Ken’s Take: You had to know that this one was coming.
While I’m a beneficiary of the Internet sales tax rules … I agree with the guy that the sales should be taxed — whether bought in local stores or over the net.
In fact, I’d be a fan of upping sales taxes … concurrent with blowing up the income and estate taxes, of course.
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Excerpted from NY Times: Sorry, Shoppers, but Why Can’t Amazon Collect More Tax?, December 26, 2009
Today, Amazon collects sales tax in only five states, which gives it a continuing advantage over companies who do collect them in all or most states. Competitors aren’t the only ones hurt by Amazon’s stance on sales taxes: it also means the loss of considerable revenue to states and localities that badly need it.
In addition to its home in Washington State, Amazon has facilities in North Dakota, Kentucky and Kansas, and collects sales taxes in these states. The company also collects sales tax in New York, but not cheerfully: Amazon has gone to court to overturn a law passed last year that compels it to collect from New York residents.
Yet these five do not exhaust the roll call of states in which Amazon has additional corporate offices, fulfillment and warehouse operations, customer service and other facilities. Fourteen more (among states with sales taxes) are listed in the company’s last annual report: Arizona, California, Delaware, Florida, Indiana, Michigan, Nevada, New Jersey, Pennsylvania, South Carolina, Texas, Virginia, West Virginia and Wisconsin. But Amazon.com does not collect for any state on that list.
Amazon uses “tax entity isolation” to put large portions of its business into tax-havens … by creating wholly owned subsidiaries for the parts that are treated separately for tax matters, so that Amazon is under no obligation to collect sales tax.
For example, Amazon has offices in four cities in California, for example, including those that are home to the subsidiary that developed the Kindle. Because the subsidiary isn’t selling the Kindle directly to consumers, Amazon is under no obligation to collect sales taxes in those locales.
Amazon is deliberately maximizing “the significant competitive advantage it gains over its rivals when they must add the typical 5 percent to 10 percent tax to their prices, but Amazon does not.”
Amazon argues that it shouldn’t be compelled to collect sales taxes for purchases made by customers other than those who live in Washington. “In Washington State, where we have a presence, we get police protection, we get fire protection. We send our kids to local schools … since we get no services from North Carolina and many other states, they shouldn’t be able to force us to collect taxes for them.”
And this may be a good time to point out that states and localities are having a bit of a tough time paying bills.
The Center on Budget and Policy Priorities estimates that state budget gaps for this year and next year combined will be more than $350 billion.
Wider collection of the sales tax is not going to plug a hole of that size, but every billion or two would help.
Some 147 million people, or half the nation’s population, live in sales-tax-levying states where Amazon has facilities but does not collect tax on residents’ purchases.
An Amazon spokesman described today’s sales taxes as “very complex,” but said the company would welcome a “simplified system, fairly applied to all business models.”
Full article:
http://www.nytimes.com/2009/12/27/business/27digi.html?adxnnl=1&ref=business&adxnnlx=1261944246-BDKnjFI47UhFShH1ZYYq1w
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