Amazon Drops California Associates to Avoid Sales Tax 623
PCM2 writes "Residents of California who participate in the Amazon Associates Program received an email warning them that the program will be terminated as soon as a new California law goes into effect. The law, which CA governor Jerry Brown signed, would require online retailers to collect sales tax on purchases. According to Amazon's statement, 'We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors.'"
Why are Libs so enamored with taxes? (Score:2, Insightful)
Good one, Governor Moonbeam! You just killed the revenue stream of roughly 25k Amazon affiliates. So instead of just being content with the revenue collected from the income tax of those affiliates, you decide to double-dip and tax not only the income earned by the affiliate but the transaction as well. Instead of allowing you to double-dip, Amazon pulls the plug on their affiliate program in CA and your projected $200+M tax revenue increase goes up in smoke. CA is a turd circling the drain. They might
Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
It's the same problem with ebay, and the crack-down is inevitable. Let them compete on an equal footing with the locals, and each will win their fair market share based on price, product, and service.
Instead, local business is indirectly subsidizing Amazon by carrying a disproportionate share of the tax burden.
Re:Why are Libs so enamored with taxes? (Score:5, Interesting)
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What tax burden is Amazon imposing on the state? They're not using any land in the state, they're not using any services that they aren't already paying for (the postage pays for the gas taxes that pay for the road use by the delivery company's vehicles) The state wants money without doing anything in exchange for it.
We're way past that.
Taxes are collected from those that make money to be given to those that do not.
You got it. They want it. You run away if you can. If you can't escape, tough. That's all you need to understand about taxation today.
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Taxes are collected from those that make money to be given to those that do not.
Partly correct. Sometimes taxes are collected from those that make some money to be given to those who have lots of money [downsizinggovernment.org].
Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
Government provides them with an orderly society in which to conduct business.
They don't need to fund a private security army to ensure collections and protect goods in transit amidst anarchy. We have police and a legal system rather than mad max lawlessness.
They also get to hire from a market of educated employees rather than taking in savages from the fields and teaching them letters and numbers.
There are numerous links running back and forth between the private and public sectors that feedback upon each other.
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The government of the State of California does not provide all those things you mentioned
California doesn't have police or a legal system? News to me! (Those are precisely the things he mentioned.)
Also I don't see how it hurts Amazon to collect extra money from its California customers to pass along to the state. They're already set up to add taxes to their bills. I admit that Amazon does get a bit of a competitive edge from the fact that, as it now stands, CA residents can break the law by not paying taxes on items they buy from Amazon, but they seem to do ok in states where they already co
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I think you misunderstand what he means by "burden". Just because Amazon doesn't use any services or resources in California does not mean they don't own them anything.
Amazon wants access to the Californian market. In exchange for that they have to abide by Californian law when operating there, both in terms of things like consumer protection laws and in terms of taxation. Even if they don't use any services in California themselves they are a) competing with Californian businesses who do pay taxes for the
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"Amazon wants access to the Californian market"
Such thing does not exist when the market is a GLOBAL NETWORK.
"In exchange for that they have to abide by Californian law when operating there"
Learn how interstate commerce regulations work, and understand that only the Federal Government was granted this power, not the states, ESPECIALLY not California.
"both in terms of things like consumer protection laws"
Yes...
"and in terms of taxation"
But no. I've checked the tax codes for each county and the state of Calif
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"Amazon wants access to the Californian market" Such thing does not exist when the market is a GLOBAL NETWORK.
Bullshit. Plain and simple. Do you think Amazon gets to avoid VAT on European sales? I think the State of California should block amazon.com from DNS resolution on state owned DNS servers, and block amazon.com's IP address at state owned routers. I think they should do it today, and promise the same for other tax evaders. I'm sure that amazon mp3 won't miss access to UC campuses. College students and faculty never buy books, right? I'm also sure that there aren't any government agencies that use amaz
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How is a CA resident's tax evasion Amazon's problem?
Answer: It's not. Amazon is responsible to the jurisdiction in which they reside. Other jurisdictions can get bent. Who says? The feds, that's who. It's not goddamned rocket science. Interstate commerce is reserved to the federal government to regulate due to inherent conflicts of interest if the states were to regulate it themselves. The State of California is wrong on this one, and they're going to take it in the pooper in federal court. Just like with t
Re:Why are Libs so enamored with taxes? (Score:4, Informative)
I don't live in California or care about this, but I do know people that do, and I can fully understand from a retailer's point of view why it is impossible to collect sales tax correctly for all 50 states.
1) exemptions - some states give an exemption up to $XXX/year tax free - how does Amazon know if/when such an exemption is hit and when to start collecting tax? Collecting tax before the exemption is hit gives the government a free loan using your money and probably isn't legal.
2) already taxed - nearly all states have a tax on online purchases already, called Use Tax. California already has this (in fact, they already have mandatory use tax registration to provide tax info to the state for in-state sellers earning over $100000/yr) Start enforcing your existing laws already.
