Rhode Island Affiliates Banned From Amazon.com Sales 532
Rand Huck writes "Amazon.com has now added Rhode Island to its blacklist of affiliates in response to its proposed budget changes to enforce a tax on Internet sales, which includes commissions on their affiliate program by content providers based in Rhode Island. The first state to be blacklisted was North Carolina, for the same reason. If you go to a Rhode Island-based or North Carolina-based website that advertises Amazon.com goods as an affiliate, that website will no longer have the goods available because otherwise Amazon.com would be forced to pay sales tax to the State of Rhode Island and Providence Plantations or the State of North Carolina. The state's rationale is, if someone clicks to buy a good from Amazon.com via a site based in Rhode Island, it's equivalent to buying a good from a brick and mortar chain store located in Rhode Island."
Catalogs (Score:5, Insightful)
This is difficult, because an internet retailer is a lot like a catalog retailer, who might have 80% of their business out of state and isn't set up to take 50 states' differing tax rates and does not have the accounting muscle to pay 50 different state taxes each quarter. I think that's the main problem. And then you have the issue of ship to in one state (NC for example) and bill to (non-taxable like Oregon) etc etc. It creates a lot of headaches. Catalogs typically only pay/charge sales taxes for the state their accounting division is in. Multiply this by millions and millions of customers and you can see why Amazon would oppose this merely on the accounting issue. Most accounting software simply isn't set up for taxation in all 50 states, especially automatically.
Re:Hopefully it will cut down on affiliate-link sp (Score:5, Insightful)
Why would I or Amazon have to pay taxes twice or more for something? First Amazon would need to pay taxes at whatever locale they're at, then I would need to pay taxes on the same product in my home state, then also every state it goes through as it is getting shipped from Florida to Rhode Island?
There is a reason intra-state purchases are not taxed. Read the constitution or so, you know the part where it says: The Congress shall have power . . . To regulate commerce with foreign nations, and among the several states, and with the Indian tribes
Re:Every state needs to step up. (Score:2, Insightful)
I can't speak for anyone else, but providing yet another source of revenue for government is the last thing I want. The US government already spends more than any other government in the world, and (surprise) the result isn't even close to ideal.
No, what the US government needs is less spending -- or even a change in where the money goes -- certainly not more revenue.
Re:Hopefully it will cut down on affiliate-link sp (Score:0, Insightful)
Taxing more things is not a fix for a budget deficit. You don't give a coke addict more coke because they're going through withdrawals. All 50 states need to learn to balance their budgets by *gasp* spending less money.
Re:Every state needs to step up. (Score:5, Insightful)
Amazon is taxed. They aren't getting a free ride. Everyone is already required to pay a sales tax on the items they buy out of state anyway. In your state tax filing it is usually listed under Use tax.
So amazon isn't going to pay any more in tax, the people that are evading taxes would be paying for the tax.
The trucks that deliver the products pay taxes. (Score:5, Insightful)
I'm sure the gasoline and other annual taxes to deliver the products to the customer cover the wear and tear on the roads.
Amazon is not using sewer, electrical, police or road services locally as brick and morter store would.
Re:Every state needs to step up. (Score:3, Insightful)
How are they not taxed like everybody else? As with catalog ordering, they aren't responsible for state sales tax.
They pay corporate taxes, no free ride there.
Am I missing something?
Re:Catalogs (Score:4, Insightful)
Doesn't have the accounting muscle? Why can't they use their cloud computing cluster?
The "acounting muscle" argument is pure BS - they have enough accounting and computing horsepower to run the rest of their business ... and they do a lot of calculations for every shaopping cart on every page refresh. Since they CAN cut off specific states, and they also calculate shipping by state, they can certainly do sales tax by state. They're just doing this to get their affiliates to lobby for them.
Re:Catalogs (Score:5, Insightful)
This is where the Federal Government actually has the authority per the Constitution to step in and regulate interstate commerce. Congress needs to dictate ONE tax rate for all Internet purchases.
Re:Inconsistent behavior (Score:2, Insightful)
Re:Every state needs to step up. (Score:3, Insightful)
They DO get taxed, their company HQ has a physical location and they MUST pay business taxes. Boeing and Nvidia pay LESS taxes than Amazon.com does.
Re:Every state needs to step up. (Score:2, Insightful)
If they don't use local resources why should they (Score:5, Insightful)
pay taxes?
Are internet retailers using your sewer? You schools? Your police?
Then why should people living in another state fund yours?
Tax them where they reside.
