Angry Amazon Pleads with California Voters to Repeal Tax Law

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warrblade

where do I sign???

I want to flip that FAIL of a law ASAFP!

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Phrish

I think CA and many other states have mismanaged thier budgets, spending, taxes, etc. for years and years. Now they're hovering around bankruptsy and finally it hits them... oh s*!#! However, instead of overhauling thier mismanagement, they're looking for ways to collect even more from businesses and individuals.

Sorry, we've squandered our money, we demand you give us more!

Government management of money, both at a state and federal level, makes me sick to my stomach. On the same token, the government is a reflection of the populace, so welcome to the fruits of our voting labors.

Businesses want to leave CA because of the incredibly high tax rates. Good.

Tax everything that moves, crawls, breathes, is born or dies = encourage people and businesses to leave = not gonna fill your coffers. It's a simple equation.

Perhaps I'm thinking too simplistically, but tell me how much taxes did Americans pay in 1950?

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Edwincnelson

Phrish you're going to have to be more specific. California tax rate or the federal? Here's the federal.

http://www.taxfoundation.org/publications/show/151.html

As you can see the federal tax rate for income over 200,000$ (adjusted for inflation about 1.7 million), in 1950 was about 90%. Now that rate is 35% for over 379,000$. So the myth that taxes were low is a little silly. Abbot and Costello, Judy Garland, Buster Keaton, and a bunch of others got nailed for tax evasion because the rates were so high. And life was good.

Why? Well mostly because we had completely destroyed a fairly significant portion of the rest of the world and it's easy to win when there's no competition. However, the other effect of high taxes on income? Rich people didn't hold onto their money, because if they did, the government took it. Back then you were way better investing in your, or others, businesses. The deductions from investements deflected your costs. Right now there is almost 4 trillion dollars of liquid, unspent capital in the economy. And the richest among us have no intention of giving it up.

What does this have to do with Amazon? Ask yourself what Amazon has done for you? When you buy something from Amazon, let's say a blanket, rather than buy it locally, where does the money go? You got a slightly better deal, maybe 5 bucks. You avoided the taxes, maybe another 5. But if you spend it in your community it goes to your community. Feeds their children, maintains their homes, and generally makes your house worth more by making your town worth more. Also, the taxes are used locally to maintain services, maintain and build roads, firemen, policemen, hospitals, ect. Which make you better, healthier, and safer.

When you buy Amazon it all goes to one place. This guy

http://en.wikipedia.org/wiki/Jeff_Bezos

He's worth 18 BILLION DOLLARS. And he doesn't care if you live or die, and he could care less if every book store, clothing store, or whatever store in your town goes out of business and leaves nothing but unemployment and tragedy in his company's wake. Because he doesn't live in your town. He lives in a 30 million dollar house in California.

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JohnP

Well said! Bravo!

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Ghok

I think sales taxes are one of the most fair taxes out there, and easiest to swallow. You only pay it if you're buying items that are taxed (I don't know about CA, but where I live things like groceries aren't taxed). If you're a low income family you won't be spending all that much on sales tax. At the same time, if you're a millionare who likes to buy cars every few weeks, that's a good chunk of change that goes to fund essential services for everyone.

You're not wrong about mismanaged government spending. However, governments need taxes to function. You're seeing this as a new tax, when really it's just a tax that people are avoiding. I spend a lot of money on things like PC games. Years ago I paid sales tax because I bought those games in a store. I don't anymore because now I buy them on Steam. I don't buy a lot of other things, so the amount of sales tax I now pay is virtually nothing compared to what I used to pay. While it works out fine for me, I can totally understand why a government would want to get me back to paying that tax.

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Tenhawk

It seems to me that the States are all playing a game of chicken with each other. Last one to flinch is where Amazon centers most of their business. I mean, they're screaming full speed at each other, and one by one they pull away and start charging taxes... so Amazon pulls out of the state.

At this point it's obvious that Amazon isn't going to flinch. They've proved that already.

Last state to flinch... wins.

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TerribleToaster

More likely is that, as more and more states decide to tax Amazon, the fedral government will be forced to move on the issue (as some have pointed out already, these "laws" flirt with the fine line around interstate commerce) which hasn't made any real moves yet, because of the same reasons the fedral government is so slow moving against crude oil.