3) 50 states, 50 different tax codes, and then subdivide that for special taxes by county (for instance, I pay something like 1.15% extra tax for stadiums in my county). It boils down to a ridiculous amount of data you need to keep on each person and each area. If I had to collect that much info about a person, I'd sell it to marketers to compensate for the amount of work and expense involved, and I'm generally not a dick like that.
4) Use tax schedules (and is for out-of-state sales, it would probably apply to sales tax schedules) vary by state - some require collecting monthly, others quarterly, and others yearly (often due on April 15). This is a tremendous amount of bookkeeping, as I mentioned in point 3.
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These days, we use computers to aid in our transactions.
The data's not "a ridiculous amount" - it's a few KB of data sent from each state each year.
It's not "impossible to collect sales tax correctly" for every state that requires it. Most mail-order companies are already set up to collect sales tax from every state they have a business presence in. Any decent accounting package will have this information built into it automatically. I'm sure Amazon is already using a very good ent
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Also, Amazon is bluffing. California is most likely Amazon's biggest market. I can understand why they don't want to pay taxes. But they're not going to just throw away the entire market to avoid paying it.
Amazon isn't going to "throw away" their California market. They're going to throw away their California affiliates, so that they legally don't have to charge California customers sales tax. They're not bluffing. The California affiliates are screwed.
This will be a hit for Amazon, because they get a sm
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No it doesn't conflict. A Use Tax [uslegal.com] is a tax on ownership and usage of an item, not the sale of the item. Most states set a Use Tax rate that matches Sales Tax, and if you purchased the item across state lines, you can subtract out any sales tax you paid to the originating state. Use Taxes have existed for quite a while, and as far as I am aware, the Supreme Court has not faced a decision regarding them.
Since California has the highest sales tax, it's unlikely you paid as much or more in the originating state
Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
How many of those 25k affiliates "forgot" to include their affiliate income?.......
So anyone who has a different opinion from yours is a law breaker?
Or is that what you do when you think you can get away with it?
Amazon's position has been tested all the way to the Supreme Court.
Amazon is in the right and CA is trying to do something the Constitution prohibits.
Nuff Said!
The Supreme Court (Score:3)
It's worth noting that the Supreme Court's Quill decision in 1992, while upholding the Bella Hess (1967) physical presence test, did so not on the basis that physical presence was inherently Constitutionally mandatory (indeed, it took the unusual step of specifically noting that it was likely that, had the issue been one of first impression in 1992, the decisi
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Actually, if you've ever filed a sales tax report, you'll find in most states you are allowed to keep a small percentage of the tax collected to offset these costs. Most often, it actually is enough to cover sales tax administration reports.
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Well, then shouldn't they be putting laws in place to catch the income tax cheats? Just like states like California to lazily throw legislation at an enforcement problem. This punishes the law-abiding instead of the criminal.
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The tax system is predicated on voluntary compliance, severe penalties and enforcement of high profile cases. If everyone stopped paying taxes they wouldn't have enough enforcement in place to get them. That's exactly the problem in this case, the sales tax system has become so broken by internet sales (no one is voluntarily paying the taxes owed) that they are at the point where the states can't use normal enforcement measures. Expect this to get much worse and much more aggressive because the states are b
Answer: All (Score:4, Insightful)
How many of those 25k affiliates "forgot" to include their affiliate income?
Substantially less than the new number of affiliates, 0, which will no longer have affiliate income to tax, nor will be spending affiliate generated income in California.
That's right, even if eery single affiliate were not reporting taxes, California STILL would have been better off with that affiliate income entering the state.
How many people getting by on affiliate income will be forced to leave the state or go on state assistance now I wonder? I'll bet THAT answer is > 0...
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Calculus
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How many of those 25k affiliates "forgot" to include their affiliate income?
Even if this is true, this is Amazon's problem how exactly? Perhaps if the goal is really to catch those lying on their taxes then a law requiring companies to report affiliate income paid to CA residents would be a more appropriate solution. Not that such a law would be without issues, as it attempts to impose a regulatory burden (compiling those reports isn't free) on a company that has no physical presence in California.
And frankly, I think you overestimate how big a problem this is. Most people runni
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Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
Because liberals realise that the things we take for granted have to be paid for by someone. They also realise that Amazon affiliates have a state-granted advantage over local brick and mortar businesses and has decided to remove that advantage. What is it with righties and their belief that they shouldn't have to pay anything towards the wonderful developed world lifestyle they enjoy?
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Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
Yes, Amazon provides some of that lifestyle. Of course Amazon sells it using the DARPA developed internet and ships it on public roads, often using the US Postal Service. They hire programmers who were educated in public schools and at public universities. When they're worried about competition, they sue their competitors in Federal Court, often over patents issued by the USPTO. Their facilities are protected from crime by publicly funded police and from foreign invaders by the US military. If one of their buildings catches fire, it will be put out by publicly funded fire fighters. That's a developed world lifestyle, and it's made possible by the continuous effort of a capable government.
