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Did Amazon sell out the rest of the nation?

Did Amazon sell out the rest of the nation?

You may remember that stopped doing business through “affiliates” (websites and blogs) in California, after the state passed a law requiring companies like Amazon to collect state sales taxes on purchases made through California affiliates.

Amazon has settled with California and will resume its relationships, but it sounds like a sell out to me as taxes will be collected starting a year from now and part of the deal obligates Amazon to work for a national sales tax collection law (emphasis mine):

Now that has settled a summer-long dispute with the state of California over collecting sales taxes on Internet purchases, the world’s biggest e-retailer wants to hook up again with 10,000 operators of affiliated websites that it fired in late June.

On Tuesday, Amazon e-mailed its “California associates,” telling them it’s ready again to start paying them commissions for any sales made to customers who “clicked through” to Amazon’s shopping site.

“As you may have heard, California Gov. Jerry Brown has signed legislation repealing the law that had forced us to terminate our California Associates,” Amazon said. “We are pleased to invite all California Associates whose accounts were closed due to the prior legislation to re-enroll in the Associates program.”

As part of the deal with Brown, lawmakers and bricks-and-mortar retailers, such as Wal-Mart Stores Inc. and Target Corp., Amazon agreed to start collecting sales taxes in September 2012 and work with California and other states to ask Congress to pass a national Internet sales tax collection law.

National retailers, who feel they are at a disadvantage at bricks and mortar stores, are quite happy:

Now that the largest state in the country has seemingly pressured Amazon to  change its policy, the result could be a flood of new online tax laws, as other  states ask why Amazon can’t treat them the same as it treats California.

Danny Diaz, spokesman for the Alliance for Main Street Fairness, a group  trying to get the online retailers to collect taxes, says Amazon has undermined  its own case by striking the California deal.

“You begin your argument by saying you can’t do it, it’s too complicated,  it’s unconstitutional and all of this,” Diaz said, “and you end your argument by  saying you’ll do it in a year, it’s legal, you can do it. Clearly, clearly the  ground has shifted underneath your feet.”

The days of tax free internet shopping are close to over.


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National (internet) sales tax, the nose of a very big camel.

How disgusting. I have recently read predictions of the end of Amazon, as taxes will eliminate their profit margin. However, I am thoroughly disgusted that part of the deal is their agreeing to work for a national internet sales tax.

One of the advantages of an Internet book provider is selection. That advantage doesn’t go away. Brick and mortar book stores seem to want to push a liberal agenda, and books of “the wrong view” aren’t available there. I can shop books online, but I don’t need to shop with Amazon.

The big problem with an internet sales tax is whose tax rate do you use and to which jurisdiction is the tax paid?

On non-internet sales tax, it is the based on the merchant’s location. E.g., I call a pizzeria in suburb A from my office in suburb B and ask to have the pizzas delivered to my daughter’s home in suburb C where we are all having dinner. When the pizza arrives, my wife (who is already at my daughter’s home with the grandkids) pays sales tax based on the location of the pizzeria, suburb A.

Every attempt I have seen on enforcing an internet sales tax (in my state they call in a “use tax”), the tax rate/jurisdiction is based on the *presumed* location of the buyer. In the example above, that would not be suburb A (from which the pizza was ordered), suburb B (where the pizza was prepared), or suburb C (where the pizza was delivered and consumed), but it would be suburb D (where no transactions or activities have occurred) because that is the location of my home, and, thus, my *presumed* location.

The easy solution would be to do it just like the regular sales tax, use the merchant’s location. (Low sales tax jurisdictions would probably see a boom of activity!) However that would never fly with the politicians.

Instead, like Viator said, this is the start of a “National (internet) sales tax, the nose of a very big camel.” A very big camel indeed, one also known as a V.A.T. tax.

My fellow Americans, it is long past time to wake up. The alarm rang a long time ago!

