MultiGrain Discussion: Amazon Boycott

by Tom Gilson, Associate Editor (gilsont@cofc.edu)

There has been a lot of recent buzz about the proposed boycott of Amazon by a coalition of non-profits in California.  According to the Huffington Post one of the groups behind the boycott, Think Before You Click CA, claims that the sales tax will bring in $200 million  in “desperately needed revenues to prevent further cuts to vital public services, while helping local business by closing the loophole that lets online retailers like Amazon.com undercut them.”  However, Amazon is fighting back contributing $3million to a group called More Jobs Not Taxes  whose goal is to repeal the new California law expanding the collection of California sales tax to Internet retailers.  Supporters of Amazon, and the repeal of the Internet sales tax, claim that “at a time when unemployment is over 11% in California, we need to be creating more jobs and fostering economic growth, not passing tax legislation that undermines small businesses.”  Adding to the controversy is the claim by the website Geekwire that “the Alliance for Main Street Fairness, which was so successful in bringing about the victory in Illinois against Amazon, was founded by Wal-Mart and other big-box retailers.”

Obviously, this is a complicated issue with multiple stakeholders and numerous ramifications.  However, ATG wants to know where you stand?  Should online retailers like Amazon be exempt from charging sales tax on their products?  Or is this an unfair tax advantage that penalizes brick and mortar stores? How would this impact publishers who sell books via Amazon? Assuming that such laws create additional tax revenue, would libraries ever see any of the money?  Or are supporters of Amazon right, would jobs be lost, undermining economic growth and risking an overall decreased tax revenue?  Let us know what you think.

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11 thoughts on “MultiGrain Discussion: Amazon Boycott

  1. If a company is doing business in my state, one of the costs of doing business is paying sales tax. I don’t see why any business should be exempt, especially since stores with both a web presence and brick and mortar stores in-state, must pay the tax.

  2. South Carolina has imposed a “use tax” on out-of-state and online purchases for at least as long as I’ve lived here (13 years). The problem is that it’s not enforceable, so many people ignore it.

  3. Ideally, internet commerce sales taxes should be the same as in-store taxes. But in-store sales taxes are built into the computers at each store and each register is programmed for that tax rate. I do understand the complexity of having to calculate sales tax for each individual purchase at a different rate. And, since many states allow city or county sales taxes in addition to state sales tax and each may change that rate individually, the complexity grows. But I still think that with today’s computers and networks, it should be possible. (like South Carolina, we are supposed to report internet sales and pay sales tax on them, but few do.)

    I live in Tennessee. We have no state income taxes (except for a small tax on investment income–which I think many people also ignore.) Sales tax is our main income stream. In spite of that, the prior Governor entered an agreement to not charge Tennessee sales tax for Amazon as an enticement to build three distribution centers in the state–creating jobs for people. So, how do you balance jobs against taxes in this economy?

    Once again, what’s clear in theory gets very muddled in reality.

  4. Living in California and serving as a librarian in a community college, this issue is near and dear to my heart. California is in a financial crisis, and funding for our community and public colleges is directly tied to tax revenue. We have lost faculty, cut service hours, and are unable to meet the demand for classes due to section cuts. Professional development funding has been brutally slashed. Our instructional faculty and staff are taking paycuts, reduced hours and furloughs just to stay employed at the CSUs and the community colleges.

    All these cuts are directly related to a loss in tax revenue, and more cuts are on the table if revenue does not appear. This directly impacts our library — we have a hold on any new database purchases, are cutting print periodicals, have lost associate faculty and tech desk hours, and are considering all purchasing decisions
    more closely than ever.

    I also run my own small online business and in California, those who sell goods must pay taxes on those goods. A huge corporation like Amazon paying taxes does not “undermine” small business — we are expected to pay these taxes by virtue of living and conducting business in the state. It merely holds Amazon to the same requirements any (small or large) California business must meet. I say tax ’em!

    Thanks, Tom, for bringing up this discussion.Wishing you all the best!

    Morgan

  5. @Morgan

    I thought that for this case, it is asking Amazon to add taxes to the price, which would by paid by the BUYERS. Amazon itself doesn’t really pay more. The only effect is probably decreased demand.