Re:Why are Libs so enamored with taxes? (Score:5, Informative)
Normally I don't comment people's sigs, but yours is instructive here. The phrase "question authority" doesn't mean "question authority at a town hall meeting", it means, "question the legitimacy of authority to control you and take your stuff". Similarly, you believe that there are a whole host of things that high income countries have because they're provided by the government. But we're talking about a state sales tax, and you're talking about a list of services that Amazon doesn't get from the state of California:
* Roads used by the U.S. Postal Service to deliver things are paid by gas taxes paid by USPS out of the postage it collects.
* The programmers' education was primarily to their benefit, not Amazons. They're not slaves. And to the extent those programmers got in state tuition, they or their families were taxpayers in that state.
* Federal courts are not administered by the state of California.
* Amazon doesn't need California police since they're not in California.
* California doesn't protect Amazon from (absurdly hypothetical) foreign invaders.
* Since Amazon's warehouses are not in California, so California's firefighters will not be the ones to protect them.
The California government is trying to shake down Amazon. Amazon is right to resist.
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Re:Why are Libs so enamored with taxes? (Score:4, Informative)
Of course Amazon sells it using the DARPA developed internet ...very little of which was financed through the use of California sales taxes.
ships it on public roads ...for which it pays the shipping companies, who, in turn, use the money Amazon gives them to pay fuel and vehicle taxes.
often using the US Postal Service ...which is a private company (with a government granted monopoly) financed by postage.
hire programmers who were educated in public schools and at public universities ...who receive higher incomes and, therefore, pay more income taxes. The money to pay the income taxes comes from Amazon.
sue their competitors in Federal Court ...for which Amazon pays their own lawyers. The money to support Federal Courts, themselves, I think comes from federal income taxes, which Amazon pays. But perhaps you meant California State Court. You actually have some point with this one. On the other hand, Amazon pays taxes to support Washing State Court, and Amazon's competitors, possibly including competitors in California, can sue Amazon in Washington.
over patents issued by the USPTO ...for which Amazon pays federal income taxes.
Their facilities are protected from crime by publicly funded police ...for which Amazon pays Washington state and local income taxes, property taxes, sales taxes, and a variety of others.
and from foreign invaders by the US military ...for which they pay federal income taxes.
If one of their buildings catches fire, it will be put out by publicly funded fire fighters ...for which Amazon pays Washington state and local income taxes, property taxes, sales taxes, and a variety of others.
That's a developed world lifestyle, and it's made possible by the continuous effort of a capable government.
Perhaps so, but why should Amazon pay California sales taxes?
~Loyal
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First things first: You, and the person you replied to, are what is wrong with the world today. Highly polarized, closed-minded, hating opposing viewpoints with generalities, getting nothing done. Congratulations.
To the meat of your post...
First, what are these things "we" take for granted? Why are you completely closed to a benefit-cost analysis? Why are you completely closed to the idea that others may not take it for granted and/or may not want it at all?
Second - state granted advantage? That's a bol
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why do you think that the "developed lifestyle we enjoy" requires constant tax increases?
Inflation.
In the UK we also have to keep giving the NHS more money to provide state of the art medical treatment and care for a growing number of elderly people, but then again we believe that the state is the best way to do that so most people are in favour of it.
Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
Because liberals realize without small things like state-financed universities, companies like Amazon would never exist in the first place.
When people call for government cutbacks, do they realizing they are cutting back future sources of research and highly skilled employees that have made Silicon Valley possible in the first place?
Re:Why are Libs so enamored with taxes? (Score:4, Insightful)
I suppose you really believe nothing would get done without state financed universities.
History says others. Thomas Edison worked part time as a clerk to fund his research. Henry Ford worked his way up from machinist to create Ford.
Things would get done without state financed things.
However, let's not argue that point. Whenever you get into these discussions with liberals they talk about the small things the government does that anyone, but the most libertarian minded person would say is a role of government (infrastructure, legal, defence, basic research).
Yet, how much of your tax dollars are actually used productively in these areas? Emphasis on the world productively here.
For every dollar of real law enforcement, there is probably 3 spend on unproductive things like the war on drugs and frivolous traffic schemes and other frivolous regulations.
For every dollar spent on actual national defense, 10 is spent on unneeded wars, big equipment, world policing.
For every dollar spent on university R&D, 10 is spent on inflated public sector salaries, pensions, frivolous degrees, pumping people through the university system who really have no place being there. ... ... ...
We could do everything we *need* government to do with 10% tax rate.
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"Yet, how much of your tax dollars are actually used productively in these areas?"
a considerable amount, actually. You might want to read up, the records are public.
"For every dollar of real law enforcement, there is probably 3 spend on unproductive things like the war on drugs and frivolous traffic schemes and other frivolous regulations."
Ah, so you get to define whats productive and not? Productivity is measured against waste, and contrary to opinion, the government doesn't actually waste a lot of money.
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I suppose you really believe nothing would get done without state financed universities.
I suppose you really believe that your straw man argument against universities has a place in the discussion.
History says others. Thomas Edison worked part time as a clerk to fund his research. Henry Ford worked his way up from machinist to create Ford.
Evidence of folks overcoming adversity is not evidence against universities providing a useful and productive place in society.
