Posted on 03/05/2011 3:40:24 AM PST by djf
Given the huge amount of controversy about California (770 miles long, 250 miles wide) vs. Amazon...
California has decided it wants to worry more about some fish than the central valley, which has been one of the highest, most prolific, profitable areas in the world for years (remember "The Grapes of Wrath" and "Chinatown"? I suspect the tax revenue California might get from a booming central valley exceeds Amazons total revenue by billions. But CA decides it would rather go after an entity in another state. Do you know what they call it when an organism manages to not produce it's own energy and instead lives off of the energy and efforts of another?
They call it a parasite.
Regardless. Let's set that aside for the moment. The guys who came up with the Constitution were not looking for a perfect government. I suspect they pretty much all would admit that humans are never perfect.
But they were looking for a far better government than what they had lived with. And they were committed to their own individual States, and familiar with the economies and benefits that each enjoyed.
The statement above, Art. 1, Sec 9, Par 5 is quite clear.
Each state would be on equal economic footing as the others, at least in that it would not loose whatever small economic advantages it had.
So a small state that produced whatever, say timber for example, would not lose that work and advantage to a large state that wanted to tax the hell out of it.
The same kind of situation now exists with those who glorify the "global economy", and rant against duties and tariffs. The founders knew very well our early limitations against Europe. They wanted to develop self sufficiency. Duties and tariffs are only a way of leveling the playing field against other countries/players that for whatever reason, can supply things (at least for the moment) cheaper.
I cannot believe how far we have strayed from these ideas.
/rant over/
IF what you are saying is correct, then the issue is totally between the state and the citizens of that state. And Amazon could rightly tell the state to go pound salt.
But as I said above, the law is supposed to look at the SUBSTANCE of what is going on, no matter how cutesy people try to phrase, label, or characterize it.
The law is not concerned with trifles.
And the quoted phrase doesn’t say “No tax or duty (well, we mean except for....)....”
It says what it says.
Amazon regularly tells states to pound sand. However, courts have ruled that states have the right to force companies to collect sales taxes for them; Amazon says they aren’t in the state, and if the state defines something they do as being “in” the state, Amazon threatens to remove that.
Meanwhile, if Amazon doesn’t collect the taxes, we who buy from them have to keep track of all that we buy, and file a form at the end of the year, or monthly, or quarterly (depending on your state). It’s a pain, but if we want to be good, law-abiding citizens, it’s what we do. Much easier when the tax is collected at the point of purchase — also much more transparent, because we see exactly what we owe at the time we owe it.
By hiding the tax, Amazon makes it’s customers think they are getting a better deal, because things “cost less”; only later do they find out they still owe the tax, or worse, they decide to break the law, cheat on their taxes, and then they have to live with that.
Amazon is a direct marketer itself, whether or not it utilizes print media to reach it's sales audience. They have sound legal basis for their declining to collect sales tax for states with which nexus cannot be plausibly claimed.
As an example, in Texas they run a distribution plant. They claim it is a subsidiary which itself doesn’t deal with the customer directly, and therefore the facility doesn’t count as “Amazon”. However, when Texas threatened to make them collect sales tax, Amazon announced that they were “not” going to expand that business.
Which implies that Amazon was in control of that business, which means it was a business Amazon had within the boundaries of the state.
Amazon makes those threats because they are scared of what a court would rule. Especially since the last Supreme Court case partly hinged on the “difficulty” of tracking sales tax for all the different states and counties, something that is no longer a factor as it is all easily done by computer, and handled every day by many companies.
It’s time for the congress to legislate this. The internet has changed the landscape; sales taxes are still the method preferred by most people to finance government, and that means collecting sales tax on sales over the internet.
Forcing an entity over which a state has no legal jurisdiction to collect a tax and submit it to that state is a very dangerous proposition and a horrible precedent, a precedent that establishes intrastate jurisdiction for purposes of taxation.
Do you realize the nightmare that even regular citizens experience with the state of New York, let alone high profile, high income individuals? Do you own a second home in another state? Want to pay state income tax to them? That’s the door that will be opened by allowing this.
