants collect the tax. If the merchants are based in the state, the courts say the state can do this. If the merchants are not based in the state, then the courts have ruled this to be interstate commerce, which is something that only the federal government has p…

Amazon sells Item X for $19.99. An Illinois retailer sells the same Item X, also for $19.99.

Your claim is that the buyer will purchase from Amazon because there is no sales tax:

Amazon: $19.99 Retailer: $21.24

Except, the item must be shipped from Amazon to the customer. If customer pays shipping, then:

Amazon: $24.99 Retailer: $21.24

If Amazon pays the shipping, then the shipping costs must be deducted from their profit on the item, further reducing their margin. If there's enough margin at $19.99 to make this feasible, then the retailer might choose to sell the item for just $1 less than Amazon:

Amazon: $19.99, shipped. Retailer: $20.18.

I don't see the unfair advantage here. To me, it looks like Amazon has the exact same advantage that any warehouse retailer has: lower overhead and (massively) larger volume, which allows them to operate on smaller margins. That is an advantage, but it is not an unfair one.

In case I'm still not making sense, let me try one other approach: because Amazon must pay to ship items from their warehouses to the items' points of destination, does that mean that in-state warehouse retailers have an unfair advantage? Should we start levying a "shipping tax" on any in-state retailer that does not have to pay to ship their merchandise to the customer? If not, then how is this different from attempting to tax e-retailers, in the context of "unfair advantage"?

Again, I can see this being a revenue issue for states. I so far do not see it as an unfair advantage issue.

Re: Amazon Terminates Illinois Affiliates

#35

Post by storborg »

michaelpinto wrote: post #13

How many states does it take Amazon to lose until they change their policies? Yes I understand the legalities of it — but there is something very strange about the fact that if I buy a 99 cent app from Apple they can collect the extra sales tax but if I purchased a $99 physical item from Amazon that they feel it's too hard. As an affiliate here in NY I run a small side biz that generates a great deal of revenue from…

They probably won't ever change their policies--I would venture to guess that the margin they gain from the affiliate program is less than 8% of their total revenue (which is very approximately what they would lose if they were forced to collect sales tax).

Re: Amazon Terminates Illinois Affiliates

#36

Post by btilly »

burgerbrain wrote: post #30
btilly wrote: post #26

Earlier quoted context omitted.

Here is an explanation. Residents of Illinois owe sales tax on their purchases. The state knows that people won't choose to pay this, so the state makes merchants collect the tax. If the merchants are based in the state, the courts say the state can do this. If the merchants are not based in the state, then the courts have ruled this to be interstate commerce, which is something that only the federal government has p…

"advantage" != "unfair advantage"

The reason why this is seen by some as unfair is because Amazon's advantage comes from making it easy for Illinois residents to break Illinois laws. If Illinois residents weren't willing to break Illinois laws, then Amazon would have no advantage.

Re: Amazon Terminates Illinois Affiliates

#37

Post by btilly »

bambax wrote: post #27

Amazon in France pays sales tax, just like everybody. Sales tax in France is 20% (19,6% to be precise). Is that a problem for Amazon in France? It doesn't seem so. I can't find a justification why online retailers should be exempt from sales tax; the reason invoked by Amazon US is that sales tax are a local tax, at the state level, and they happen to be located in a different state (they're always in a different stat…

I can't find a justification why online retailers should be exempt from sales tax;

This justification is to be found in the US Constitution where authority over interstate commerce is granted to Congress. This leaves states with no legal authority over interstate commerce.

This reasoning is preposterous; the sales happens where the customer is, and that's where the tax is due. That's what will happen eventually; they are just buying time -- and not very elegantly.

In theory, yes. In practice, no.

Experience says that people don't voluntarily report or pay taxes on those sales to the state government. Furthermore state governments have proven unable to track down those sales without the cooperation of merchants. So if Amazon doesn't cooperate, those taxes don't get collected.

Re: Amazon Terminates Illinois Affiliates

#38

Post by wheels »

bambax wrote: post #27

Amazon in France pays sales tax, just like everybody. Sales tax in France is 20% (19,6% to be precise). Is that a problem for Amazon in France? It doesn't seem so. I can't find a justification why online retailers should be exempt from sales tax; the reason invoked by Amazon US is that sales tax are a local tax, at the state level, and they happen to be located in a different state (they're always in a different stat…

Amazon's competitors in France also pay tax. That's the difference.

The issue here is that the law is such that out of state vendors don't have to pay tax; Illinois is just trying to jigger a way to make Amazon have to pay anyway, because Amazon sells lots of stuff and they'd like the tax revenue. But that effectively gives their competitors a 10% pricing advantage, not to mention making accounting much more expensive.

Re: Amazon Terminates Illinois Affiliates

#39

Post by [deleted] »

btilly wrote: post #36
burgerbrain wrote: post #30

Earlier quoted context omitted.

"advantage" != "unfair advantage"

The reason why this is seen by some as unfair is because Amazon's advantage comes from making it easy for Illinois residents to break Illinois laws. If Illinois residents weren't willing to break Illinois laws, then Amazon would have no advantage.

[deleted]
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