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Amazon Poised To Get Cut of CA Sales Taxes 295

Posted by timothy
from the unfettered-free-market-free-of-cronyism dept.
theodp writes "Eager to host Amazon warehouses and receive a cut of the tax on sales to customers statewide, the LA Times reports that two California cities are offering Amazon most of the tax money they stand to gain. After agreeing to collect California sales taxes beginning in the fall, Amazon is setting up two fulfillment centers in San Bernadino and Patterson, which will gain not only jobs but also a tax bonanza: Sales to Amazon customers throughout California will be deemed to take place there, so all the sales tax earmarked for local government operations will go to those two cities. The windfall is so lucrative that local officials are preparing to give Amazon the lion's share of their take as a reward for setting up shop there. 'The tax is supposed to be supporting government,' said Lenny Goldberg, executive director of the California Tax Reform Assn., of the proposed sales-tax rebate. 'Instead, it's going back into Amazon's pocket.' Sen. Mark DeSaulnier added: 'It seems like the private sector finds a way to pit one city against the other. You can't give away sales tax in this manner.'"
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Amazon Poised To Get Cut of CA Sales Taxes

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  • by bigdavex (155746) on Monday May 21, 2012 @08:12AM (#40063079)

    Special tax deals for individual companies is a recipe for corruption.

  • Don't blame Amazon (Score:5, Insightful)

    by gstrickler (920733) on Monday May 21, 2012 @08:23AM (#40063125)

    Blame the design of the tax laws, and the city officials who are willing to give huge tax breaks to major businesses. We see this type of thing all the time in the building of major sports facilities. It's welfare for billionaires.

  • by mwvdlee (775178) on Monday May 21, 2012 @08:27AM (#40063145) Homepage

    It's not like a small start-up competitor for Amazon wouldn't get these same tax cuts in these same cities, right? Right? Please tell me I'm right.

  • by roman_mir (125474) on Monday May 21, 2012 @08:35AM (#40063213) Homepage Journal

    It seems like this story is trying to make Amazon look bad or trying to make cities that are hunting for Amazon's money look bad, because they are providing the most competitive environment to the other cities and government officials don't like it. It's a story that needs to be cut just like Gordian Knot.

    Yes, governments require money.
    Yes, private enterprise creates money, so governments require private enterprise.

    So governments competing for money of private enterprise makes sense. Some argue that this is wrong, they want 'one government' even 'world government' and 'world taxes', etc., all just to KILL competition (and majority of the mis-educated public believes that government increases competition, not that it destroys it in every way possible).

    But of-course the real issue needs to be distilled here just like the Gordian Knot needed to be cut to be solved:

    1. Sales taxes and income taxes should not coexist. Income taxes are illegal and collected illegally [slashdot.org] and sales taxes, excise, import taxes are legal and they are the preferred way to run governments, because they can be moderated by the people's purchasing and saving behaviour, and we shouldn't believe in propaganda that we exist to support the government structure and that individual rights are secondary to collective.

    2. Governments SHOULD HAVE TO COMPETE for money. Governments that compete for money are governments that are much less spending happy and are aware that their financial situation wholly depends on the financial situation of the actual market and not on their ability to ENSLAVE people through taxing their labour, DESTROY competition by creating, supporting and bailing out monopolies/oligopolies and STEAL liberties and freedoms from people through growth of government offices due to all of the laws and regulations governments come up with.

    People must be free to choose between different governments and governments must be local, not global.

    Global government above you is a single point slave owner that you cannot escape.

  • Re:Yes, you can... (Score:5, Insightful)

    by Trepidity (597) <delirium-slashdot@hacki s h . o rg> on Monday May 21, 2012 @08:45AM (#40063289)

    As far as I can tell, empirically this doesn't really happen: when FAA taxes were suspended for a bit recently, due to a Congressional screw-up when it came to reauthorizing the agency to collect the fees, airlines didn't lower their fares, they just pocketed the savings as higher profit margins.

    Another way of putting it is that profit margins, like almost everything else, aren't completely fixed, so tax hikes and tax cuts don't necessarily get passed through to retail prices, but instead may modulate profit margins (or other things, such as employee pay).

