Posted on 03/10/2010 3:26:01 AM PST by BulletBobCo
The political battle over taxing online sales made through retailers such as Amazon.com intensified Tuesday, with Democrats saying the state should not back down from trying to collect money it's owed and Republicans arguing the new law should be repealed.
The hardened stances came a day after Amazon said it would end its relationships with thousands of online affiliates in Colorado who send business its way through blogs and niche websites and then earn commissions on each sale.
Republicans immediately blamed the Democratic-controlled legislature for passing a bill that attempts to collect the state's 2.9 percent sales tax on online sales through e-retailers such as Amazon and Overstock.com.
"The Democrats' bill and their anti-Amazon rhetoric doesn't harm Amazon," said Sen. Greg Brophy, R-Wray. "It hurts the thousands of Colorado affiliates" who made money from online sales.
Democrats, though, said Amazon's action was purely a public-relations tactic, punishing affiliates even though the final version of the bill removed the in-state marketers as means of collecting the sales tax.
"They (Amazon) absolutely killed the affiliates just to show that they can," said Sen. Michael Johnston, D-Denver.
Meanwhile, one liberal group called for a boycott of Amazon until the retailer renews its relationships with affiliates.
Amazon "chose to make an example of our state and unfairly punish their own business associates for political gain," the group ProgressNow Colorado said in a release.
At the statehouse, both sides agree the fight with Amazon could have national implications. Colorado's approach in attempting to collect sales tax from online retailers who don't have a physical presence in the state is unique from any other state that has tried to collect the same tax.
Gov. Bill Ritter signed House Bill 1193 into law Feb. 24. The measure requires online retailers to send notices to Colorado buyers that they owe state tax on their purchases, and it would fine the retailers $5 per unsent invoice if they don't do it.
The hope is that retailers will find it less trouble to just collect the tax from purchasers and remit it to the state, something Amazon officials themselves recognize.
Amazon spokeswoman Mary Osako on Tuesday would not explain why the retailer had ended relationships with sellers in Colorado and instead repeated phrases from a letter the company sent to affiliates over the weekend.
"Although the legislation and regulations do not require online retailers to collect sales tax, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to 'voluntarily' collect Colorado sales tax," she said in an e-mail that quoted directly from the statement to affiliates.
In the bill's original form, the tax would have been collected through the in-state affiliates, as other states are attempting, but Johnston and other lawmakers helped re-engineer the bill to take affiliates out of the equation after threats from Amazon that it would dump them.
When the bill was changed, Democrats, in-state affiliates and even Republicans cheered.
Brophy wrote on his Twitter account at the time that affiliates were "no longer collateral damage in war on Amazon" and said, "Affiliates win!"
On Tuesday, though, Brophy said he was wrong. "I thought that (the new version of the bill) settled the question, but it didn't."
Amazon has said that it will only renew its relationships with affiliates if the law is repealed or significantly altered.
Brophy said he is seeking permission from Democratic leaders to offer a late-status bill to repeal the legislation.
A state Department of Revenue official said online retailers will be hit with penalties if they don't comply with the new law by May 1.
"In other words, to avoid penalties, prior to May 1, a retailer that does not collect sales tax must begin including the notification that sales tax is due," said agency spokesman Mark Couch.
The pot is calling the kettle black, sounds like.
Keep in mind that HR. 25 is for the Federal FairTax. Each state would have to implement their own State FairTax and that would need to address property tax.
But you’re in the right area of the debate issue, that is how to manage competing forms of local taxation? Business versus property etc. Tell me what you think of my local tax bond idea in post #19. Thanks!
Using property tax to fund education? This makes no sense: why should I support public education when I will use it, ever?
Good points, really good points. Have to go to a meeting now but will get back to you!
Demos want to know what part of “Tax and Spend” Conservatives don’t like.
Dims in control = less jobs.
Dims never met a tax they didn’t like and never met a way to kill jobs that they wouldn’t implement.
