A different lens on taxes

[meierlde]

Thanks... that by far the best article that I have seen on this subject.

It appears from reading another article the issue is that states are passing click thru nexus laws. That is if an instate web site allows you to click thru to amazon, then Amazon is regarded as having a nexus in the state. (This dispute started in 2008 in NY) For a while Amazon shut off affiliates in the state, but since the laws also apply to adds for amazon on other web sites, it appears that they have decided that to Amazon might have had to stop adds on a lot of web sites, or at least restrict advertising so Amazon just gave in.
Note beyond the list it appears that April 1 adds New Mexico to the list where sales tax is charged, and I saw another piece that implies Arkansas is on the list. Of course Amazon just like Wal-Mart is able to afford the Software that does the calculation, all be it services that do the calculation for the vendor based on zip+4 do exist for smaller vendors.

 

[Hermit]

Amazon is obviously smarter than getting between a state and "its money".

 

[Montecfo]

While it is true that they have the advantage of brinks and mortar, there is a related disadvantage of the substantial cost of bricks and mortar... the have to either price that in or accept a lower return to compete with an online merchant that does not have to collect sales tax. They also have to put up with buyers who visit the store to see and feel the merchandise and then go home and order it online... and many people do. If bricks and mortar were such a big advantage then Amazon and others would be all over it. Barnes and Noble tried that and it didn't work out too great.

It is a lot more complicated than that. Online sellers must invest in logistics, ship products one at a time, and forego the profit from "impulse purchases" that in-store retailers get. These are just different business strategies with different costs and opportunities. And if you notice, most sellers do both bricks AND clicks. Even Amazon is opening stores now. Why would they do that if having them is a disadvantage? And also notice you do not see storefront sellers closing stores en masse and existing states to get the "advantage" of not collecting sales tax.

On the second part, I totally disagree with you. Sales taxes are assessed on buyers, not on merchants in most states. As a result, it makes zero sense for a merchant with nexus to be required to collect sales taxes and allow a merchant without nexus to avoid collecting sales taxes. All that does is move the unlevel playing field.

Nexus is the linchpin, so it seems to make sense. Blame the framers of the Constitution. And I addressed the playing field above.

If residents reported and paid use tax then there would be no need to press for online merchants without nexus to collect sales tax... but non-compliance is rampant.

Sure. But that goes back to the same issue. Many bills have been presented in Congress which would allow states to force interstate sellers to collect. None have passed. Thus this is not the sellers' issue to solve.

I have no problem with a state using pressure on online merchants to collect sales taxes for sales in the state given the rampant non-compliance of use tax... if an online merchant doesn't want to do it then just don't ship to addresses in that state... simple.

Well, existing law is there for a reason. State taxing authorities are not at all about "fairness". Is it "fair" that states favor in-state sellers that bring jobs and other tax revenue into the states, and tax them more lightly (talking income taxes now) by changing apportionment rules to favor them? Of course it is not "fair" but it may still be good tax policy, even though it puts out of state sellers at a disadvantage.

Thanks for the discussion.

 

[EastWest Gal]

I hate taxes. I get stuck with obscure ones like the 3.8% ACA tax. You're welcome to all the people who get a subsidy. I pay a small part of that. I also get hit with the AMT. It was only a few hundred bucks this year, but I still had to cough it up after already paying over $80k in taxes. I max out my 401k, my wife's 401k, contribute to an IRA. Make too much for a Roth. I buy Muni's. Bury money in a deferred annuity. Bury it in whole life (I know you all hate that, but it defers taxes and pays for my LTC), give it to charity, donate appreciated stock...I do everything I can because I am one of those folks who has to bend over at tax time.

You are very fortunate to have the income to have to pay so much in taxes, with so many people just trying to keep a roof over their heads. I saw the huge impact the ACA had on reducing premature births and pregnancy complications. Your 3.8% tax likely saved some lives. Thank you for that.