The battle over online sales tax collection in California continues to heat up. Bloomberg News reports that Amazon.com has added another $2.25 million to a campaign to overturn a law which would require online retailers to collect sales tax on purchases made by residents in the state.

Bloomberg notes that Amazon is the only backer of the More Jobs Not Taxes campaign, which started with a $3 million donation in June. The goal is to try to get enough signatures — a total of 505,000 by September — to put the anti-tax effort on the ballot next year.

Amazon claims that it does not have to pay sales tax in the state because it doesn’t have physical operations there, citing a 1992 U.S. Supreme Court decision that provided more flexibility to online retailers.

But a number of organizations, including small retailers and a group known as Stand With Main Street, have argued that Amazon should have to collect taxes like all other retailers.

In one of many editorials against Amazon’s stance, The Daily Californian noted this week:

Amazon’s refusal to collect sales tax not only denies the state much-needed revenue but also creates an artificial advantage for Amazon over its competitors (both online and in-person) who do collect sales tax. Such an advantage removes money from local economies and further stifles the slow recovery in California.

Previously on GeekWire: Californians launch boycott of Amazon.com over sales tax

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  • http://twitter.com/CEOsherpa Michael Schutzler

    There is a balance of power here that works and has for many decades – since the days of Sears and Lands End.  The online (and DM and catalog) merchants have the advantage over local merchants by not having to pay state taxes where there is no nexus. But local merchants have the advantage of no shipping costs and local, high-touch service. By taxing the online merchants in EVERY state, the accounting, reconciling, and filing effort adds as least as much cost than the new taxes.  Means higher prices for consumers.  Means reduced demand in a reasonably rational, free market. Means less jobs all around.  

    Bottom line IMHO is this:  want more tax revenues?  Then manage the economy toward mo bettah jobs. Adding new taxes to interstate commerce is like adding extra weight on top of the last horse you have left pulling your wagon.

  • http://blog.CascadeSoft.net @CascadeRam

    imo the larger problem here is that small, local brick-and-mortar businesses are required to collect sales tax, but large online giants aren’t required to do this.

    This is big-government social engineering that seeks to promote online businesses at the expense of local businesses.

    Realistically, Congress will not approve any taxes and the president won’t even raise the topic.

    However, imo Congress should put an end to this social engineering and the states should be allowed to adopt a uniform and fair sales tax policy that is applicable to both local businesses and online businesses.

  • http://twitter.com/Vroo Vroo (Bruce Leban)

    Amazon’s campaign site says “The More Jobs Not Taxes committee has been formed to oppose the recent internet tax law….” and Michael Schutzler’s comment also says that these are “new taxes” and that California wants to “tax the online merchants”. That’s just not true.

    The truth is that California is trying to go after *tax cheats*, people who are not paying the taxes that they legally owe on their out-of-state purchases. It’s hard to go after individual taxpayers so they’re asking Amazon to collect the tax, just as Amazon does for Washington taxpayers when I make a purchase. Amazon doesn’t pay the tax for me and it’s not going to do it for California customers either. This is not a tax on Amazon.

    Bottom line: Amazon is spending millions of dollars, terminating affiliate contracts and even closing distribution centers in some states, to preserve its customers right to cheat on their taxes.

    Couldn’t Amazon implement the code to collect the sales tax for less than the money it’s spending?

    P.S. Comparing sales tax to shipping costs is disingenuous: local merchants have to pay shipping to get the product on their shelves and they don’t get the steep discounts that Amazon can negotiate so their prices are often higher. Plus they get the benefit of providing customer service to people that end up buying from Amazon because it’s cheaper and they “save” the sales tax.

    • Guest

      Bruce,

      The truth is that Amazon is not obligated to collect these taxes. If California wishes to receive the tax she is owed, she has the following options:

      1. Begin auditing California citizens she believes to be “cheating,” as you say, on their taxes.

      2. Hire Amazon as a tax consultant, paying the rate Amazon charges for such a service.

      Amazon exists to serve me, the customer. Government agencies like California’s Board of Equalisation can ask (pay) Amazon to provide additional tax collection services, but to demand Amazon’s help is simply overstepping the bounds of Federal law.

      Imagine if you, Bruce, demanded that shopkeepers help you with your bookkeeping tasks. You’d be literally tossed out of every store. California is no different.

  • http://twitter.com/Vroo Vroo (Bruce Leban)

    Amazon’s campaign site says “The More Jobs Not Taxes committee has been formed to oppose the recent internet tax law….” and Michael Schutzler’s comment also says that these are “new taxes” and that California wants to “tax the online merchants”. That’s just not true.

    The truth is that California is trying to go after *tax cheats*, people who are not paying the taxes that they legally owe on their out-of-state purchases. It’s hard to go after individual taxpayers so they’re asking Amazon to collect the tax, just as Amazon does for Washington taxpayers when I make a purchase. Amazon doesn’t pay the tax for me and it’s not going to do it for California customers either. This is not a tax on Amazon.

    Bottom line: Amazon is spending millions of dollars, terminating affiliate contracts and even closing distribution centers in some states, to preserve its customers right to cheat on their taxes.

    Couldn’t Amazon implement the code to collect the sales tax for less than the money it’s spending?

    P.S. Comparing sales tax to shipping costs is disingenuous: local merchants have to pay shipping to get the product on their shelves and they don’t get the steep discounts that Amazon can negotiate so their prices are often higher. Plus they get the benefit of providing customer service to people that end up buying from Amazon because it’s cheaper and they “save” the sales tax.

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