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Startup Flees To Seattle Amid Amazon's Tax Fight 235

Posted by timothy
from the game-theory-of-taxes dept.
An anonymous reader writes "SF-based comparison shopping startup Shopobot was caught in the fight between Amazon, big-box retailers, and politicians over collecting of sales tax for online purchases. So what did the entreprenurs do? Flee to Seattle, right next to Amazon HQ, where marketing affiliates have a chance — because Amazon already collects sales tax in WA." And if you must flee, Seattle's a nice destination.
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Startup Flees To Seattle Amid Amazon's Tax Fight

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  • And in the event of civil uprising in the states, Canada is only 2 hours away.

    • And in that event, Canada would have to consider itself a casualty of a continental war fought between two halves of a superpower nation. That would be very sad.

      I hope that we in the U.S. can settle things more locally by destroying the bastards who have taken control of our fine nation. We all know who they are. *

      * Contentious. IMO it's the two major political parties, the scumbags on Wall Street and the clowns in Hollywood.

  • by OS24Ever (245667) * <trekkie@nomorestars.com> on Friday September 16, 2011 @06:07PM (#37425316) Homepage Journal

    They don't have a sales tax there, won't ever have to deal with it there.

    • Just a business and occupation tax which varies by industry. In most cases it's about 1% of revenue, which is pretty business-friendly.

      Oregon has a two-tiered corporate income tax, which tops out at 7.9% of profit over $250k. Web-based services usually have low expenses, so there's not much difference between revenue and profit, making Washington the clear winner.
      • Oregon has a two-tiered corporate income tax, which tops out at 7.9% of profit over $250k. Web-based services usually have low expenses, so there's not much difference between revenue and profit, making Washington the clear winner.

        Hmmm... Not quite. Having run a business in WA, you do pay an effectively hefty B&O tax (it's now at 1.5% for service industries, like resellers). And it's on GROSS receipts - not operating revenue. So every dollar of product or service you sell is hit with this rate - not just your gross profit or operating revenue. Buy a widget for $80 and sell it for $120? You pay 1.5% tax on the $120 - not the $40 of your gross margin. And there are NO deductions for profitability - you can lose money on the

    • Yeah I'm really confused by this news. Just so I'm clear... companies are fleeing California (because it has a sales Tax) to go to Washington which has a sales Tax!?

      • No - it was weirder than that...
        basically..
        1) online stores like Amazon would prefer not to collect sales tax. And they've been able to do that because they're not a "California company"
        2) California would love to get some more tax revenue. So they made a law saying: if you work with a CA affiliate, that's basically the same thing as being a CA company.

        So Amazon had a choice.. start collecting sales tax in CA, or stop working with CA affiliates. The choice was pretty easy for them! But for us (
    • by PPH (736903)
      You can't pump your own gas in Oregon.
      • by xero314 (722674)
        I think you mean you don't have to pump our own gas in Oregon, or New Jersey.
        • by PPH (736903)

          No. I mean can't. I don't have to in Washington State, if I'm willing to pay for full service. Try getting out of your car and grabbing the nozzle in Oregon and see what happens.

          I wonder if Oregon will hang on to this nonsense if, one day, some CEO considered Oregon for their new corporate HQ. But he (or she) is a real car nut and just said, "Can't pump my own gas? I'll locate somewhere else. Thanks anyway."

          • by drinkypoo (153816)

            No. I mean can't. I don't have to in Washington State, if I'm willing to pay for full service. Try getting out of your car and grabbing the nozzle in Oregon and see what happens.

            Yeah, I tried to do that one time, because I'm an independent individual as well. But then I realized that the gas was still cheaper than it was in Washington (where I was driving from) or California (where I live) and then I relaxed.

            I wonder if Oregon will hang on to this nonsense if, one day, some CEO considered Oregon for their new corporate HQ. But he (or she) is a real car nut and just said, "Can't pump my own gas? I'll locate somewhere else. Thanks anyway."

            I wonder where you come up with this shit.

    • Hey! - one of the http://shopobot.com/ [shopobot.com] founders here.. We chose Seattle because we've both lived there before, and we like it, and it has a pretty good startup scene. I actually just moved to SF from Seattle to when we started the startup, so it was a quick return home for me.

      btw, this is the first time we've been on /. so I was excited about having the servers melt.. but unfortunately most people just went to the blog on not our site. Maybe next time :)
  • Oh yeah, today's Stay Away from Seattle Day [komonews.com]. I think /. is trying to subvert this most wondrous of holidays!
  • I've been to Seattle (Score:2, Informative)

    by blair1q (305137)

    I've been to Seattle.

