Jeff Bezos Calls Sales Tax Requirements On Amazon Unconstitutional 623
Steve1960 writes "Amazon.com chief Jeff Bezos says the online retailer won't collect tax from most of its 90 million customers until Congress clearly mandates it. Although a growing number of states are demanding that Amazon collect and remit tax on sales within their borders, such demands are 'interference in interstate commerce' and prohibited by the Constitution, Bezos said."
Finish your sentence! (Score:1, Informative)
Foolish people like to convince themselves this is true, but the reality is that if you raise income tax to Reagan era levels, you will raise about $800B/year.
Our deficit is $2.2T
So the question is, where are you going to cut the other $1.4T?
Its an ugly thing that progressives don't like to talk about. Thats where they start whining about hope and change.
Hmmm... (Score:5, Informative)
A state with no Amazon business would be on dubious interstate-commerce ice(though post Gonzales v. Raich virtually anything is arguably interstate commerce); but saying "businesses wishing to conduct business in this state must abide by state laws" is hardly a bold arrogation of interstate powers. Bezos is, shockingly enough, just protective of his ~5% advantage over the B&Ms...
SCOTUS agrees with Bezos (Score:5, Informative)
Bezos is right. Back in the days of catalog sales, the US Supreme Court decided that only those companies with a legal presence in a particular state are required to collect sales tax from the residents of that state. Unless the Federal Government steps in, there's nothing any of the states can do to compel a company to collect sales tax for states where the company has no such presence.
And here is the case in question (Score:5, Informative)
Quill Corp. v. North Dakota [wikipedia.org]
Re:In other words (Score:5, Informative)
Except it is unconstitutional for a state to tax or regulate interstate commerce. Imagine if California could put a tariff on Florida Orange juice coming into the state to protect California growers?
That is one of those things that is clearly forbidden in the constitution. The issue is that the internet confuses where the commerce is taking place but it is no different than catalog sales and those are also not taxed.
Re:Hmmm... (Score:4, Informative)
Re:In other words (Score:2, Informative)
Re:Why not just raise taxes on the rich? (Score:5, Informative)
Re:Finish your sentence! (Score:4, Informative)
It does up to a certain point. Increasing the tax rate from 0% to 5% will certainly raise more revenue. From 5% to 10% almost certainly will as well. From 85% to 90% probably won't. The tipping point is usually considered to be about 60% for total tax take from all sources.
Re:The Constitutional Right to Competitive Advanta (Score:4, Informative)
Amazon is in Washington. If it sells something to someone in Washington, it charges sales tax. If it sells something to someone outside Washington but in a state where Amazon has some sort of presence (like a warehouse), they charge sales tax. Any other state, they charge no sales tax.
Their competitor is in some state. if it sells something to someone in that state, it charges sales tax. If it sells something to someone outside that state but in a state where it has some sort of presence (like a warehouse), they charge sales tax. Any other state, they charge no sales tax.
Seems perfectly fair to me. The disparity arises when you're comparing a mail-order/internet business to a brick and mortar business. The brick and mortar business sells primarily to people who live in the state, the mail-order and internet businesses sell primarily to people who live outside the state. Fundamentally, the problem in that case is that the state's sales tax is too high, and thus puts the brick and mortar business at a competitive disadvantage. But for some reason it always seems to get portrayed as Amazon having some sort of unfair advantage. If the state is unhappy that its businesses are at a disadvantage due to high sales tax, the direct solution within their power is to simply lower their sales tax.
If the states want their cake and to eat it too - keep their high sales tax but level the playing field - it's going to take an act of Congress to do it. Bezos is correct that the Constitution explicitly prohibits state taxation of interstate commerce. Only the Federal government has that power.
Re:Why not just raise taxes on the rich? (Score:5, Informative)
The really poor actually pay a disproportionately high percentage of their income in taxes because sales, gas etc. taxes are not indexed to income.
After a certain level of income is reached tax rates start going down until you start becoming liable for federal income tax. This group is not necessarily poor, but is certainly not well off.
At this point your rates start going up.