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someuid

I can see California's point.  Amazon has a significant advantage by not having to collect sales tax compared to the local brick and mortar stores.  By not making Amazon and their affiliates collect sales tax, the state is basically subsidising an out-of-state company and letting in-state affiliates gain a huge advantage over stores just down the street.

Of course, the other option to making one retailer start collecting taxes is to let all the other retailers stop collecting the sales tax.

I think Amazon and their affiliates should collect those taxes and use their lower costs of not having to maintain a store presence be their profit generating engine.

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Carpnter

California was trying to get around the federal laws by redefining what a physical presence is.  Just because a website, whose operator lives in CA, links to Amazon.com does not mean that Amazon has a physical presence in that state.  The website operator was making money on the deal, was paying taxes to the state and now the website operator is making less money and is no longer paying taxes on that money.

CA has some of the highest taxes in the country and has businessess leaving the state to more business friendly environments.  You'd think the politicians there would figure out that they need to spend less money instead of trying to raise taxes.

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TerribleToaster

The ENTIRE point of applying sales tax to online retailers is that it will allow for a reduction in taxes rates (a.k.a. they aren't raising taxes, but lowering them). It also makes CA more friendly to local retailers. Having strong local retailers means you get a stronger local investment in the community meaning that the local government needs to spend less.

So applying sales tax to Amazon addresses your complaints about CA (Unfriendly business environment, high tax rates, high spending) in short order.

 

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ddimick

Reductions in sales tax are very, very rare. I cannot recall a single time where this has actually happened. Rest assured that if Amazon and every other online retailer starts collecting sales tax, the sales tax rates will remain the same or increase.

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TerribleToaster

 

It is not necessarily a reduction in sales tax rates, but in tax rates overall, often by effecting multiple other taxes. I'll have to do some searching, but I remember seeing a article written about a reduction in property tax to coincide with an attempt on taxing online sales somewhere.

 

But regardless, I shall reveal to you something I've learned from experience working for a local government (I worked for the capital projects division). They hate having large sums of money.

This, by the way, doesn't apply to politicians and I feel I should explain. Politicians will say and feel whatever they have to stay in office. But the vast majority of any government body isn't elected, even though they are, in fact, the decision makers for most things the government does by and large. Politicians aren't the ones surveying roads, constructing prisons, or balancing budgets. They don't do the work of L&I, the police, or even write the laws they lobby most of the time. They don't have the expertise for that, that why they hire others who do. They are as responsible for "what they do" as Balmer is responsible for Windows 7. That is, they are the boss, and the work is done by the workers. Now, as is know, a politician’s job status depends on getting elected and staying there through repeated elections, the "workers" however, rarely ever change. If Politician A hired a civil engineer for the purpose of maintaining roadways because he is the best/most qualified. When Politian B enters office, he/she won’t want to change that first civil engineer unless they know they can hire someone better. It's a skilled trade, they don't fluctuate often. Thus, at the end of the day, the ones deciding things like tax rates and budget size aren't "politicians", but the "advisors" whose pay check doesn't depend on the whims of the people.

Now, governments are non-profit organizations. They have to spend all the money they get; which is, a royal pain. This can be explained in two parts:

1. People are lazy; most of technology is working towards the idea of reducing how much work we, as people, need to do.

2. Government workers get paid the same amount in the same position regardless of how much money they need to spend to use their budget. The more money you have, the more work you have to put in to spend it, which sucks because you are still paid the same. This is why governments often suck in spending money. If you over pay for one thing it means you don't have to find something else that you would have spent that money on.

Thus workers, in the everlasting quest to do less work while still being paid the same, tend to want to reduce budget and spending. Seeing as the workers are the ones who write budget and do the spending, this is rather easy to influence. The only other influence on this is how much pressure is put on the workers to do any work at all.

So if you reduce spending, it makes life easier for government workers while not even affecting their pay check. The incentive for governments is always to reduce how much money they get so they can reduce how much they need to spend.