    The sun hasn't.

    I wouldn't flee there except that I then proceed to another destination.

    • I was going to say the same thing. In their defense, though, San Francisco isn't a mecca of sunshine either. Lots of grey days, even when the rest of the Bay Area is basking in sunshine.

      • by Dahamma (304068)

        SF may not be a mecca of *warmth* (in the summer - in winter it's warmer than most or the rest of the Bay Area), but it still WAY in the top percentage of US cities as far as sunny days goes. Not only blows away Seattle by 2x, it beats most major cities outside of CA and AZ...

        http://www.worldfactsandfigures.com/weatherfacts/numbersunny_city_desc.php [worldfactsandfigures.com]

        Caveat - this does not apply if you live in the Sunset, in that case the rest of SF pities you :)

        • by digitig (1056110)
          What's sunshine got to do with it? As far as I can see, these are SF geeks. What would they be doing outside?
    • by wilgibson (933961)
      Obviously you weren't in Seattle for the months of June, July, August, and September. All we've had are gorgeous sunny days with temperatures between 60 and 85F. Four months of amazing whether and eight months of drizzle and chill is definitely more favorable than the five months of 90F+, 100% humidity BS I moved out of when I left the south.
      • Huh? Not this year! Summer didn't arrive until August! June and July sucked bad - and I'm a native, having lived in Seattle for most of every one of my 43 years... We had a good August, and it stretched until September 10th - and then promptly petered out with the 62 and gray skies thing since then...
    • Re: (Score:2, Funny)

      by Sponge Bath (413667)
      What about Texas? Come for the drought and wildfires, stay for the Tea Party madness.
    • by Greyfox (87712)
      You know, people say that and every time I've been to Seattle it's been 70 and sunny. I think the crappy weather is just rumors spread by residents who don't want anyone else moving there!

      Plus the sushi there is fantastic.

    • I've been to the rest of the state. Feel free to discover the rest of the state.
      http://www.city-data.com/city/Clarkston-Washington.html [city-data.com]
      The average commute to work is less than 10 minutes.

      • Forgot to include The Tri Cities in the post above. If you want Sun, check near Pasco.

        With more than 300 sunny days each year, the Tri-Cities is perfect for Golfing, Swimming, Boating, Hiking, Hunting... Anything and everything under the Sun!!

        65 days a year without sun is what part of the rest of the state has.
        http://www.viewourhomes.com/tri-cities.html [viewourhomes.com]

  • by smoothnorman (1670542) on Friday September 16, 2011 @06:13PM (#37425374)
    No no no... stay away from Seattle. nothing to see here. it rains all the time!. this is not the city you seek. you want...Portland, yeah! Portland is much more friendly and bike-centric and mellow. Seattlites are all hyper-liberal coffee-drinking zombies... save yourself! stay away! ....aaaaieeeee..... [end of transmission]
    • by geekoid (135745)

      IF you like good beer and coffee, then yeah, come to portland. We will treat you and your business well.

      Seattle is where old douche bags go to die.

    • You shouldn't come to Portland either. We also have tons of rain, and... there's nothing to do here... so stay down in Cali where you're safe from the harmful drops of water that mysteriously fall to earth.
    • by frank_adrian314159 (469671) on Friday September 16, 2011 @07:01PM (#37425700) Homepage

      No, no!!! Not Portland! It's always rainy here and there are all of those smelly hippies and hipsters and... well, you saw Portlandia, didn't you? It's just like that. And there are cougars (the feline kind) roaming in the streets (no more cars to run them over now that we have so many bicycles) so you're not safe at all. Stay down there in beatuiful, sunny California. I'd be down there with you, instead of this hell hole, but we don't make enough money up here for us to move there.

      • by drinkypoo (153816)

        You just failed. The people considering Portland or Seattle can't afford to live in California. At least, not the parts nicer to live in than Portland or Seattle... which are numerous.

        Washington Chill
        Oregon Nazis
        California Hippies
        California Assholes

        North to south progression, of course. There's something to hate everywhere.

    • by macshit (157376)

      No no no... stay away from Seattle. nothing to see here. it rains all the time!. this is not the city you seek. you want...Portland, yeah! Portland is much more friendly and bike-centric and mellow. Seattlites are all hyper-liberal coffee-drinking zombies... save yourself! stay away! ....aaaaieeeee..... [end of transmission]

      Hmm, my seattle-living-friend's big complaint is that Seattlelites are wayyyy too mellow and laid back; it drives her crazy. She's moving to NYC, of course...

      [I spent a large part of my youth in Seattle, so I'm not so bothered by it ... but I have utterly no desire to go back...]