Whats next? Taxing people for giving gifts to people in higher tax states? Hell, lets tax people's medical benefits - oops.
Re:Hopefully it will cut down on affiliate-link sp (Score:3, Insightful)
Let them pay their fair share of taxes,
They already do, considering that they're consuming approximately 0% of the state's resources.
Sale origin difficult to pinpoint (Score:5, Insightful)
Re:Every state needs to step up. (Score:3, Insightful)
Re:Hopefully it will cut down on affiliate-link sp (Score:5, Insightful)
You really want to go down that line of reasoning?
The customer pays for his/her bandwidth.
FedEx and UPS pay their taxes for road use(fuel).
Et al, etc.
Re:Every state needs to step up. (Score:4, Insightful)
This is absolutely correct! In fact, you are supposed to report and pay use tax on everything you purchase - even used stuff from garage sales, (not that anyone does).
Re:Hopefully it will cut down on affiliate-link sp (Score:4, Insightful)
Not that they get any better when you do that. You can just pay more for them. It helps you get re-elected. What, you're not in Congress? Oh, well disregard everything I just said...
LOOK, SEX SCANDALS!
Re:Hopefully it will cut down on affiliate-link sp (Score:5, Insightful)
No, this is no more than another reach where states are trying to end run the commerce clause which has prevented them from successfully taxing out of state mail order purchases. This one is especially stupid because they are saying "because Amazon does business with contractors in our state, they have to act as a tax collection agent for us." This is a change in two ways:
* The state is extending the definition of "nexus" to include the use of contractors. Historically, a nexus includes employees and/or property.
* The state is basically telling mail order merchants to not spend a dime in the state or you have to become a tax collection agent for the state.
Basically, N. Carolina and Rhode Island are shooting themselves in the head and preventing mail order operations from using any in-state contractors to do things like print catalogs, mail catalogs, provide call center services, freight forwarding, delivery services and so on. In other words, no jobs for your state from any mail order company.
This is why there is a commerce clause in the constitution - to prevent one state from taking actions that unfairly burden a business or citizen in another state. Why should I care what sales tax is in California? My business is in Indiana. Eventually this will go to the supreme court and get tossed just like every other attempt by one state to make businesses in another state collect taxes for them. This has been building up for a while and we're due for another 8-1 decision in favor of the Federal Government having EXCLUSIVE jurisdiction over interstate commerce.
Re:I fear that pretty soon... (Score:3, Insightful)
That's really no big deal for me. I pretty much ONLY buy stuff that Amazon sells itself, so I can get the 'free shipping' with orders over $25..and of course, no sales tax.
I generally trust Amazon more than I do the small fry sites they 'affiliate' with.
Re:Every state needs to step up. (Score:5, Insightful)
No. Amazon is simply not collecting sales tax for states they are not located in. Why should Amazon (an out of state company) have to pay to do the job of the RI Department of Revenue? Since when did they delete the commerce clause from the constitution?
Re:Sale origin difficult to pinpoint (Score:2, Insightful)
The problem with this story is that it isn't clear where the sale has taken place.
Fortunately there is a very large body of law (mail order) which already covers this topic.
The test for sales tax isn't where the sale takes place, it's whether the seller has a business presence in the state the goods are shipped to.
Rhode Island is claiming these Amazon affiliates cause Amazon to have a presence in Rhode Island.
Re:States don't get it. (Score:3, Insightful)
Amazon is trying their best to avoid having to collect sales tax (and compete on a level playing field).
Wrong. RI and NC are trying to expand the definition of nexus to force mail order companies not located in their state to collect sales tax from citizens in RI and NC.
At present the playing field is level. Businesses outside RI and NC don't have to collect RI and NC sales tax, and business inside RI and NC don't have to collect tax for the rest of the country. That's pretty fair.
Re:Hopefully it will cut down on affiliate-link sp (Score:5, Insightful)
And I suppose the person with 50k in credit card debt and a house in foreclosure is also in that situation because they can't raise enough income?
I'm sure it has nothing to do with the million dollar house and their insatiable desire for new goods. A good rule of thumb for people (and states for this matter) in debt is to first create a budget that reduces spending below ones income. Not to figure out a way to make more money. This is not rocket science.
Re:Hopefully it will cut down on affiliate-link sp (Score:3, Insightful)
Or they could just cut back. If you can't afford it, don't buy it. This is just as important for States as individuals.
Re:taxes (Score:3, Insightful)
What is taxed twice is your return. Your tax return for paying to much in taxes is counted as income and taxed the following year. Even though those monies were taxes collected.
You have the world's crappiest accountant.