[tedious argument that governments are inefficient based on random made-up statistics]
Governments are inefficient, you are right, but to pretend that the private sector has a better solution waiting in the wings is unproven, especially for the sectors you mentioned (and I would definitely include at least basic education to be in the purview of government). I
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I'm not going to support the silly besmirching of political leanings by you or the gp, but it does seem like the legislature is doing this not out of a sincere desire to make sure essential services are kept running, but because they're scared of the potential backlash if they make the hard choice that would balance the budget. Roads, street lights, defense are all paid for with other taxes (gas, property, income), whereas this sales tax mostly helps to maintain discretionary spending (i.e. vote-bribing fun
Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
No they weren't I had to pay a fairly significant percentage of my income for them. Everyone takes things like roads, street lighting and not being invaded by foreign armies for granted. Doesn't mean they magically pay for themselves.
Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
Presumably on a matter of principle you refuse to drive on public roads, send your kids to a public school, make use of Police or Fire services, will never claim any medicare benefits or in any way allow yourself to benefit from any of the publicly funded services that you so deride?
If so, then fine, you're at least acting consistently with your claims, otherwise, not so fine. People always bemoan having to pay *their* money for public services for a bunch of lazy, no-good wasters, right up to the point that *they* suddenly need to make use of them.
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Presumably on a matter of principle you refuse to drive on public roads, send your kids to a public school, make use of Police or Fire services, will never claim any medicare benefits or in any way allow yourself to benefit from any of the publicly funded services that you so deride?
Why on earth would anyone fore-go recovering some of their stolen property in the form of government services?
I don't happen to believe that taxation is theft, but I'm also not an idiot: I don't see any hypocrisy at all in someone who DOES believe that doing everything they can to recover some benefit from the people they see as thieves.
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Look at it this way; the U.S. government currently runs a deficit, so for every dollar it receives in revenue, it spends more then a dollar. In other words, taxation acts as a multiplier, since the government spends all (and more) of the revenue it takes in.
Besides that, taxes are necessary to provide services that the private sector cannot provide well for various reasons; he
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You could read part of the story here:
http://en.wikipedia.org/wiki/Broken_window_fallacy [wikipedia.org]
Simply put though, just because tax money hasn't "left" the economy doesn't mean that it's being put to good use. I could buy a gallon of gas and burn it in my back yard rather than in my car and the same amount of energy would be released, but in the former case it wouldn't be doing anything. Similarly, there are all kinds of ways that you can circulate money without doing anything useful. Hell, you can use it do jus
Dear conservative: Government is not a person (Score:5, Insightful)
I just want to know why it is that when times are tough everyone except the government is expected to make due with less. Why don't politicians have to share in the hardship?
If you think that social security is too large, say that you think that the poor should make due with less. If you think that military spending is too large, say that you think we should bring the troops home. If you think that we spend too much on public infrastructure, say that the government should spend less money building roads, etc... All of those are valid views. However, realize that in none of those cases it isn't the government whose life is affected as government isn't any single entity separate from the people, neither does the government have feelings or a soul.
There is no such thing as attacking "government spending" even though certain people would like to make government appear as a faceless opponent that takes money away from the hard working people and burns it. When you say that government should do with less, you should specify which of the services that the government provides for people should be cut. When you speak about government as it would be a separate entity with goals, motivations, feelings, ability to make sacrifices, etc. I get the same feeling I get when I hear a paranoid person talking about "them". It doesn't make any sense as there isn't such a creature called "government" any more than there is "them". There is just a list of services that the democratic society has decided to provide to the people, the employees needed to provide them and the taxes that have democratically been set in order to provide those services. That being the case, attack the services, not the government.
Re:Why are Libs so enamored with taxes? (Score:5, Insightful)
Why don't liberals seem to understand that imposing a tax has a net effect of reducing economic activity?
Because that's a falsehood repeated over and over by the right-wing. There is a mountain of historical data that shows a correlation between high tax rates and GDP growth. Just google "historical tax rates vs GDP growth" The results may surprise you. Increasing taxes on big business actually increases economic activity because you force people to reinvest in their business as opposed to just pocketing the money as income. Yes, unemployment is very high, but that hasn't stopped businesses from being profitable. If the economy is so bad, why are stock indexes back to prerecession levels? The Dow-Jones average is back to where it was at the beginning of 2007. NASDAQ has rebounded as well. S&P500 is back up.
When times are tough, the government does expect "everyone" to make due with less, they expect those can afford to, to make due with less.
Why are conservatives so averse to facts? (Score:3)
Well, no. First, the $200M isn't just from Amazon
Re:Libs Don't Think Dynamically About Economics (Score:4, Insightful)
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Considering the fact that California, despite the dire situation, still subsidizes some of the chest-thumping, mouth-foaming but revenue-devoid "red" states, I'd say that secession would improve this state's outlook.
All a game (Score:4, Insightful)
The federal government is playing the same games since they are out of money (which is funny when you think that they are the ones with a printing press), but that's why you see Obama saying bad things about ATMs and Jets my guess being that ATMs and jets don't pay taxes.