Sorry, interstate not intrastate.
Excellent post.
The alternative is to abandon the sales tax, since as it is the sales tax is becoming an unfairly applied tax, hitting people who shop at local stores that employ people in the state, while those who shop online are getting help cheating on their taxes.
To me, the far greater danger is the disincentive for stores to operate within communities, by providing a false advantage to pulling up stakes and becoming a non-physical entity. It's already harder for local stores to operate against the economies of scale of a major mail-order shop (the shipping costs are about the only "disincentive" of mail-order, and as more people ship the per-unit costs are dropping; the brick-and-mortar stores do have some shipping costs to stock their shelves, and have local storage and operating costs).
Imagine if there were no more local stores, and everything was purchased from one of two or three "amazon" type stores. There'd be employment for shipping companies, but no place for people to find jobs in their own communities. Guess what -- I'm a "conservative" in every sense of the word, and part of that means I don't like the idea of radical change all at once; I'm sure given time we would cope with the shift, but not in the short term.
I happen to like sales tax, because it is a tax that you control to some degree by deciding whether to buy things, and it is a fair tax, in that I don't get taxed more than the hippie who lives off government welfare.
Let me put it another way -- Logically, how would you "justify" a system where Barnes and Noble online is required to collect sales tax for virtually every state in the union, while Amazon, selling exactly the same product to exactly the same people, does not? I understand the REASON -- but how is that logical, when you consider that B&N could get the same treatment as Amazon, if they simply shut down all their stores and fired most of their employees.
It just doesn't make sense to me to operate a tax code that encourages bad behavior. I think the tax code shouldn't encourage ANY behavior; it should be neutral. Right now, Amazon specifically avoids certain practices that might actually be better for it's business, simply to avoid tripping over the "nexus" line and having to collect sales taxes. I want a sales tax that applies equally to everybody in the state who buys the same item, regardless of where they buy it.
You’re thinking symbolically and not legally. I’d encourage you to try an exercise in purely visualizing the legal ramifications and those alone.
Legally, it’s a bottomless pit that you and I both will live to regret. Legalized taxation with extrajurisdictional reach can be nothing but an authoritarian nightmare, and a rather arbitrary one at that.
Above and beyond these points, I do not disagree with you.
Partially true, but not entirely true. First, merely because you purchase something over the internet from a business that has not contacts with your state of residence - and thus cannot be forced to collect your state’s sales or use tax from you - does not, ipso facto, make you a tax cheat.
As a general matter, if you bring something into the state on which state sales tax has not been paid, then you owe the compensating use tax. So far, so good.
However, it is difficult to track all of those purchases, particularly for people who live near populated border areas. Thus, e.g., states like NY have come up with a simple solution - you either report, and pay use tax, on your actual untaxes purchases, or else you pay a proxy “use” tax computed as a percentage of your income.
That proxy may, or may not, be a reasonably accurate measure of what your actual use tax liability would be; however, once paid, you are, ipso facto, not a tax cheat, regardless of whether or not you actually paid use tax on your actual purchases. Of course, that creates an interesting market distortion because it incentivizes middle and lower income folks to buy as much as possible over the internet from companies that have no presence in NYS because their effective sales tax costs will be substantially lower than if they had purchased from companies with a presence in NYS.
I did not know this. By GSEs, do you mean Fannie and Freddie?
LA stole water from the Owens Valley (Bishop area) instead of the San Joaquin Valley for the Chinatown scandal. But drive south from Sacramento along I-5 and you can see the canal bringing Delta water down south to the Grapevine, where it is pumped over the mountain and into Pyramid Lake just north of Castaic.
It was a bite coming back from Sean Hannity’s water rally in Huron and seeing our water flowing right past those dusty, unfarmed fields.
The libs have a stranglehold on mining, timber, fishing, farming and drilling, all means of solving this economic “crisis” if we had the nerve to do what needs to be done.
Residents are asked to pay the equivalent in use tax on an out of state purchase that they would have paid in sales tax had the same purchase been made in CA.
