Amazon.com cuts California sales tax deal in stunning turnabout • Hacker News Board

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#31

Post by cletus » Thu, Sep 08, 2011, 10:04 PM UTC

While most like the trumpet the enumerated protections of the Constitution that the US enjoys, this is (IMHO) an example of where the wording and the intent of the Constitution is outdated.

Most developed nations have some for of consumption/sales tax. In the EU it's typically 17.5-25%, in Australia it's 10%, in Switzerland it's ~7% and so on. America has this on a state by state basis.

Nowadays the split jurisdiction with interstate commerce is now awkward and unwieldy. I believe that in the coming years the Federal government will act to enforce an interstate sales tax and maybe even a tax on imports. The path of least resistance here is for the sales tax due to be the sales tax that applies in the state of the recipient.

I'm not sure how much revenue that would raise but my guess is a lot.

As for Amazon, I'm not sure what they're thinking. In a year they'll have the same problem. One would think they're confident of Federal action in the next year on online sales taxes or they think the climate will have changed in a year. I'm not convinced of either. Are they that desperate that a year's delay is a win for them?

While we're at it, what's up with New York? Amazon collects sales tax for the state of New York while it (thus far unsuccessfully) has tried to challenge the "Amazon tax" in the courts. Is New York a test case? Are the affiliates in New York that much more valuable?

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#32

Post by usaar333 » Thu, Sep 08, 2011, 10:06 PM UTC

reemrevnivek wrote: post #4

> While Democrats and Gov. Jerry Brown fretted that they would lose $200 million a year in sales taxes California residents are supposed to pay use tax on internet purchases regardless of the physical presence of the retailer, right? Running the math: the $200 million/year loss that they claim is an estimate on tax fraud on just Amazon purchases? At a 7.25% tax rate, that's a tax on $2.7 billion in sales, and Amazon'…

1) California's GDP is $1.9 trillion, 13% of the $15 trillion US GDP (this is more accurate in comparing consumption than population). Factoring in California's likely higher rates of online retail purchases, 14% is quite plausible.

2) There is massive fraud with use tax reporting. http://lakeconews.com/content/view/21075/928/ $10.4 million in use tax payments were made in 2009, which would work out to be about $100 million in revenues taxed. With Amazon alone is selling $2.7 billion in CA, of which the vast majority is for out-of-state purchases that don't have sales tax. It's entirely plausible that over 95% of out of state sales are not being taxed. I'd even hypothesize that most of the use tax payments actually made are for trackable items (cars). 2a) The whole reason politicians want out of state companies to collect tax is because of the massive fraud.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#33

Post by shoota » Thu, Sep 08, 2011, 10:11 PM UTC

weaksauce wrote: post #26

halostatue wrote: post #17

Earlier quoted context omitted.

The varying rates aren't a problem, for certain; Amazon deals with those just fine in various localities (Canada has approximately 10 different rates; I don't think that cities are allowed to put additional sales taxes, as that's reserved to the federal government and the provinces/territories). What's problematic for Amazon (IMO) is the wildly varying applicability rules and filing mechanisms. I think your idea of a…

In California there are different tax rates for every county in the state. see http://www.boe.ca.gov/cgi-bin/rates.cgi

They have different rates even down to the city level take a look here http://www.boe.ca.gov/cgi-bin/rates.cgi?LETTER=A&LIST=CI...

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#34

Post by mikek » Thu, Sep 08, 2011, 10:13 PM UTC

aero142 wrote: post #2

I'm unsure of what Amazon's long term plan is. Is it their hope that Congress deals with this on a national level and makes it workable? They just don't want to deal with the mess on a state by state basis?

They want to deal on an even playing field with other online retailers. They don't want to have to collect tax in a state that their competitors do not. A nationwide solution would make them happy.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#35

Post by shoota » Thu, Sep 08, 2011, 10:15 PM UTC

ars wrote: post #30

shithead wrote: post #19

Just FYI: in Europe, Amazon collects VAT at the buyers' local rate. For example, when shipping books from the UK (which has zero VAT on books), the bill includes VAT at the destination country's rate.