All of this comes down to one thing, spending. Assuming you are not checking your bank account to see if your SS check was direct deposited into your checking account, the US will be at 200% GDP vs debt in our lifetime. That means that if every single American got a second full time job and paid all money from both jobs to the government then we could pay for our spending. As it stand now if we took all the money, 100%, from the top earners in the US FOREVER we still would never pay our debt off at the rate our spending is increasing.
Spending. Spending. Spending. Until we realize spending is the problem, the problems will continue.
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California's real problems (Score:4, Informative)
Sorry, spending by the legislature is not CA's problem. Actually, there are many interrelated problems, many of which are a result of Prop 13.
1. Property taxes, which are a generally stable source of income are limited to the point of insignificance. This was sold as a way to protect grandma, but the real beneficiaries are big corps like chevron who are still sitting on the same land they were when it passed. Because property taxes cannot be touched, we have to rely on income and sales taxes, which are inherently unstable and obviously tank when you need them most.
2. Ballot box budgeting, has tied the hands of our legislature for quite some time. We keep passing laws specifying where and how much money must be spent, but without any regard to where the money comes from or to whether there is, in fact, any money to spend.
3. Prop 13 also raised the bar on tax increases to the point where it is virtually impossible to raise taxes at all. It used to be, if the budget stayed within 5% of the previous year's budget, it could be passed with a majority vote. If the budget grew or shrank too much, a super majority was needed. This seems quite logical and effective to me.
4. We pass stupid laws that dramatically increase our prison population without considering the financial impact of housing them.
There are many reasons why CA is in the shape that it is in. Raising taxes and cutting spending are only stop gap measures for what is really needed. The only way CA is going to get out of the shape it's in is to hold a Constitutional Convention. We need to gut and rewrite it in such a way as to be fair, effective and quite a bit more strict as to how it is modified.
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Sorry, spending by the legislature is not CA's problem. Actually, there are many interrelated problems, many of which are a result of Prop 13.
1. Property taxes, which are a generally stable source of income are limited to the point of insignificance. This was sold as a way to protect grandma, but the real beneficiaries are big corps like chevron who are still sitting on the same land they were when it passed. Because property taxes cannot be touched, we have to rely on income and sales taxes, which are inherently unstable and obviously tank when you need them most.
2. Ballot box budgeting, has tied the hands of our legislature for quite some time. We keep passing laws specifying where and how much money must be spent, but without any regard to where the money comes from or to whether there is, in fact, any money to spend.
3. Prop 13 also raised the bar on tax increases to the point where it is virtually impossible to raise taxes at all. It used to be, if the budget stayed within 5% of the previous year's budget, it could be passed with a majority vote. If the budget grew or shrank too much, a super majority was needed. This seems quite logical and effective to me.
4. We pass stupid laws that dramatically increase our prison population without considering the financial impact of housing them.
There are many reasons why CA is in the shape that it is in. Raising taxes and cutting spending are only stop gap measures for what is really needed. The only way CA is going to get out of the shape it's in is to hold a Constitutional Convention. We need to gut and rewrite it in such a way as to be fair, effective and quite a bit more strict as to how it is modified.
I don't completely disagree, but a higher reliance on property taxes would certainly not be helping the situation now. In case you haven't noticed, in most parts of California property values have taken a big dump the last couple of years. There would be a massive hole in the budget no matter what is getting taxed at this point.
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Tax Principle #1: Minimized Disruptive Impact (Score:3)
I've said it before and I'll say it AGAIN:
Tax the shipping companies and you wouldn't have all these problems!!!
Tell you what, politicians are terrible at looking "outside the box" for solutions.
Oh come on! (Score:3)
"Amazon Drops California Associates to Avoid Sales Tax"
Should read:
Amazon Drops California Associates to Avoid COLLECTING Sales Tax ON BEHALF OF A GREEDY STATE GOVERNMENT.
Option 1: Amazon should spend millions of dollars on programmers, accountants, tax compliance attorneys, and so forth so that they can continue paying commissions to 25,000 affiliates (many of whom do report their income and provide taxes to the state of CA).
Option 2: Find affiliates in states that are friendly and don't employ mob-style tactics. When will these pols get it? There is not an endless supply of OPM (other people's money).
Not just associates (Score:3)
Amazon has two research labs in CA, the first does work on searches the second did the design work on the Kindle and is rumored to be working the new Kindle and the upcoming Android based tablet.
So Amazon may be willing to not fight for the associate program but will probably fight to kill the law to protect themselves and keep theses two subsidiaries.
Marvelously Stupid, California (Score:4, Informative)
After reading a few comments, most of the people here don't understand this law very well. What California did is redefine what being located in California means to:
If California were more creative, they should have tried defining a nexus as anyone who uses a shipping service with warehouses and vehicle depots in the state of California. Fedex or UPS could not have pulled out as easily under this condition.
So, Amazon fired the California contractors. Now they aren't located in California any more. Stupid law gets equally mind numbing response. Amazon pulls out, and their affiliates, some of which are very large web publishers, will have to forgo participating in Amazon's affiliate program or will have to move out of California to protect their income from their Amazon affiliate programs.