  • by unassimilatible (225662) on Friday September 16, 2011 @06:14PM (#37425382) Journal
    over taxes and regulation. According to this blog [blogspot.com] (LOL, only "business relocation coaches" have secure employment in CA) companies leaving CA has increased 5-fold since 2009, an average of 5.4 per week! And Chief Executive magazine has again ranked California last of 50 states to have a business [chiefexecutive.net]. 14 states have tasked their economic development agencies with luring away [city-journal.org] California companies tired of high taxes, profuse regulations, and an extortionate legal system. So let's not just make this about Amazon. Everyone is fleeing CA. In fact, WA is not even safe. With the NLRB's overreaching against Boeing, their next move might be to China.
    • Look, California is one of the largest economies in the world for a reason. (Actually, a lot of reasons.)

      If you don't want to give back to the state that you do business in, bye bye. You won't be missed. Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.

      • by sdguero (1112795)
        North Carolina has a shitload of software companies. I dunno about the South though...
      • by mc6809e (214243) on Friday September 16, 2011 @08:08PM (#37426118)

        Look, California is one of the largest economies in the world for a reason. (Actually, a lot of reasons.)

        If you don't want to give back to the state that you do business in, bye bye. You won't be missed. Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.

        Ugly sentiment and dangerous.

        At some point you'll wake up and realize that the state needs them more than they need the state. And California is not East Germany. You won't be able to build a wall to keep them in so they can be forced to "give back to the state". They'll leave and they'll be missed.

      • by Denmc (2463338) on Friday September 16, 2011 @08:59PM (#37426358)
        As a native Californian, this "don't let the door hit your ass on the way out" attitude concerns me. Our state has an unemployment rate of 12.1%. Only Nevada is higher at 12.9%. Our state has a serious jobs problem and continuing to encourage businesses to leave will not improve the welfare of our citizens.
        • So seriously.. What is your state doing to attract and retain businesses and jobs?

          High unemployment and businesses leaving for greener pastures is not the problem. The problem is the pasture is no longer green there.

          California has become one of the most liberal states with fantastic benifits. The side effect is budget problems when the economy is not so great. Raising taxes instead of cutting entitlements has caused the problem.

          Again, I ask, what is California doing to attract and retain businesses? We k

          • by drinkypoo (153816)

            California has become one of the most liberal states with fantastic benifits. The side effect is budget problems when the economy is not so great. Raising taxes instead of cutting entitlements has caused the problem.

            No, supporting shitty states that can't pay their bills has caused the problem. California gets less money back from the federal government for each dollar we put in than any other state so that we can prop up shitty states in the midwest that can't profitably produce anything and should be permitted to be turned into public storage for states people actually want to live in that have natural resources. I support the George Carlin prison plan, personally. That ought to use up some of that shitty real estate

      • by drnb (2434720) on Friday September 16, 2011 @09:11PM (#37426404)

        Look, California is one of the largest economies in the world for a reason.

        Yes, the policies we had decades ago. Be careful, you are looking backwards, and the GP is looking forwards.

        If you don't want to give back to the state that you do business in, bye bye. You won't be missed.

        Yes, but up to a point. Both you and the GP may be a little overdramatic but the GP does have a point. For example how much of the economic success you refer to is from the aerospace industry? Bad news on that front:
        http://washingtonexaminer.com/blogs/examiner-opinion-zone/aerospace-exodus-california [washingtonexaminer.com]

        And what of the emerging private space industry that has its roots in Mohave? More bad new:
        http://www.signonsandiego.com/news/2011/apr/14/competitors-are-wooing-california-space-industry/ [signonsandiego.com]

        On a personal note I know some guys who used to shape surf boards. Very small scale shop but respected by locals and profitable for years. They had to give it up due to ever increasing regulations.

        Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.

        I don't think US customers know or care where a software company is located, except possibly that it is a US operation. And with the increasing popularity of the digital supply chain -- developer to online store to consumer, no packaged goods or distributors -- this is becoming even more so.


        You have to admit the California legislature is out of control and making California a less friendly place to do business than a few decades ago.

      • Look, California is one of the largest economies in the world for a reason. (Actually, a lot of reasons.)

        If you don't want to give back to the state that you do business in, bye bye. You won't be missed. Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.

        Thing is, you need to look for a middle ground there.

        Yes, businesses (and citizens) should pay taxes in their state and country of residence. And yes, successful economies are generally not the ones which have ultra-low taxes, at least not in long-term - you can make a market "efficient" that way, but it does not contribute to a healthy society.