Does VAT vary per county? Or also by smaller areas? If it's just per country it's not that hard to do.

How about per city which is the level at which sales tax can vary in California?

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#36

Post by calloc » Thu, Sep 08, 2011, 10:21 PM UTC

cletus wrote: post #31

While most like the trumpet the enumerated protections of the Constitution that the US enjoys, this is (IMHO) an example of where the wording and the intent of the Constitution is outdated. Most developed nations have some for of consumption/sales tax. In the EU it's typically 17.5-25%, in Australia it's 10%, in Switzerland it's ~7% and so on. America has this on a state by state basis. Nowadays the split jurisdictio…

I thought it was because Amazon had an physical presence in the state of new york...

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#37

Post by nostromo » Thu, Sep 08, 2011, 10:25 PM UTC

cletus wrote: post #31

While most like the trumpet the enumerated protections of the Constitution that the US enjoys, this is (IMHO) an example of where the wording and the intent of the Constitution is outdated. Most developed nations have some for of consumption/sales tax. In the EU it's typically 17.5-25%, in Australia it's 10%, in Switzerland it's ~7% and so on. America has this on a state by state basis. Nowadays the split jurisdictio…

This is a classic case of "who moved my cheese." Sales tax used to make sense -- but it's trivial to avoid with the advent of e-commerce. Instead of struggling to preserve the small e-commerce portion of this small revenue stream (California is looking for $200 million in revenue from Amazon a year while the state budget is over $100 billion) the states should find other sources of revenue or cut spending.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#38

Post by nknight » Thu, Sep 08, 2011, 10:32 PM UTC

gojomo wrote: post #20

msumpter wrote: post #10

Earlier quoted context omitted.

Or maybe just buy them enough time to close up operations in an orderly fashion and leave California. I'm not sure if Amazon has a physical presence in the state but if they have a distribution plant or other company owned assets this will give them time to relocate. I believe Amazon had already notified their affiliates that they were terminating the relationship when the law was passed (similar to what they do when…

Somewhat unlikely. Amazon has a number of wholly-owned subsidiaries in California with sizable technical staffs: A9 (search; Palo Alto), A2Z (mobile/media product development; 5 California offices), Alexa (analytics; San Francisco), and probably others. There's also a Northern California EC2 Region. That's a very strong 'nexus' that would cost them a lot (in money and talent) to uproot. I suspect Amazon sees the way…

You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners.

It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail business.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#39

Post by pyre » Thu, Sep 08, 2011, 10:34 PM UTC

cletus wrote: post #31

While most like the trumpet the enumerated protections of the Constitution that the US enjoys, this is (IMHO) an example of where the wording and the intent of the Constitution is outdated. Most developed nations have some for of consumption/sales tax. In the EU it's typically 17.5-25%, in Australia it's 10%, in Switzerland it's ~7% and so on. America has this on a state by state basis. Nowadays the split jurisdictio…

  > Most developed nations have some for of 
  > consumption/sales tax. In the EU it's typically
  > 17.5-25%, in Australia it's 10%, in Switzerland it's
  > ~7% and so on. America has this on a state by state
  > basis.

1. It's nice in that I live in Oregon and there is no sales tax. :P

2. Canada has provincial sales tax and a national sales tax, so the overall sales tax is still 'state-by-state.'

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#40

Post by hga » Thu, Sep 08, 2011, 10:37 PM UTC

mikek wrote: post #34

aero142 wrote: post #2

I'm unsure of what Amazon's long term plan is. Is it their hope that Congress deals with this on a national level and makes it workable? They just don't want to deal with the mess on a state by state basis?

They want to deal on an even playing field with other online retailers. They don't want to have to collect tax in a state that their competitors do not. A nationwide solution would make them happy.

Ah, but for a company as big and established as Amazon it will be anything but an even field. One reason they're all for this is that it would hinder upstarts the might threaten them.