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Amazon and its crafty initiative [Most commented]

July 22, 2011 |  4:52 pm



Californians, don't be duped by Amazon.com's campaign against sales tax collection, The Times' editorial board wrote Friday. The company's drive to put an initiative on next year's ballot wouldn't end sales tax for items bought from the online retailer; it would merely place the burden on consumers to crunch the numbers and pay the tax -- and, in effect, would allow Amazon to keep its noticeably lower and sales-tax-free prices at the checkout, which brick-and-mortar stores can't do.

Also, most people didn't know they were liable for sales tax on items they bought online, and the current battle between the state and the cyber-merchant eliminates that ignorance, the board wrote.

Bottom line: Voters shouldn't get on board with a company using the initiative process to give itself a business advantage.

Now that buyers are becoming aware of their obligations, Amazon no doubt would like them to view its campaign as part of the tax-revolt tradition. But Proposition 13 lowered property taxes for everyone who owned real estate. The recall of Gov. Gray Davis resulted in lower car taxes for everyone who drives. Amazon's campaign to protect its blame-the-buyer business model is instead the latest in a line of corporate attempts to swindle California voters into boosting their businesses at the expense of others. Take, for instance, last year's Mercury Insurance initiative (Proposition 17), which would have allowed auto insurers to offer some consumers deep discounts — by jacking up rates on drivers new to the market. Or Pacific Gas & Electric's so-called Taxpayers' Right to Vote Act (Proposition 16), to make it harder for public utilities to compete. Or the Alternative Fuels Initiative (Proposition 10), which stood to enrich already rich Texas oilman T. Boone Pickens.

Judging from our discussion board, the majority of readers are on Amazon's side, but -- how many voluntarily pay sales tax?

Amazon is right; the sales tax jurisdictions are chaotic

Personally, I buy the 1992 US Supreme Court's ruling:"states cannot force retailers without an in-state presence, or 'nexus,' to collect sales tax; it would lead to chaos in interstate commerce, since America has some 8,000 different sales-tax jurisdictions that are constantly changing their rules and are not even aligned with zip codes."

In other words, AMAZON is right.  You may not like it, but it is nonetheless true.

Has the LA Times soiled itself down to being a third class cheerleader for a failed Democratic governance?


The question isn't whether Amazon can collect the taxes; it's whether it should

Amazon has the ability to collect and remit this tax.  All they would have to do is hire a bunch of new tax employees and pay a whole bunch more money in transaction costs, including higher credit card fees to the credit card companies. 

The issue isn't whether or not they can do that.  The issue is whether or not they are legally required to do that.  If they aren't legally required to do that, then they are legally required not to.  Their officers and directors have a legal, fiduciary responsibility to manage their company in the best interests of their shareholders.

The state of California doesn't want to do something that would be expensive for them:  collect their own taxes.  They want to make someone else do that for them, at someone else's cost.  That's what they do to their in-state retailers.  It's not right to do that to Amazon and it's not right to do that to California's in-state retailers.

The national plan that big bad horrible Amazon and other online retailers are pushing for would require one simplified national sales tax system and would require the states to reimburse the cost of collecting it.  That's the right solution.  [...]


 It is the state's responsibility to enforce tax laws

It's not Amazon's responsibility to be a tax collector for the state.  There is a line on everyone's CA 540 to report the "use" or sales tax on items purchased from out of state sellers.  Could you imagine every eBay seller trying to collect sales tax and remitting payment to the state?   It is the state's responsibility to enforce its tax laws on its taxpayers, not enforce tax laws on entities that do not reside in or have no physical presence in the state. 


There are a number of separate issues here

I've never seen so much conflating of issues.  The following are separate issues and should be dealt with separately:

1. California's government and budget are in big trouble.  (By the way, most of this is because of mandatory spending and mandatory tax ceilings, much of which has occurred through the initiative process).

2. The sales tax is regressive  (yes, it is, but it is also a tax that is currently on the books)

3. Companies with a nexus in California are required to collect and remit sales taxes from California customers. It's arguable whether AMZN has a nexus in CA.

4.  The supreme court decided, before e-commerce became so huge, that companies don't have to charge sales tax unless they have nexus in a state.  This is the current precedent but it is not necessarily the eternal law of the land.

5.  It is unrealistic to expect people to comply with the use tax filing (sorry, the evidence is they just won't do it).

6.  Nobody likes paying taxes and will do what they can to minimize their taxes.

7.  It would not be a great hardship for Amazon or other large e-tailers to collect and remit state taxes. (There's a $2500 database I was able to find in 2 minutes with google that solves the problem).

8.  The Commerce Clause in the Constitution does not prevent states being involved in interstate commerce - there's a long court-mediated history of this.

--NW Corner

This is a lose-lose situation

If Amazon does get a measure on the California ballot, thereby WILLINGLY dragging itself into the 2012 election, it will become a case study in how NOT to conduct your PR strategy.

What are the available outcomes of this action?

1.They successfully pass the anti tax measure by galvanizing support from the obviously jumped the shark tea party.  Imagine that guy with the keep your government hands off my Medicare sign, holding a sign with a kindle on it (in terms of PR it does not get any worse than this). After the measure is passed the whole thing ends up in the courts anyway.

2.They fail to pass the measure because big business is able to successfully galvanize what seems to be Amazon’s core demographic against them.  Picture those quirky little kindle ads, being followed by brutal political attack ads BY SOME UNKNOWN GROUP.

This seems like a lose lose situation.  The person that came up with this strategy needs to go back to the drawing board before Amazon becomes the AOL/Time Warner case study of the new millennium.


*Spelling errors in the above comments were corrected.


Amazon to California: Drop dead!

Ted Rall cartoon: Busting Amazon's chops 

Amazon vs. California: Whose side are you on? 

Tim Rutten: Amazon's shameful California tax dodge 

--Samantha Schaefer 

Credit: Rick Wilking / Reuters

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