What California did is try to make an end run on the US Constitution and a recent supreme court decision that said requiring out of state merchants to pay sales tax was an attempt to regulate intrastate commerce, a power that is exclusively delegated to the Federal Governement. The basic reason for this is to prevent trade wars between the states over tariffs, duties and exclusionary laws. Fortunately, California has inadvertently aimed it's cannon at it's own foot and fired a round of grapeshot: By attempting to regulate Amazon, California affiliates now will have to leave the state to continue doing business.
A lot of people seem to think somehow Amazon was ducking an obligation to pay sales tax. This is simply wrong. The buyer pays sales tax. The seller only acts as an agent in collecting it (in most states, the seller actually gets to keep a cut of the sales tax). The only way for Amazon to duck sales tax is to not pay sales tax on their taxable purchases.
Some people think that affiliates are not reporting their taxes. Some less intelligent affiliates my not report their income, but most will because Amazon reports your Affiliate income to the IRS, so if you fail to report your affiliate income, you are likely to get into trouble.
A few people see the mail order sales tax issue as one of being fair to local merchants. As it sits, mail order merchants in California can sell to every other state and protectorate without having to collect sales tax on those sales, just like an Indiana retailer doesn't have to collect sales tax for a sale shipped to California. It's actually pretty fair to everyone except huge companies that do have actual locations in every state.
Comment removed (Score:5, Informative)
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Defending against patent trolling competition, yes.
Re:i oppose Bezos' patents... (Score:4, Insightful)
> 'We oppose this bill because it is unconstitutional and counterproductive.'
Is your point how ridiculous the statement is?
If Amazon really believed it was unconstitutional, they would keep their associates and fight it in court. Even mid-priced lawyers would win if it were that simple and obvious, so the transaction cost of the lawsuit shouldn't preclude them from doing so. They figure there's a decent chance that it is not unconstitutional, which is why they are pulling out. (i.e. the downside risk of being ordered to pay sales tax.)
Also, if B&N is smart, they'll snap up a whole lot of business in Cali today.
Re:i oppose Bezos' patents... (Score:5, Insightful)
Even if you are in the right, going to court is not easy and cheap.
You're also not guaranteed to win.
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Re:Great way to cut down on the affiliate link spa (Score:5, Insightful)
"Gee, I can buy it for $50 at the store today, or $50 on Amazon and have it Monday, but I'll get free shipping ..." - most people will just buy it locally.
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And what does this have to with taxes? (Score:2, Insightful)
This has nothing to do with the tax then does it? If you can't buy it at X then how much tax Y charges doesn't really matter anymore.
Also, might the unfair tax advantage of amazon have made it impossible for the local shops to compete? So if Amazon did NOT have its unfair tax advantage, you would still have a choice. But no, you saved a penny or two and now you got no choice.
Free market, I see you do work, I just don't like your results.
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Also, might the unfair tax advantage of amazon have made it impossible for the local shops to compete? So if Amazon did NOT have its unfair tax advantage, you would still have a choice. But no, you saved a penny or two and now you got no choice.
Even pre-tax, Amazon is often much less than local retailers. $10 (Amazon now) $10 + 6% tax (Amazon with tax) $15 + 6% tax (Local store now). Somehow I don't think tax law is what's giving them their pricing edge.
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Yes, you save money with big corporations at the expense of small business. This is the trend and it takes money out of your pocket and your community. In the long run it costs you more, when the competition is gone, the price will go up.
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Sadly at this point it's all but impossible, outside of major metro areas, to find a decent local book store anymore. Huntsville is a mid-sized metro with a very high population of educated customer (lots of engineers and scientists per capita here), but we still don't have any that I am aware of. A few used book stores, a couple of "Christian" book stores; but for new general purpose books you have to go to B&N or BAM. I still try to go to the brick and mortar super stores, on the theory that they d
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Re:And what does this have to with taxes? (Score:5, Insightful)
So, if I go into a store and buy something, should they be required to ask where I live, then collect and remit the taxes for my state, county, and city?
Re:Great way to cut down on the affiliate link spa (Score:5, Insightful)
Keep in mind that you're still supposed to pay the equivalent "use tax", so any savings were a lot less, unless you're a tax cheat. The vast majority of people, given the opportunity, proved to be tax cheats, which was no surprise.
All California is doing is saying "if you want to compete, compete on an even footing, and don't enable tax cheats." Is it a cash grab? Look around - state governments everywhere need the cash. Which is better - that Amazon be forced to compete fairly, or that you pay for a state bail-out?
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Re:Great way to cut down on the affiliate link spa (Score:5, Insightful)
Pretty weak cornerstone to base a nation on. Also, the tax is not on interstate commerce - the goods are free to travel through the state without accruing tax liability. It's only when they find their way into the hands of an end user that they are liable to the sales tax, or the equivalent state use tax. If you can show that sales taxes, levied by the state against the local individual, as opposed to being levied by the state against the vendor, are unconstitutional, you'd have a point.
Just as important, it's not interstate commerce when you have a business presence in-state. The affiliates ARE that presence - affiliates are, after all, affiliated with Amazon, that's why they're called affiliates, duh!!! They're paid by Amazon, not some 3rd party. They're no different than having a commission sales rep working the state, because that's what they are, commission sales reps.