Re:Hopefully it will cut down on affiliate-link sp (Score:5, Insightful)
Well, they could stop spending. They could start to consider that this massive govt. run healthcare (regardless of your views on it) is something we absolutely cannot afford right now. They could stop with the pork in bills.
Why can't the govt. do what a 'sane' normal household does when it is having budget problems. The first thing is to cut spending!!
Re:That is a VERY good idea! (Score:3, Insightful)
Re:Hopefully it will cut down on affiliate-link sp (Score:5, Insightful)
Re:Hopefully it will cut down on affiliate-link sp (Score:2, Insightful)
Since Amazon's customers aren't paying their fair share of consumption taxes, your local retailer is paying MORE than their fair share.
That sounds an awful lot like an issue between the customer and the state. If you buy my used car, it's your responsibility to pay the taxes on it. In what way is that substantially different for Amazon?
In reality, taxing Internet sales is like taxing tourism: it's a zero-sum game. If your state's citizens pay $100,000 in my state, and my state's citizens pay $100,000 in yours, then it's moneywise exactly as if they'd stayed home and paid their taxes there. If all 50 states begin collecting Internet sales taxes, then the average net revenue flow will be exactly $0.00, at the cost of huge regulatory overheads for every single Internet-using business.
Re:Hopefully it will cut down on affiliate-link sp (Score:4, Insightful)
You wouldn't. Amazon doesn't pay (sales) taxes at whatever locale they are at. And no state can charge a tax for shipping goods through the state (as mentioned in your Constitution excerpt), except as a fee for using the road system. That only leaves the final point of sale.
Why should ordering something over the internet and having it delivered to your door result in you paying less sales tax?
First, the word you are looking for is interstate. Intrastate purchases are taxed. Secondly, the interstate aspect of the transaction is not being taxed, rather it's the purchase in Rhode Island of a good that is.
I fail to see the distinction between paying sales tax on goods purchased at Amazon and goods purchased in a local Walmart (when discussing non-Washington/Arkansas residents). In either case you're purchasing an item in, e.g., RI and accepting delivery there. The actual charges are applied from a credit card company in Deleware to an account, which you will then pay later with a check drawn on some other corporation. Why should the Internet be magical?
Re:Catalogs (Score:2, Insightful)
"Lower prices due to not having to maintain a brick and mortar store are the only things that allow online stores to compete against local stores."
The word "only" isn't used correctly in this situation. There's no "only" about it. The overhead of having a brick and mortar store is MASSIVE. Employees, rent, power, upfit, etc. It's MASSIVE. All they need is some crappy warehouse somewhere cheap. There's a huge difference, which enables them to be able to eat the shipping on most items. There's no comparison between a warehouse and a few computers and a real store.
Re:Catalogs (Score:3, Insightful)
The consumer is certainly governed by the laws of the state of their residence, and is required to pay consumption taxes on all purchases (a sales tax IS a consumption tax). When you buy something out-of-state,you're supposed to pay your local sales tax, and apply for a reimbursement from the originating state. Small purchases have been ignored, but try buying a new boat or car in one state and taking delivery in another - when you go to register the vehicle, you'll be required to pay the sales tax. The only way around that is to plate it in the original state, then bring it into the destination state as a used vehicle - and you'll still get dinged in many places.
Amazon is helping them avoid their legal obligations. I'm surprised the various states don't simply file suit under RICO - just watch the affiliates run like rats when that happens. At that point, it isn't about applying local laws to out-of-state businesses, but applying local laws to local business transaction, and an out-of-state business profiting by enabling locals to break those laws.
Another partial solution would be to go to a VAT-base tax system, but that makes too much sense for it to happen.
Re:Absolutely not (Score:5, Insightful)
Equally bullshit is your state trying to tax me for a purchase when I've never set foot in it.
Re:Hopefully it will cut down on affiliate-link sp (Score:3, Insightful)
Please understand how sales taxes work before you submit nonsense like that.
I'm not going to explain the whole system, but suffice it to say that if I pay sales tax in one jurisdiction, then that tax paid is a credit to my tax due in another jurisdiction. This is Amazon's biggest objection -- the nightmare of calculating taxes paid and taxes due.
If I'm an RI retailer, and I buy directly from Amazon (as a wholesaler to me), I charge sales tax to my customers in RI. Then when I have to pay the sales tax to RI, I deduct what I have paid to Amazon as sales tax on my purchases from them. However, since Amazon has no nexus in RI, I'm not paying any tax to them.