  • by thomasw_lrd (1203850) on Monday May 21, 2012 @08:48AM (#40063311)

    Its not really though. They will tax the employees. This is how the city makes additional tax revenue. That's what it really all about. Plus all the residual services that new job bring.

    People only bring up the issue at hand, they aren't considering what is really happening.

    It's much the same with the whole X amount of billionaires don't pay any taxes on their income. The news media doesn't report that's because they give 90% of the money to charitable causes, or what not. It's the residual effects of their money that makes the biggest difference, not the fact that they don't pay X amount of taxes.

  • by Anonymous Coward on Monday May 21, 2012 @08:49AM (#40063317)

    Corporations play one state or city against another to extract tax breaks. They threaten to move the plant here or there, and get different localities to bid against each other with tax reductions. The burden falls on the rest of us.

    I have a proposal for how to solve this problem. I think the states should increase their bargaining power against companies by forming a union. We could call it the "United States of America."

    Here's how it would work. All the states would agree to be bound by a rule that when a company considers locating a facility in more than one place, none of those jurisdictions can offer it a tax break without the consent of all the others. Any jurisdiction that believes a company is considering another location could make a complaint under this requirement. If the company then chose a different location, and got a tax break there, it would be fined twice the amount of the tax break and the fine would go to the jurisdiction that made the complaint.

    Of course, the states already have a so-called union. Too bad it sold out to the companies.

    rms, http://stallman.org/articles/states-union.html

  • by KozmoStevnNaut (630146) <henrikstevn@gm a i l .com> on Monday May 21, 2012 @08:50AM (#40063323)

    So what you're really saying is that you refuse to contribute financially to the society which helped you achieve your current station in life.

    I'm assuming that you live a relatively comfortable, perhaps even wealthy lifestyle. Yet you refuse to pay taxes and contribute, like the scum-sucking libertarian festering leech-like boil on society that you are.

    Got it.

  • by KingSkippus (799657) on Monday May 21, 2012 @08:53AM (#40063351) Homepage Journal

    Yeah, it sounds like a good deal except that a lot of towns are ignoring the hidden costs of these deals. That huge company is going to require a lot of extra government services in the forms of things like electricity, water and sewer, roads, etc. Plus with the extra people, it's going to require more of things like fire nad police services, welfare benefits, unemployment benefits, public parks, postal services, yadda yadda yadda. What looks like a $5,000,000 bonanza, when all is said and done, ends up costing the taxpayers a crapton of money.

    These deals ought to be illegal, period. Government at all levels, from federal all the way down to local, should be prohibited from making sweetheart deals to one company without making them for all companies. It would have to be a federal law, since there's no way in hell that cities or states would make such laws on their own. That's the only way that the playing field could be leveled for everyone. Maybe now that corporations are "people," some small companies should get together and sue using the Equal Protection Clause, under the theory that government is prohibited from offering Company X a sweetheart deal that Company Y, Company Z, and every other company doesn't have access to. It's a little like selling bus tickets to the Smiths for $2 each and selling the same bus tickets to the Johnsons for $8.

    There is no telling how many trillions of dollars aren't being collected from companies because of deals like this, how much money is being sucked out of local municipalities' and states' coffers and being paid by people who live nowhere near where the money eventually ends up.

  • by KozmoStevnNaut (630146) <henrikstevn@gm a i l .com> on Monday May 21, 2012 @08:59AM (#40063397)

    The fact that you call it "the correct solution" is very telling. As if it is the only single way to run a country, but I'm afraid the tendency to grossly over-simplify things is a common trait in all libertarians I have encountered.

    And please do not hold me up as an example of the failures of your US publicly financed education system. Your education system has failed due to religious pressure, infighting and almost complete lack of funding.

    None of this has affected my education, I live and was educated on the other side of the Atlantic, first in a public school, then a private school. My further education took place in my country's world-leading publicly financed system of higher educated, which is free and open for all to attend, with no regard to social class or income bracket. THAT is freedom.

  • by roman_mir (125474) on Monday May 21, 2012 @09:15AM (#40063501) Homepage Journal

    The fact that you call it "the correct solution" is very telling.