  6. Steve McKinzie August 23, 2011 at 4:32 pm -

    Someone once said that nothing is certain except death and taxes. Well evidently, it ain’t so — at least with respect to taxes and those who sell online.

    I have strong sympathies with Amazon in this quarrel — and that for two reasons. First, these states, as in the case of California who want to tax more businesses, are notoriously irresponsible with the revenue they do bring in, so it seems unreasonable to empower them to take in even more. There is also the matter of whom they have on their side in the quarrel. Tom Gilson reports that Wal-Mart and other over-the-counter retailers led the fight in Chicago on the issue of taxing online vendors. Who in their right mind would ever want to side with Wal-Mart against anybody?

    Even so, in the interests of even-handedness and rationality, I’ll side with California on this one and cast my sympathies for Amazon aside. In the final analysis, put me down as one favoring some sort of evenly imposed sales tax — both for online and for over the counter vendors. We shouldn’t cut businesses like Amazon any extra slack or any special privileges. It only makes sense. Make your country’s taxes as fair and as even as you can.

  7. Has anyone considered the fact that sales taxes place an unfair burden on lower socio-economic groups?

  8. DennisBrunning August 26, 2011 at 5:14 pm -

    Amazon delivers to my door even before I click the purchase link. Kind of hard to boycott them. Especially in Arizona, no boycott rights here.

  9. Californian consumer August 26, 2011 at 8:19 pm -

    I’m against sales tax on Amazon.com purchases:

    1) They hurt consumers.

    2) The law excusing sales taxes from out-of-state retailers was intended for catalogers. Isn’t Amazon.com just another mail order catalog, just online? So what has changed making the tax necessary now? The only thing that has changed is they have been successful, so local businesses are looking for trade protections.

    3) Amazon.com is an out of state business, not benefiting from the tangible benefits of our local and state tax receipts – at least not to the same extent as businesses located in state.

    4) Many internet companies are located IN California. Do we want those businesses – and the taxes, jobs, etc. they bring to Californians – to be hurt by having to pay taxes in the other 49 states? I would not.

    5) I agree that we need more tax revenue in the state, but we shouldn’t be trying to solve our financial problems with a complicated to implement, regressive sales tax – we should change the laws so that it’s not harder for our legislators to raise taxes on corporations and billionaires than it is to change the state constitution. And we should repeal Prop. 13.

    6) Finally, insofar that Amazon is competition for local bricks and mortar businesses – competition is good for consumers! Local businesses have the benefit of knowing their local customers and what they want, as well as the convenience of being right there – you don’t have to pay for shipping or wait for an item to be shipped to you. And further, they could certainly start up their OWN online operations and expand their customer base and revenues by selling to out-of-state customers (thereby benefiting from the same tax benefit that Amazon is benefiting from).

    One of the biggest fallouts from Amazon.com is it’s harder to browse titles at local, independent bookstores… but at the same time I would say it has created an opportunity for well-curated specialized bookstores – Builders Booksource in Berkeley, specializing in architecture; Omnivore Books on Food in San Francisco; Travelers Bookcase in LA… times change and business needs to be responsive to those changes in order to succeed. Trying to hurt competition in order to support those businesses is not going to help anyone at the end of the day – they will still fail, and in the meantime consumers will be harmed.

  10. Amazon has been a great revolutionary, both in increasing access to a vast supply of titles to the reading public and advancing new model of retailing and service. Indeed, much as Sears and Montgomery Ward shrunk the distance between rural and urban America in the late 19th and earlier 20th C, so Amazon has become retailer to the world.

    That however does not mean they should be exempt from being a social and civil partner in the communities they do business in. Given that e-retailing is retailing, seems to me that the rules for bricks and clicks should be the same. I realize that there is additional overhead in managing multi jurisdictional tax compliance and that sales tax is really a pass through cost. But fair’s, fair: Amazon relies on the smooth functioning of state and federal apparatus – from roads to security, and directly benefits from the state or municipal investment in local education. They – as well as other online retailers – bear the some of the responsibility for their maintenance as well.