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or perhaps technology shut them down (Score:5, Insightful)
quit blaming Amazon and their "unfair" tax liability.
Did Amazon kill Blockbuster? No, technology did and a better competitor did. Same thing with local CD and book shops. Most locals don't go out of business with mail order companies, even those the size of Amazon. They go out of business because of other local competitors, their location became a hindrance, or their customers moved. Even companies like Wal-Mart didn't kill mom and pops, most mom and pops were killed by the first gen big box stores and more importantly they were killed by cars. Yeah, the widespread use of cars allowed people to not be trapped by local stores. Same goes for any other technology, now I can download my book. How is the local store supposed to compete with that? A kiosk can do it
What is amazing is you rant against Amazon and then notice the "use tax" side of the issue, which is, if your customers are not honest somehow its your fault. As in - Amazon is at fault for buyers through their website not adhering to the law.
No what California is saying, screw the law about interstate taxation and rulings related to it, we plan to intimidate companies into paying the tax - which isn't really what is going on here ... What is really going on is...
We are dumb asses who promised our supporters to the point we cannot pay up and damn if we don't need new tax revenue, would you please become the bogeyman and take the blame for collecting taxes our residents would never support if we did it directly.
Needless to say, this is all based on the typical bogus math politicians use which always underestimate costs and overestimate revenues gained.
Re:Great way to cut down on the affiliate link spa (Score:5, Interesting)
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Untrue. The reasons that California is in big trouble financially are fourfold:
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You're forgetting the fact that most big-box retailers don't have nearly the same inventory as Amazon and other online retailers. Some products -- like new turntables as I recently found out -- are impossible to buy in a brick and mortar store unless you live in a large metropolitan area because local stores simply do not carry a wide selection.
Re:Great way to cut down on the affiliate link spa (Score:5, Interesting)
In Europe there are sales taxes in all countries and Amazon's local operations are able to work within the system. This is just a side effect of the US states not working together as one entity. It's very short termist and selfish on both sides.
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Except it won't be the same price at both locations because a B&M store still has to pay rent, utilities, pay their cashiers etc... Having a physical presence in a community costs more than a web site and drop shipping from a warehouse in BFE.
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Nonsense.
I use Amazon extensively and from my experience the savings far exceed the difference between taxed (7% in NE) and untaxed sales prices. Free shipping and rapid deliveries make home shopping nearly as convenient as local shopping, especially for 70+ people like myself. While many local stores disavow warranty or service problems (the stickers say "Don't bring this XXX back to the store. Contact the manufacturer"), Amazon makes returning merchandize free and easy, including printing RMAs from y
Re:Great way to cut down on the affiliate link spa (Score:5, Interesting)
Because things get insanely hairy. For instance, what is the tax rate for an affiliate in California? There isn't a single rate for the state, it varies by location. Besides the state tax you've got county and/or city taxes plus the occasional special tax district. And no you can't go just by ZIP code, because we've got plenty of ZIP codes that span multiple tax jurisdictions with different tax rates. And the state doesn't provide Amazon with any way to get an authoritative (as in "If you charge the rate we give you, you can't be legally touched if it turns out it was the wrong rate.") answer to the question of what the tax rate is for a given affiliate address.
And that's just California taxes. What happens when the affiliate is in California, the buyer is in Texas where Amazon has a warehouse and thus a physical presence, and both states claim sales tax is due? Does Amazon charge taxes for both states on the same sale? Or if Amazon only charges taxes for one state, what happens when the other sues for failure to collect taxes due under it's laws?
The states want to have these taxes collected, but they don't want to answer the hard questions about the actual implementation: what are the rules for which jurisdiction applies, and how is the merchant told what rates apply to any given transaction? Until the states are willing to address those questions, IMO actions like California's are simply unfair.
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The Supreme Court already made their stance on the exact Affiliate issue known: http://en.wikipedia.org/wiki/Quill_Corp._v._North_Dakota [wikipedia.org]
"Quill Corp. v. North Dakota, 504 U.S. 298 (1992) is a Supreme Court ruling concerning use tax. Quill Corporation is an office supply retailer. Quill had no physical presence in North Dakota (neither a sales force, nor a retail outlet), however it did have a licensed computer software program that some of its North Dakota customers used to check Quill's current inventories
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And yet other online retailers handle this. Apple and Barnes and Noble both come to mind. Due to their extensive retail outlet infrastructure both have to collect sales tax in nearly every state. When you order something from either company an intelligent system determines where you live and charges the relevant taxes. I'd guess once a quarter the same intelligent system adds up how much it owes every state and locality in taxes and disburses funds. This isn't that difficult a problem. I'm a pretty p
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Maybe they could license the systems walmart.com uses. It's pretty damned certain that Walmart has a physical presence in every state and they sell a wide variety of products online. You're right that I underestimated the complexity of selling such a variety of items, but it still doesn't make the problem that much more difficult. You could just use some extra tables in the main product database to figure out how an individual product is classified in an individual locale. Add an optional field for tax
Re:Great way to cut down on the affiliate link spa (Score:5, Insightful)
Considering that the "local mom&pop" only has to worry about the one rate that they are responsible for, it's not surprising they can keep track of it.