        On the other hand, taxation should be fair. Taxes are not some kind of magic coffer where the state should reach into every time it runs out of money doing stuff - e

      • by khallow (566160)

        If you don't want to give back to the state that you do business in, bye bye. You won't be missed. Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.

        Looking back on it, while I still have some connections in California, leaving the state was good for me. Yes, I didn't want to give back, mostly because I think California deserves the destruction it is inflicting upon itself. My only concern is that the California disease will spread with California refugees.

      • So, what are the reasons California is one of the largest economies in the world, and why wouldn't you want to run a software company in South Carolina?

      • by drinkypoo (153816)

        Look, California is one of the largest economies in the world for a reason. (Actually, a lot of reasons.)

        Hollywood, which is a criminal cartel. The music industry, likewise. The drug trade (and production) which is all criminal activity. Food production, which is based on illegal immigration. Tech, which is today overwhelmingly based on abuse of patents. Every way in which California leads the nation, it leads it in criminal and/or antisocial behavior.

    • by sdguero (1112795)
      Cannot agree more. I'm a So-Cal guy and I love it here but I've been watching this state drive out business, particularly in tech, for the last 10 years. My hope is to stay and pay the insane state taxes, but if all the jobs leave (San Diego is still doing OK, largely thanks to Quallcom) I'm going to have to leave too. :(
    • by mspohr (589790)
      In California, we are happy when someone leaves. This has the effect of increasing the average IQ of both California and wherever they land. (Not to mention making more space for us.)
    • This is a reversal of a trend in the 1960's. It was so bad that there was a billboard that I remember there..

      Will the last person leaving Seattle, turn out the lights?

      Do a Google search for "Will the last person leaving" and you will find it in the top hits.

      On April 16, 1971, real-estate agents Bob McDonald and Jim Youngren put the words, "Will the last person leaving SEATTLE -- Turn out the lights" on a billboard at S 167th Street and Pacific Highway S near Sea-Tac International Airport. The two realtors, who work for Henry Broderick, Inc., put up the billboard as a humorous response to pessimism generated by the national aerospace industry's nosedive, known locally as the Boeing Bust.

      This page includes a photo of the billboard. Looks like California is the next to get the billboard.
      http://www.historylink.org/index.cfm?DisplayPage=output.cfm&file_id=1287 [historylink.org]

      Seattle has tried not to repeat losing major businesses leave.

      • by drinkypoo (153816)

        California has what it has because the wild people have always gone out west. There is still massive opportunity in California for those who seize opportunities. Those who sit on ass and wait for them to show up are having an ever-harder time. If a bunch of businesses go then a bunch of people will leave California and it will get cheaper, resulting in a fresh influx of interesting people with ideas. Some of them will start tech companies and they will find people to hire because other interesting people wi

  • I think we, in many ways, have a better environment for startups than the SF area. There's a lot of good talent up here.

    And it's not rainy year round. The summers are gorgeous and sunny. The SF area is pretty rainy in the winter too.

    • by Tumbleweed (3706) *

      I think we, in many ways, have a better environment for startups than the SF area. There's a lot of good talent up here.

      And it's not rainy year round. The summers are gorgeous and sunny. The SF area is pretty rainy in the winter too.

      The problem with the startup talent in Seattle is that so many of them have grown up on MS shit that they don't realize it's shit. And expensive, which is anathema for startups. Some startups realize that as long as someone knows how to code, they can switch to any other platform with a minimum of fuss, but many do not.

      • There is a pretty strong population of non-MS programmers here too. I've l been mostly a Unix hacker, though I did do some work with Microsoft garbage a long time ago, and in the bad old days of MS-DOS when you couldn't get a machine on your desk that ran Unix for less than 10k USD.

  • by Anonymous Coward

    Businesses are fleeing California [cnn.com] for a lot of reasons [ocregister.com].

    Those that remain may enjoy their fitted sheet [theblaze.com] mandate as enforced by their mattress police [patch.com].

  • I'm just a one man operation doing a browser with mobile app API for my own service (for extra money revenue -- not a true startup in the typical sense) that got shutdown mid-development by this fracas. However, I'm not ready to move to Seattle -- lived there for 15 years, and unless you are wealthy the place has fuck all going on. I'm not wealthy and my CPA advises me that simply filing incorporation in another state without significant infrastructure there will not pass the smell test.
    However, I'm conside

    • by glenstar (569572)
      Washington state is downright hostile to small business. The DOR is evil and will treat you like a mega corporation even if you only have a single employee. I have had several corporations and LLCs registered in Washington (and stupidly just set up a new one here) but next time I will pay for an empty office space in Las Vegas and do it that way.
    • Every major city will have its issues. I lived in Reno for a year before moving to Carson City. Compared to my last home in Texas, the property rates here seemed high. My Los Angeles area relatives were shocked that I could buy a 3/2 house 1500 sqft for 74K. They also thought it a waste since it's just me and my girlfriend. At any rate, I've noticed more and more companies moving here from California. If I ever decided to give up my cushy government job, I'd have my pick of the companies coming here.
  • Seattle's a nice destination until the volcano triggers the earthquake.