 

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gordonung

Not a result of the Amazon law, but our gridlocked government at worked.

http://www.nbclosangeles.com/news/local/California-Sales-Tax-to-Drop-on-July-1-124736009.html

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ETNPNYS

It's hard to argue that by taxing us on Amazon purchases, we won't just simply go to a local store and get it immediately for the same price. If this were the case, Amazon will have to further drop its prices in order to remain competitive with B&M shops.

For example, I found the TV I wanted at Best Buy for $1500. Add the extended warranty from them, plus tax, and I'm looking at over $1800. Amazon, however, had the same exact TV for $1200, only $99 for the extended warranty, no tax, and free shipping. I saved at least $500 by purchasing from Amazon. 

On the other hand, I bought a Kindle from Amazon because it was the same price as Target but without tax. I only saved a few bucks, but if the price was the same there's no doubt in my mind that I would have just picked it up locally. 

The question is: in the above scenarios, does me giving my money to Amazon have a positive effect on California's economy or does it bypass California wallets and go somewhere else? I think it would be hard to argue that buying from our local stores would help our local economy. 

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TerribleToaster

"It's hard to argue that by taxing us on Amazon purchases, we won't just simply go to a local store and get it immediately for the same price."

That beacuse the point of trying to extend sales tax to Amazon is so you do exactly that. It tends to be a good idea to invest in the local economy.

 

"If this were the case, Amazon will have to further drop its prices in order to remain competitive with B&M shops."

Right now, B&M shops need a way to compete with Amazon. once again, the idea is to save B&M shops from being destroyed by Amazon.

 

"I think it would be hard to argue that buying from our local stores would help our local economy. "

 1. Local stores determine who is empolyed locally. No buying from local stores means no more local stores. No local stores, no local jobs. No local jobs, and I think you can figure out the rest.

2. Local stores are a major controling factor in determining market price both locally and globally. Weaking/losing local stores makes us lose more control over the economy as a whole as well as on a local level. 

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Blues22475

Agreed. Part of the reason why I even purchase my goods from Amazon is because there's, often times, no tax attached to it. If they start taxing (by the way it's going may end up this way) I am less likely to guy from Amazon and go to a local store and pick it up. Even so, I am still likely to buy from Amazon because they have products that I cannot find here in town.

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TerribleToaster

So, what exactly is bad about this?

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Blues22475

Taxes on crap that didn't have tax on it before is what bad about it...at least on the surface.

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TerribleToaster

 

What item did you buy that didn't have tax on it before? Oh wait, it always had tax on it. You were just using a loophole to avoid paying it resulting in an outsourcing of the local economy and facilitating its collapse.

 

This is what bothers me about this, people complain all the time about the outsourcing of industry to China and the many ways it ruins our national economy. But you aren't upset about industry being outsourced to which ever state Amazon happens to decide will have your distribution center so that they can avoid sales tax and the same many ways it ruins the local economy. It's the exact same thing on a slightly different scale, yet somehow people how completely different opinions on it.

 

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Blues22475

Why do you think I said "...on the surface"? Calm down.

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TerribleToaster

What was the point of your post then, if you knew it didn't answer my question?

All I'm asking is that you think before you speak (or type, as it may be).

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Blues22475

The main purpose of posting is to state an opinon/fact so everyone can read it. Also, to assume I don't think before I post is a bad idea. Indeed, you have alot of information about how the economy works, but that doesn't justify your indirect flame.

Btw, why are we having a nothing fight? It's just a article ffs. lol

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TerribleToaster

 

"The main purpose of posting is to state an opinion/fact so everyone can read it." 

I am aware of that, and I assume that you are aware that people will ask you to back up your opinions. 

"Also, to assume I don't think before I post is a bad idea."

How so? I see no evidence that you gave any thought to it. You have expressly neglected to provide any.

" Indeed, you have alot of information about how the economy works, but that doesn't justify your indirect flame."

If you took offense to my effort to make you think about this topic a bit more, I apologize. It was not intended to cause you discomfort.

"Btw, why are we having a nothing fight? It's just a article ffs. lol"

I can not speak for you, but I debate so that I may better understand the topic at hand which is a rather serious one.

What I wish for is for you to either bring up points I haven't considered so that I may reform my opinions or for you to come to share my own (to serve as a further ensurement to myself that my ideas are correct).