Apples and orchards.
Re:Great way to cut down on the affiliate link spa (Score:4, Informative)
More nonsense. Are you letting your political ideology control your reasoning? (You have a hammer and everything you see is a nail.)
"Funny how Amazon "can't figure this out" with all their resources, but the local mom and pop nails it with few problems. "
Before I retired I wrote software for the Dept of Revenue, State of Nebraska. Taxes and their collection isn't a funny matter for anyone, and it is not surprising at all that Amazon "can't figure this out". My state is one of the smallest, population-wise. We have less than 2 million people living in 93 counties. But, at the time I retired 3 years ago, there existed in the state over 4,700 different taxing entities. Resident zip codes do not determine which taxing district a citizen resides in, even if they limited their shopping just to one location. Citizens can get their mail in one zip code but live in another. Strange as it may seem to you, many residents do not know which taxing district they live in and would not be able to supply that information to Amazon. Or, strange as it may seem to you, they frequently put the wrong information in forms they fill out, even if they fill in online digital forms that do not have to be scanned and fed to an OCR engine, which is yet another can of worms. So, even for a small state like Nebraska, tracking sales by over 4,700 taxing entities that are NOT distinguished by a zip code or address can be, and often is, a nightmare. But, don't feel bad. You not alone. A LOT of elected representatives have unrealistic expectations of what a computer program "should be" able to do.
Nebraska's constitution requires a balanced budget and the legislature is forbidden to spend more than the tax revenues take in, so there isn't a any negative income or sales tax calculations using convoluted rules to benefit those who are more equal than others, like CA, Tx, NY, MA and other heavily indebted states have. To require Amazon to keep track of the taxing districts and policies of 50 states and the territories of the USA and do their tax collections would put a burden on Amazon that could, and probably would, drive it out of business. Add to that the legal costs that would most definitely arise because some political or selfish-interest groups would see Amazon as a Golden Goose that they could pluck in a political favorable court district, and you have the last nail in Amazon's coffin.
YOU are a responsible citizen, or should be. What's wrong with YOU keeping track of how much YOU buy at Amazon, and when tax time comes around YOU compute what sales tax YOU owe on YOUR purchases through Amazon, and submitting that tax to YOUR state when YOU pay your state income tax? That's how it is done in Nebraska, and that's how I did it six months ago, and I do my taxes on line.
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Yeah that 20-25% in defense spending is really out of control compared to the >50% (and growing) in entitlement spending, watch out!
The "entitlement spending" as you put it at least goes back into the US economy. "Defence" spending goes to chew up the top 10cm of Afghanistan.
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Are you at all familiar with the defense procurement process? Do you *REALIZE* the regulations you have to comply with in order to even source parts from a foreign entity? "Export controls" are a *HUGE* headache for anyone in the DoD's procurement chain, such that the vast, VAST majority of Defense dollars stay States-side.
In fact, the net effect is such that it entirely negates your point: dollars spent on munitions manufactured by US firms are deployed in theater and used for creative destruction far from
Re:Tax Distraction (Score:4, Insightful)
Re:Tax Distraction (Score:4, Insightful)
Yeah that 20-25% in defense spending is really out of control compared to the >50% (and growing) in entitlement spending, watch out!
The only difference between military spending and entitlement spending is that you have to blow things up to get your free medical, free food, free housing, and free childcare.
Re:Tax Distraction (Score:5, Informative)
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Amazon is fighting the good fight, but it is a losing battle.
With states hurting for tax dollars, online retailers are being targeted as a source of income for the states.
The days of tax free internet orders is coming to an end.
I do have sympathy for online retailers, if there was a simple tax rate for each state, it would not be so bad, but each county, each city, certain merchandise all have different tax rates. What a accounting nightmare to keep up with. Every time you turn around another city council is passing another tax on something, having to keep up with would be next to impossible.
So the companies will move overseas. There is only so much money to go around, and the companies are going to do everything they can to hold on to it.
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It's not a new tax. They're just attempting to enforce existing sales taxes on online purchases, which people are supposed to pay (check your income tax forms. there's a box for "use tax" if you live in a state with sales tax), but don't. California wants Amazon to add the tax onto purchases, but they don't want to as it eliminates a price advantage for them.
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establish a tax clearinghouse that any merchant can plug in to, and then anybody who collects money online can take advantage of their existing ecommerce infrastructure to both calculate and deliver the correct amount of tax to the clearinghouse, which then tags it with the EIN of the employer and sends it directly to the state and/or local government, each of which would pay a small percentage or else a flat fee based on their size to run the clearinghouse.
That's already in existence. The Streamlined Sales Tax Agreement [streamlinedsalestax.org] set up the framework, and there are six "certified service providers" which connect up with shopping cart systems, take the address and commodity code, calculate the tax, bill the merchant, and pay out the correct amount to each jurisdiction. The problem is that only 24 states have enacted legislation to work with this system.
It's not getting retailers to comply that's hard. It's trying to get state legislatures to go along. Some states have