What the new tax structure is saying is that retailers shouldn't be able to escape the tax requirement by only being a referrer to Amazon. So sales taxes are due to RI.
In essence, RI & NC are saying that the referrers are retail outlets, not referrers.
This does not raise any specter of double taxation or worse. It's just a battle over whether Amazon referrers are retailers or not.
Re:Hopefully it will cut down on affiliate-link sp (Score:2, Insightful)
old world, meet new world (Score:3, Insightful)
It's not that they're being unreasonable, per se. It's that they're applying and old model to a new technology. It's a bit like trying to do rocket science with the math available to Aristotle.
Physical location matters little on the Internet. But our countries and states are defined by physical location. So it's not a trivial problem, but applying solutions that simply don't fit will not solve anything.
Re:Every state needs to step up. (Score:3, Insightful)
You mean once ten percent of the population no longer has to pay ninety percent of the taxes?
You mean when fifty percent of the population finally pay more than zero net tax?
You mean when the vast majority stop getting more benefits than they are paying for then maybe we can spend less?
Yes that sounds great.
Re:Hopefully it will cut down on affiliate-link sp (Score:2, Insightful)
is our education system really this bad? (Score:3, Insightful)
It truly amazes me how few people understand even basic economics.
Amazon does not have brick and mortar stores. So it's not the same. In fact, when the tax laws where written that apply to "mail-order" they understood this basic concept. Based on those laws you only have to pay sales tax if the company you're ordering from has stores(brick and mortar) in your county.
Facts: Amazon pays taxes. They pay taxes on their employees, properties, income, purchases, etc. The shipping companies also pay taxes. In order to pay all of these taxes the price of their products and services get marked up.
So, when you order an item from Amazon, a surprising amount of what you're really paying for is indirect tax. Including local taxes paid by the shipping company.
The gross tax lean across the US is over 50%. It's insane. Anyone who agrees that there should be any new and/or more taxation is a complete and utter moron. More taxation increases the cost of living, which increases poverty, which increases crime rates, which has the end effect of idiot politicians stating that we need more tax. It's a corrupt cycle that killing this country and needs to end.
Re:Hopefully it will cut down on affiliate-link sp (Score:2, Insightful)
Re:Every state needs to step up. (Score:2, Insightful)
Re:Hopefully it will cut down on affiliate-link sp (Score:4, Insightful)
Well, from everything I'm seeing and hearing now...this current govt. healthcare thing will cost aobut $1Trillion additional money, and still leave about 35 million people uncovered.
How about just starting with regulating that insurance companies can't deny you for pre-existing conditions. How about broadening the HSA (Health Savings Account) to be more flexible and allow more citizens to save MORE of their own money pre-tax for their routine health needs, and only need insurance for catastrophic needs?
I did that for awhile and it was great. Why should people not budget for routine health needs like they budget for other things in life (food, shelter, etc)? Hell, when I was doing that and told Dr. and labs I had work (even an MRI) I was paying on my own, they gave me at least a 15% discount right on the spot.
I found that I could shop around for Dr. and what all for best price and service. That puts true competition back into the system...that would lower costs, it also cuts out the bean counters and other middlemen.
Trouble is...that wouldn't allow the govt. to have a heavy hand in the midst of it all, and with the current govt...that isn't a goal of their apparently.
Re:Hopefully it will cut down on affiliate-link sp (Score:3, Insightful)
What nonsense. You will never be foreclosed on if you're making your mortgage payments. What ever gave you the idea that a house could be forclosed because it's theoretical resale value fell?
There is *no overlap* between "living frugally" and "house you can't afford". House prices here are stupid so I *rent*. Fuck all the assholes too proud to rent.
The only possible reasons for forclosure are "irresponsible living" and "two disasters" (merely losing your job or unexpeced medical expenses are no excuse, only both at the same time). BTW, I knew the housing bubble would pop. Everyone rational who had bothered to compare house prices to historical trends [irrationalexuberance.com] knew the housing bubble would pop. Only people with a near-religious belief that "house prices only go up" were blind to the obvious.
Nothing but pathetic excuses for irresponsible lifestyles.
Re:Hopefully it will cut down on affiliate-link sp (Score:3, Insightful)
Then the government needs to fix its tax structure, not try to charge us more sales tax.
It's simple: fuel tax pays for roads. If it's not enough, then raise the fuel tax. Instead of hobbling the economy by taxing everyone for purchases, it would make a lot more sense to tax road users for their use of the road, and let that cost be passed on as appropriate (i.e., someone shipping lots of heavy stuff will be forced to raise prices, whereas someone selling digital goods won't).