    - says the guy, whose main objection to all of my actual prescriptions was: you are a 'libertarian sob' or some such.

    As if it is the only single way to run a country,

    - it's the best way to run a successful country, like the USA was 1870-1913. But surely, countries can be run for some time without being economically viable at all, USSR, Greece, USA post 1971 especially, Japan for the last 20 years, etc.etc.

    You can run a country and then you can run a country into the ground.

    but I'm afraid the tendency to grossly over-simplify things is a common trait in all libertarians I have encountered.

    - seriously? The simplest things like: not running over your budget, spending within your limits, not growing the government above its basic and authorised functions and not growing government spending and in fact cutting government spending when there is no money for government, because the government has already done enough to hurt the economy, so the economy is shrinking. Those are not just simple ideas. Those are ideas that nobody wants to follow because they don't want to face the music, yet they love talking about the proverbial kids.

    Simple ideas that nobody follows because sticking your head into the sand is even simpler.

    And please do not hold me up as an example of the failures of your US publicly financed education system.

    - first, it's not my publicly financed education system.

    Neither is USA my system, nor does it have to be US system to be a publicly financed failure. Wherever you were 'educated' today, it's most likely you were 'educated' by a publicly financed, publicly ran system, and your failure to understand that point, that it doesn't matter whether it is a USA system or any other nation's, is just another testament to how pathetic this idea is in the first place.

      Your inability to stop talking about any specific circumstance, my or your own ('your father', etc., who asked you? Who gives a shit and what does it have to do with the point that is being made? nothing), proves how completely irrelevant the education systems have become. Worse than irrelevant.

    I am sure you weren't actually BORN this stupid - they had to beat this into your head over time.

  • Re:nothing new (Score:4, Insightful)

    by Hatta (162192) on Monday May 21, 2012 @09:45AM (#40063761) Journal

    In the absence of such a deal, the company would still have to make a factory somewhere. That means those jobs would still exist, and still contribute taxes to the economy. The sweetheart deals only ensure that it's your city that gets the jobs.

    So what we have here isn't a situation where everyone's a winner. These deals make your locality a winner at the expense of others. When looked at it from the perspective of society as a whole, these deals are zero sum or worse. They should not be allowed.

  • by KozmoStevnNaut (630146) <henrikstevn@gm a i l .com> on Monday May 21, 2012 @09:54AM (#40063875)

    The best way to run a successful country? That obviously depends on how you define "successful".

    Can we agree that a successful country is one where each person has the best possibilities to break their social heritage? One where each person has the best possibilities to rise up and create their own wealth? One where education is equally accessible by all and not a road to financial ruin for the unlucky? One where equality between all people, no matter sex, religion or sexual orientation etc. is a priority? One where even the poorest people can live a decent, well-fed existence?

    If we can agree on this, and I believe we can, you really should study the Nordic Model, or "capitalism with a human face" as it's also called. Sure, I would love for my country to move further left. It works well right now, notwithstanding the idiotic policies of the previous 10 years of populistic, lowest-common-denominator right-wing politics that sought to dismantle our world-leading welfare model.

    Please, do tell me what is wrong with my education? I work for an industry-leading company, among the top people in my country within my field of expertise and I am paid handsomely. I comfortably within the top tax bracket and pay my taxes with pride in exchange for the society that helped me get to where I am today.

    Is it because nothing publicly funded can ever be effective, good or admirable, in your mind? You deride the idea of public education as "pathetic", yet you present no arguments.

    I never mentioned my father, but now that you did, he also attended the same public education system that I later enjoyed the benefits of. Today, he is a successful business owner and has been for over 20 years.

    I'm sorry, but I completely fail to see your points, both in the discussion to this article and in the post of your own writing that you linked to as "documentation" for your wild theories on the subject of income tax being illegal.

  • by J'raxis (248192) on Monday May 21, 2012 @09:59AM (#40063947) Homepage

    I hope all you people who were whining about Internet retails back when they were untaxed, not "paying their fair share" and having an "unfair advantage" over brick and mortar stores, are happy with the results. Now one of the retailers turns around and buys privilege from the government, actually benefiting from these taxes.