Amazon should have told Jerry Brown and the inept politicians of California “NO!” and kicked them out of the office.

You don’t defeat bad government by feeding the beast. You starve it to death or it will starve YOU to death. Just ask the victims of Hitler, Stalin and Mao.

The brick and mortar retailers just have to get it in their heads that the all-important Commerce Clause is on the side of the internet retailers and on the side of consumers.

As for Amazon, big corporations like this one have too many liberals in the closets and on the board of directors.

Look hard at Amazon’s financials. They cannot afford to pay the sales taxes without raising prices.

So. When the tax law passes, they’ll raise their prices.

But that makes their pricing equal with the brick/mortar folks. Maybe that’s an opportunity.

ConserveLiberty | October 5, 2011 at 10:32 pm

Well that just tears it. I guess I’ll do all my shopping at Goodwill.

This is a terrible sell out by Amazon. One thing, perhaps the only thing, that puts at least some pressure on states not to raise sales tax rates is that consumers have an alternative such as Amazon. If that goes there will be no restraint left on rapacious state politicians to prevent them from raising sales tax rates through the roof. Their own voters seem to be asleep at the wheel on the increasing burden of sales taxes. It’s not just New York City where people must pay enormous sales taxes. In Prescott, Arizona the combined state and local sales taxes are 11%.

Amazon is already charging sales taxes on Kindle books where the publisher has set the price of the download. They are NOT charging the sales tax rate of the buyer’s home state. Your tax dollars on Kindle books is not to your home state but rather to the state where the publisher is located. Thus, if you buy a Kindle download of a book with the download price set by the publisher you paying sales taxes to a foreign jurisdiction you don’t even live in, the same as if you actually went there to buy the book. The sales tax rate that I would pay for such a download, if it were based upon the state and county in which I live, would be 4.3% The rate I have been charged for a publisher-priced Kindle book has ranged from 7% to almost 12%. I have sworn never to buy a Kindle book that costs more than $9.99 and never to buy one if sales tax is to be charged.

By the way, there is only one way to know whether sales tax will be charged for your Kindle book. If price was set by the publisher, there will be sales tax. That is your only clue before you hit the “buy” button.

TeeJaw brings up an interesting point. How much fudging can Amazon do to determine who gets the tax revenue for products? Would this make Amazon a quasi-taxing authority? I must ponder the possibilities and talk to my accountant friend.

Also, Professor, something is wrong with your home page. Until I script-blocked youtube, after landing on I was redirected to is your ‘video of the day’ possibly tagged ‘no-embed’?

I’m not seeing it. Amazon has a “presence” in California due to the affiliates that most internet retailers do not. Yes, other states may jump on the bandwagon and collect taxes from Amazon and other big internet retailers with legal ties to their state but they can’t force a web site with all operations outside their state (maybe in tax-free NH or TN) to collect taxes for them. Likewise foreign web sites.

As for this being the pointy end of the VAT spear, what incentive does California have to push for a national sales tax? None, it competes with their own tax and puts political pressure on them to keep their tax lower than it otherwise could be. CA is seeking a national policy on application of state sales taxes to internet transactions, probably to solve the jurisdictional problem – tax in the seller or the buyer jurisdiction? There may even be a case that a state which imposes a tax on sales from other states amounts to a tariff and violates the commerce clause (the real purpose that clause even exists). PA, where I live, technically requires that residents pay a use tax on any purchase where the seller fails to collect sales tax. (They actually enforce that for major purchases – I got a tax bill for my wife’s engagement ring that I bought from

Amazon decided for whatever reason they weren’t going to win this (I’m sure CA has other weapons at their disposal), and opted to push for a national policy that would cause equal treatment of all internet retailers. High-tax states will want it levied in the buyer’s state (sellers would flee their state otherwise) while low-tax states will want it levied in the seller’s state (Wyoming can collect taxes on purchases made by millions of Californians). Guess who will win that one? Hint: buyers are less mobile.