“I did not know this. By GSEs, do you mean Fannie and Freddie?”
Yep. They used caplital reserve ratio “control” to pump both the government debt and housing bubbles. It was one of the easter eggs the Clinton admin left for Bush. The rule went into effect Jan 20, 2001.
Thanks djf.
Charlie, “Fight Dirty”
“California”
The first time I met you, I tried to forget you
You showed me the worst of your sides
But all that I’d seen was that town full of dreams
Where people are living out lies
Now I’ve been back and seen the other side of you
And from where I stand, well, I must say I like the view
Surrender ... I surrender
Back here on earth I’m dreaming of sunshine, good times
For whatever it’s worth, I’m coming back
So hold on, it’s not too late, I said
Hold on, I can’t wait
California ... California
Your place of extremes where there’s no inbetweens
Oh, you can be one living hell
You’ve still got your dreamers, your liars and your schemers
But you can be heaven as well
‘Cause now I’ve learnt there’s more to you than meets the eye
You’ve got me hooked, I’m coming back and that’s no lie
I’ll be there ... I will be there
I just can’t wait ‘til I can be with you right through
They call you the Golden State, so I’ll
Hold on, they’re not wrong, I said
Hold on, can’t wait too long
California ... California
Now don’t get me wrong, I have lived here so long
And my home it always will be
‘Cause when I’m away I can’t wait for the day
To get back to my sanity
But knowing you is like some crazy love affair
So if I leave don’t ever think that I don’t care
About you ... care about you
I’m six thousand miles away from those bright lights, warm nights
Could take me some time, but I’ll be there
So hold on, it’s not too late, I said
Hold on, I can’t wait
California ... California
I was aware of this thread but couldn't call up the mental faculties at the time to focus on it but it is truly an interesting problem and discussion. Looks like one of the few areas where the federales actually have some bona fide Constitutional power under the "commerce clause". The court cases cited tend to follow the letter of the Constitution by NOT allowing interstate tariffs/duties/taxes, etc., although from my perch there looks to be occasional workarounds by various States in one way or another. Imagine that.
As a practical matter I don't see any solution to the issue aside from some sort of feral government intervention. If history is any lesson, we can probably conclude THAT would not work out well. Maybe the States should just get over it and concede the point but especially in the current economic environment, what are the odds?
~~pinging~~ for more input.
About twenty years ago, I was schooled in just how far-reaching CA sales tax is. We had sold product to the City of Los Angeles and charged them sales tax, as required. LA did not pay stating they were tax exempt.
Long and short of it, we got fined for not collecting the sales tax that LA would not pay and a whole lot of paperwork got dumped in my lap. The next time LA ordered product, I had to call the City Comptroller and inform them that I could not ship them any product until they made their account current. Since it was filtration product for their water system, they had no choice but to comply.
does this mean states can’t collect internet taxes because it would inhibit commerce of smaller states?
If I had to guess, I'd say today's politicians are more ignorant of the Constitution, the public is certainly more ignorant of their Constitutional rights, and the politicians are probably in worse money straits now than they were then. I doubt today's politicians are any more greedy than those were. Politicians are politicians are politicians.
But you make exactly the right analogy, that to mail order sales. So many people talk about the shift to internet commerce, much of which is interstate, and jump from there to the assumption that the states are LOSING money and that there is some sort of "loophole" if you don't have to pay on interstate transactions. They probably are losing in absolute terms, but so what? They were probably getting too much anyway (when was the last time they complained when some paradigm shift increased revenue). Anyway, the RELEVANT datum is the comparison with what taxes they used to get out of interstate transactions, or what they should have been getting, which is none.
Incorrect. They try to tell you that, or actually they tacitly admit they lack the authority to apply sales tax to those goods when they try to hide what it is behind the deceptive name "use tax". But it's exactly the same amount applied to the same goods and only when sales tax is not applied. It is a sales tax, but it's unConstitutional. If it weren't, they wouldn't even go to the effort of trying to fool you with the pretense.
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