    I'd write more, but I'm laughing too hard. :)

  • by Anonymous Coward on Monday May 21, 2012 @10:14AM (#40064115)

    What people loudly complain about is irrelevant; they generally suck at assessing and comparing costs in an unemotional way.

    Think of it this way: the tax rate, in principle is calibrated such that all entities (people, companies) pay their fair share of the communal burden (roads, fire departments, etc.). Thus, anyone who gets a tax break is necessarily not paying their fair share. They are a net burden. Now, we all know this isn't quite right, since the tax system is set up so that some entities in fact overpay to subsidize other entities (e.g. people who can't work (the young, the old, the disabled) pay less than people who have an abundance of wealth). So, yes, it's conceivable that bringing in a big company, and giving them a tax break, is still a net positive. But it's by no means a given.

  • by crimoid (27373) on Monday May 21, 2012 @10:22AM (#40064199)

    I'm sorry, but the lions share of the tax money (at least in CA) is not going to major corporations in the form of incentives. Most of it goes to state employees' salaries and benefits, the latter of which is grossly out of whack in this state.

    I'm all for keeping a close eye on corporate/government activity, but saying that taxes are high because of it is just incorrect.

  • by KozmoStevnNaut (630146) <henrikstevn@gm a i l .com> on Monday May 21, 2012 @10:37AM (#40064417)

    So paying taxes = being a slave, do I understand you correctly? In that case, you have a very twisted definition of being a slave.

    I fail to see how I am a slave. There are two things that are for certain where I live. The law and taxes. I obviously cannot do anything that is illegal, that is the rule of any organized society. And I must pay my taxes, to contribute back to the society that has enabled me to earn my wages, through education etc.

    Is that slavery? I can quit my job and start over on another line of education, or start my own company, or take my savings and explore the world. I am free to explore my ideas and ambitions, safety encourages creativity and thinking outside of the box.

    Being able to break the social heritage and be successful on your own in spite of where you came from in life is the cornerstone of the American dream, yet America is one of the hardest countries to actually do this in, always has been.

    Tell me, oh oracle of the free market, how have I chosen to not be free? I have precisely two obligations in life, the law and taxes. These are the only (mild) limitations put upon me and apart from them, I am free to do whatever I like. How is that being non-free?

    You tout the free market as some sort of panacea to every ill that plagues the world. Yet when the market is truly free, self-styled monarchs and rulers will spontaneously pop up. Without checks and balances in place to prevent the exploitation of their fellow man, human suffering increases exponentially.

  • by tsotha (720379) on Monday May 21, 2012 @05:27PM (#40069843)

    The tax money in question is only the part of the tax that goes to the local municipality. They cities in question can't bargain away the state's portion of the tax, so other cities aren't losing out on tax revenue. And we're not talking about a lot of money here - of the $316m Amazon is expected to pay in taxes only $8m apiece was slated to go to the cities in question. Now, you could argue that the sale actually happens wherever the customer is clicking away on his computer and therefor that city should get the money, but that's not how sales taxes are collected for brick-and-mortar sales. If I drive to another city and blow a bunch of money at the mall my sleepy burg doesn't get any of the tax money.

    These kinds of deals are done all the time by cities and states. Whenever a company decides to build something that's going to employ a lot of people or generate a lot of tax revenue it typically will shop around for the best deal. Nothing wrong with that, IMO. Cities and states aren't losing money when someone comes in and employs a bunch of people, some percentage of whom who would otherwise have been on the dole. All those employed people pay income taxes (which are quite high in CA), and they pay sales tax every time they buy something (well, in CA it doesn't apply to staple foods and clothes, but still).

    This happens at the country level as well. Multinational corporations have options when it comes to siting a factory, and what kind of tax deal they can get is always going to be considered along with the normal stuff like infrastructure and labor costs.

    What would be shocking is if Amazon didn't shop around. Anyway there isn't anything California could do to force Amazon to collect sales taxes as long as Amazon didn't have a presence in the state, so presumably they ground out all the numbers and decided the supply chain advantages outweighed the tax liabilities.

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