    Or was it the other way around?

    • It's actually the grizzlies getting pissed at all the rain and stomping too heavily that triggers the Earthquakes which kick off the volcanoes. So we Washingtonians try to keep the grizzlies happy by feeding them the occasional CA or OR hiker...
  • by Okian Warrior (537106) on Friday September 16, 2011 @07:24PM (#37425836) Homepage Journal

    Look, it's really simple.

    Taxing Amazon is unconstitutional on its face, and there is a supreme court decision which is on point that clarifies the issue.

    Part of having integrity is supporting what's right even when it's not in your best interest. Yes, California is hurting, we get that. Yes, you need more money, we get that. No, it's not right, deal with it, and no, it's still not right even if you really, *really* need the money.

    A better question is whether California really needs the money. Comparing CA with NH:

    The CA budget is 9x the NH budget

    CA has 28x the population to tax (income taxes)
    CA residents have higher income on average than NH residents (income taxes)
    CA has 17x the land area to tax (property taxes)
    CA has much greater tourist draw than NH (meals and room taxes)
    CA has a vast agricultural and industrial base (NAPA valley, Silicon valley) (business taxes)
    CA has an enormous coastline which attracts international trade and recreation

    NH has... hiking.

    If you can't get 9x the revenue from 28x the population, you're doing it wrong.

    Here's a thought: How about California just ditch all government infrastructure and duplicate the one in NH, expanded per capita. You would have no income tax, no sales tax, and an operating budget 3x higher.

    Source:

    http://slashdot.org/comments.pl?sid=2320930&cid=36754362 [slashdot.org]

    California

    Population: 37M
    Population Density: 234/sq mi
    Area: 163,696 sq mi (770 miles from top to bottom)
    2010-2011 Budget: 102 Billion
    Budget per capita: $2756

    NH

    Population: 1.3M
    Population Density: 146/sq mi
    Area: 9,304 sq mi ( 190 miles from top to bottom)
    2010-2011 Budget: $11.5 billion
    Budget per capita: $8846

    • by Anonymous Coward on Friday September 16, 2011 @08:34PM (#37426258)

      Oh, I may be a little slow but from your numbers it looks like the CA government is 3x more efficient than NH. Why on earth will Californians want to spend 3 times more to service the same population???

      • I think what he meant was if NH has less people then why can't CA balance the budget.

        But a quick look on wikipedia shows NH gets most of it's income from property taxes. CA has always had trouble with that income stream due to prop 13. The burst of the housing bubble made it worse. With folks not spending all that much sales tax revenue has declined.

        • I think what he meant was if NH has less people then why can't CA balance the budget.

          What is the portion of people in NH earning minimum wage or close to it? Stuff like "average" income can be meaningless depending on how you compile the statistics (eg rich ass Hollywood types balanced out by tons of poor people in CA, vs maybe mostly middle class people in NH). The rich will pay less tax on their fortunes then if that same overall amount of money was being earned by a bunch of middle class people, and the working poor are generally still a drain on the budget.

          From what I hear California ha

      • Oh, I may be a little slow but from your numbers it looks like the CA government is 3x more efficient than NH. Why on earth will Californians want to spend 3 times more to service the same population???

        Indeed, that was a major arithmetic what-the-fuck moment.

    • New Hampshire has one of the lowest overall tax burdens. Sometimes *the* lowest, depending on the year.

      California has one of the highest overall tax burdens - 7th in the nation. (Varies, depending on the year and source)

      We raise 3.2x as much money per person than California, while taxing each person much less.

      Here's how we do it:

      1) We have a hefty property tax. Unlike income and sales taxes, property tax is largely immune to economic swings. When the economy goes up, you pay X. When the economy goes down, y

  • So what did the entreprenurs do?

    Maybe they learned how to spell?

  • Stay the fuck out of seattle. Do NOT move here.

    It rains all the time, homeless wander the street, the police beat up small children, gas is expensive, we have a big bed bug problem, there is no public schools for children.

    Everything else that is bad, happens here in Seattle. We are overcrowded and have bumper to bumper traffic on our freeways.

    Please stay away, we don't need anymore people here.

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