After you reach a certain level of wealth the rate starts going down again on average because more income tends to come from dividends, tax free bonds, and cap gains which are tax advantaged.
This is why Warren Buffet can go around saying he pays a lower tax rate on his income than his secretary.
Re:Finish your sentence! (Score:2, Informative)
That's pretty much poppycock. The US global tax rate is currently something like 15% of GDP right now, which is the lowest it has been since the days of Hoover. Economic measurements generally suggest that revenues increase up to about a 50% tax rate.
Re:In other words (Score:5, Informative)
Amazon collects tax it has actually presences in, such as Washington State.
Re:Why not just raise taxes on the rich? (Score:5, Informative)
Just raise the income tax back to pre-Regan era levels
I would say I'm amazed at the economic illiteracy of /.'ers, but it's not really a surprise given political discourse these days. I'll let the Joint Economic Committee do the talking for me. http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm [house.gov]
During the 1980s ERTA had reduced personal tax rates by about 25 percent, while the Tax Reform Act of 1986 chopped them yet again.
after the high marginal tax rates of 1981 were cut, tax payments and the share of the tax burden borne by the top 1 percent climbed sharply. For example, in 1981 the top 1 percent paid 17.6 percent of all personal income taxes, but by 1988 their share had jumped to 27.5 percent, a 10 percentage point increase.
The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.
The 1993 Clinton tax increase appears to [sic] having the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993.
according to the FY 1997 Clinton budget submission, individual income tax revenues as a share of GDP will be lower during the first four years of the Clinton tax increase, which include the effects of the 1990 tax increase, than under the last four years of the Reagan tax changes (FY 1986-89)
Even so, individual income tax revenues rose from $244 billion in 1980 to $446 billion in 1989.
Re:Why not just raise taxes on the rich? (Score:2, Informative)
What myth? The "poor" don't pay federal income taxes. The federal budget is funded by federal income taxes. The fact that "poor" people pay sales taxes, state taxes, etc. doesn't change the fact that 47% of American households do not contribute to the federal budget. Hell, a good chunk of the "poor" get more back on their irs refund than they paid in.
Re:In other words (Score:5, Informative)
If states can allow and levy taxes on Indian Casinos, why can they not levy taxes on corporations selling to or from their state?
Bzzt. Wrong. States do NOT levy taxes on tribal casinos that are operated on tribal land.
Per federal law, tribes operating gaming establishments must enter into Tribal-State Compacts. [wikipedia.org] with their respective States.
Any money the State gets is per Compact negotiations ultimately derived from Federal law, and in fact these compacts are not legal until they are accepted and entered into the Federal Registry. Furthermore, the federal laws governing this entire situation specifically point out that they do NOT give the States the authority to "impose any taxes, fee, charge, or other assessment upon an Indian tribe."
Now get off my lawn, nub.
That's just plain wrong. (Score:5, Informative)
47% of American households do not contribute to the federal budget.
That's just plain false.
40% of the federal budget comes from payroll taxes. That's a 15.3% tax on all wages up to about 90k or so. It's 2.3% after that. It's 0% on rich people income like dividends, capital gains, interest, etc.
The poor may not pay income taxes... but they don't have much income. The rich don't pay payroll taxes, and they have a ton of income.
If you add it all up, the very, very poor come out at about 0 on taxes. Once you get into the lower middle class, federal taxes are pretty much flat-rate from then on - income taxes go up, tax breaks go up (like home mortgage deductions), payroll taxes go down, and more income comes from "favored" means like dividends and capital gains that are taxed at very low rates and interest that doesn't get a payroll tax.
Re:In other words (Score:5, Informative)
The states are wanting Amazon to pay YOUR taxes,
No, they want Amazon to COLLECT your taxes. The same as McDonalds, and Payless Shoes do when you make a purchase and they add sales tax to the bill and then cut the state a check for that amount.
Re:Why not just raise taxes on the rich? (Score:2, Informative)
No, taxing the top 1% would actually cover the deficit FOREVER.
http://www.tnr.com/blog/jonathan-chait/87197/wsj-edit-page-disproves-own-point