Also, why should an e-tailer in another state be required to pay for another state’s fire/police/idiot politicians when it will derive no benefit or service from said monies as they are not in that state?The "e-tailer" does not pay the tax. The purchaser who lives in the state pays the tax.
Cry me a Colorado river!
Right, but they would pay the tax on purchases originating outside the state, right?
Interstate sales have always been off-limits for taxation, haven't they?
Legislation such as this turns the e-tailer, or Amazon, into a tax-collection agency, and puts them under the jurisdiction of the State of Colorado, to one degree or another. See the problem?
The Marxist "useful idiots" think tax policy will not change behavior.They are like the Underpants thieves from South Park
I would be in the same boat if Pennsylvania was ever stupid enough to do this. I'd have to rent a PO box in Delaware.
It could be that indirect investments in Treasury bonds are a good way to go, BTW, for a term. I don’t know. At least some of the negative predictions about them came from skittishness after the Greece debacle—that, along with debt and deficit to GDP ratios for the UK and our country. It’s more difficult for economists and financial advisors to make good predictions during or immediately an economic decline because of radical fluctuations that occur around such declines. History isn’t even really of as much help as would be hoped, because the current situation includes unprecedented volumes and dependencies of commodities and other products in international trade.
[I’m not an economic or financial advisor. This is only a discussion of public policy.]
Oops—predictions during or immediately after an economic decline...
Good points again. Until I read this thread about the impact of e-commerce on state/local sales tax revenues, I was all for sales tax at both state and federal levels using the FairTax at both level.
I don’t want to see property taxes, business taxes, cap gain taxes and on and on.
I always thought states and locals could subsist off sales tax but now am not so sure.
I don’t support taxing internet retailers as this thread discusses.
So what to do?
I know there is a lot of waste and so people are fed up with all the spending and would like to see spending cuts.
But if we could define a list of essential services such as you started to point out, and then use a revenue stream taken from US Treasury Bonds to fund only those essential services, then that would leave all the socialists with pretty much nowhere to go to panhandle for tax money, because that is exactly what they are, political panhandlers.
So now I see the FairTax would work at the federal level but not necessarily at the state level if we enact laws barring states from taxing internet sales and sales tax revenues begin to decline.
So what’s left in the tax engineering design is how to fund a list of essential services at the state/local level without using taxes on property, business, cap gains, income and also reduced in-state sales.
The beauty of attaching revenues from US treasury bonds is that the federal government could sell the bonds at a discount to state and local governments, limit the quantity of discounted bonds by constitutional apportionment and mandate that the interest revenue from discounted bonds be used only for the defined essential services.
As far as the bond market stability, I know things now are precarious but federal bonds should not default although their market value can plummet. The reason they won’t default IMO is because the Fed will just monetize the debt, which they have been doing of late. The danger is hyperinflation but we are in a deflationary environment in many respects, and also all currencies float leaving the benchmark GDP performance amd other relative measures to interact and set the price of a dollar against commodities and other things ecnomic. IOW we the USA will likely remain at the top of a giant mudslide of all falling economies. So we may be shielded from hyper-inflation. We will see, Geithner and the Fed are getting away with it for now because so many other economies are doing so poorly relative to the USA.
I really liked also ALPAPilot pointing out the history of fire protection being a matter for property insurers and for property tax to fund fire departments.
BTW...complete repeals and deletions of those ordinances. Most men of some ingenuity won’t be asking for variances. Hard feelings have gone too far for that. If locals want caps on sizes of local manufacturing operations, they could do that (e.g., small maximum number of employees, say between 4 and 10). Unreasonable flooring costs (leases, etc.) have killed more new businesses than anything else. Allow the technologically inclined to start on their home properties. No one should be bothered by a small operation on, for example, a neighboring 35 acres or so, and we already do such projects as hobbies.
...more considerations on rural manufacturing. Nuisance regulations (noise, restricted to indoors, traffic, etc.) would be necessary to keep it from being squashed.
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