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Amazon Terminates Illinois Affiliates

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Re: Amazon Terminates Illinois Affiliates

#21

Post by cookiecaper »

cypherpunks01 wrote: post #6

For a couple years now, New York State has gotten away with forcing Amazon to charge sales tax via a similar state law regarding affiliates, does anyone know why amazon implemented the sales tax instead of dropping affiliates in that case?

I don't, but a guess may be that Amazon has some physical facilities in New York like a warehouse or office, meaning they can't say "they're making us pay tax even though we don't exist in the state and just mail people stuff" like they're saying in this case.

I don't know if Amazon has offices in New York or not, but that's my immediate guess.

Re: Amazon Terminates Illinois Affiliates

#22

Post by thaumaturgy »

eykanal wrote: post #11
logic wrote: post #2

I just received my termination email. I believe I have a whopping $4 owed to me at this point, so I'm not upset about losing a large amount of revenue; I just have a difficult time understanding the rationale here. I'm an affiliate: I direct traffic to Amazon, nothing more. Or put another way, I'm a third-party marketing arm; I don't participate in purchases as either buyer or seller. But apparently, I'm involved eno…

The message being sent is simple; Amazon is receiving an unfair competitive advantage by not paying taxes (all their prices can be lower), and the legislature is trying to figure out some way they can "force" Amazon to have a local presence through people like you. Amazon, being the 800-lb gorilla they are, just said the equivalent of, "I'm taking my ball and going home." They did this because you were the "arm" of A…

> 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 that increases the total cost of the item, and again, that eliminates Amazon's competitive advantage.

I don't think this has anything to do with unfair competitive advantages, and everything to do with states simply looking for ways to grab more tax revenue ... so that they can turn around and offer it as cuts to other businesses, of course.

Re: Amazon Terminates Illinois Affiliates

#23

Post by Encosia »

Ethics aside, this seems extremely shortsighted on the part of the legislature. Amazon might compete strongly with local big boxes ("Main Street", my foot), but how much shipping business (and resulting jobs and tax revenue) is ultimately created by Amazon's sales in IL?

Re: Amazon Terminates Illinois Affiliates

#24

Post by burgerbrain »

eykanal wrote: post #11
logic wrote: post #2

I just received my termination email. I believe I have a whopping $4 owed to me at this point, so I'm not upset about losing a large amount of revenue; I just have a difficult time understanding the rationale here. I'm an affiliate: I direct traffic to Amazon, nothing more. Or put another way, I'm a third-party marketing arm; I don't participate in purchases as either buyer or seller. But apparently, I'm involved eno…

The message being sent is simple; Amazon is receiving an unfair competitive advantage by not paying taxes (all their prices can be lower), and the legislature is trying to figure out some way they can "force" Amazon to have a local presence through people like you. Amazon, being the 800-lb gorilla they are, just said the equivalent of, "I'm taking my ball and going home." They did this because you were the "arm" of A…

What these government numbskulls don't seem to understand is that what Amazon is doing isn't fundamentally any different from what Sears was doing over a century ago with their mail-order catalog.

Amazon it's receiving an "unfair" anything, they are operating well within the law and long established acceptable business practices. Politicians are just being greedy, plain and simple.

Re: Amazon Terminates Illinois Affiliates

#26

Post by btilly »

thaumaturgy wrote: post #22
eykanal wrote: post #11

Earlier quoted context omitted.

The message being sent is simple; Amazon is receiving an unfair competitive advantage by not paying taxes (all their prices can be lower), and the legislature is trying to figure out some way they can "force" Amazon to have a local presence through people like you. Amazon, being the 800-lb gorilla they are, just said the equivalent of, "I'm taking my ball and going home." They did this because you were the "arm" of A…

> 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 power over, and therefore the states can't do it. (The issue is hardly new. It was settled over a century ago with catalog companies.)

Note that the tax is theoretically owed by the residents of the state regardless of where the merchant is. But in practice people wind up paying the tax at Walmart, and not at Amazon. Which gives Amazon an advantage.

Re: Amazon Terminates Illinois Affiliates

#27

Post by bambax »

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 state).

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.

Re: Amazon Terminates Illinois Affiliates

#28

Post by stevie_wilks »

cookiecaper wrote: post #21
cypherpunks01 wrote: post #6

For a couple years now, New York State has gotten away with forcing Amazon to charge sales tax via a similar state law regarding affiliates, does anyone know why amazon implemented the sales tax instead of dropping affiliates in that case?

I don't, but a guess may be that Amazon has some physical facilities in New York like a warehouse or office, meaning they can't say "they're making us pay tax even though we don't exist in the state and just mail people stuff" like they're saying in this case. I don't know if Amazon has offices in New York or not, but that's my immediate guess.

You are correct sir: http://bit.ly/hFkxpK

Re: Amazon Terminates Illinois Affiliates

#29

Post by ars »

It's time for the Congress to get involved here.

Pass a law that each state can specify a single tax rate for any shipments into that state. Then all retailers everywhere would have to collect that tax and pass it on to the state.

If the state wants to distribute the money locally let them handle it themself - the retailer sends a summary with the city names, and total amount, and the state can figure out how to distribute it.

I'm a fan of taxing via sales tax instead of income tax.

Re: Amazon Terminates Illinois Affiliates

#30

Post by burgerbrain »

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…

"advantage" != "unfair advantage"
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