 

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Blues22475

"How so? I see no evidence that you gave any thought to it. You have expressly neglected to provide any."

I purposely leave my thoughts fragmented to see how people respond. Yeah, it seems under-handed but I do so with good reason. I learn how people think and how critical people can be by doing this method. Let me explain what I meant now (regardless if it makes sense to you it really doesn't matter at this point):

When I look at my invoice from Amazon, I do not see any tax applied. Does this mean there is no tax? No, but on the surface it appears to be absent. At least in this sense I can afford to be naive and say there is no tax on the I purchased (which is a lie you already know). If there is a tax at least I am not paying for it (as far as I know).

"I can not speak for you, but I debate so that I may better understand the topic at hand which is a rather serious one."

I used to believe the same thing, then I stopped. Why? Simple: no one on the Internet (at least from my experience) cares about that. People wanna be right or wrong, not understand about the subject at hand and walk away knowing more about it. If you attempt to, you wind up looking like an arrogant (regardless of what your motives are) person and people have disdain for you everywhere you go. I leaned this earlier on as a Teen and kinda of seen it constantly being done as I read these forums.

Sorry for the Wall-o-text. Let's not derail this any further. If you'd like to discuss further (not sure why at this point) drop me an e-mail.

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roninnder

For California voters it ultimately comes down to this: Vote for the law and pay more taxes, vote against and pay less. It's just that simple.

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TerribleToaster

You do know, that because they put sales tax to online purchases, they were able to reduce taxes rates, right? The consumers are getting taxed either way for the same amount, it just a question of how suppliers will be taxed.

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roninnder

Your argument makes no sense, because the "suppliers" never pay any sales taxes for end user purchases, that cost is passed on to the consumer. The tax cut was in no way dependent on this tax law, and can (and most likely will) be raised back up again as early as next year. Either way California residents pay their local sales tax. This tax is a fairly clear violation of the Interstate Commerse Clause.

If you want to pay taxes so bad, just pay your use tax. It's your legal obligation after all to pay use tax on every single item that you buy online, you do do that, right?

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TerribleToaster

"Your argument makes no sense, because the "suppliers" never pay any sales taxes for end user purchases, that cost is passed on to the consumer."

 I can't believe you are so much of an fool that you think sales tax doesn't affect sales so I'm going to assume you just weren't thinking clearly at the moment. Suppliers (in this case, Amazon and other retail outlets) sell less product because there is less quantity demand (which there is with a sales tax). Thus, when your goods are taxed, the tax hits you to. Consumers only take the full brunt of a tax when demand is completely inelastic; otherwise the profit loss is split between the supplier and consumer, with the government picking up some of that profit and an addition amount known as dead weight loss which no one gets having the rest. 

 

"The tax cut was in no way dependent on this tax law, and can (and most likely will) be raised back up again as early as next year."

I disagree. I doubt a state government in a almost 10 billion dollar deficit would consider a sales tax cut if they didn't see themselves getting income another way. just because they weren't introduced in the same bill doesn't mean they are related.

 

"Either way California residents pay their local sales tax." 

And so do the CA retailers, so why doesn't Amazon?  

 

"This tax is a fairly clear violation of the Interstate Commerse Clause." 

Not at all. It is a slightly possible very fuzzy violation of the Interstate Commerce Clause. If it was a clear violation they would have never had tried it. They simply used a loophole to tax Amazon just as Amazon uses a loophole to avoid being taxed.

But it is most definitely clear that the federal government has to step in and laws be amended. No one ever thought there could be such a thing as a interstate distributor when these laws were written. I find the best solution would be for Congress to give state legislature the right to tax any retailer that falls in the interstate retailer category, or something similar to that. 

 

"If you want to pay taxes so bad, just pay your use tax. It's your legal obligation after all to pay use tax on every single item that you buy online, you do do that, right?"

In my state, there is not a sales tax on every item, so no on that point. But otherwise, I pay sales tax whenever I can, yes. But even if I didn't an appeal to hypocrisy (Tu quoque) is a red herring. It does nothing to undermine the point of the argument.

 

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TerribleToaster

I hope it fails.

The sales tax loop-hole is just too damaging to economic diversity. I believe it needs to be snubed out.

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winmaster

Exactly

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