markwelch
March 22nd, 2009, 11:23 AM
Amazon has "drawn a line in the sand" in the sales-tax battle, by informing the State of Hawaii that if they enact their version of the "Amazon Tax," then Amazon will NOT collect Hawaii sales taxes (called "excise taxes" there), but instead Amazon will terminate its relationships with Hawaii resident affiliates. (Thanks to Mellie for digging up and posting this information (http://www.capitol.hawaii.gov/session2009/Testimony/HB1405_Testimony_EDT_03-20-09.pdf)! I'm attaching a JPG of the Amazon letter to this post.)
I'm posting this in the California thread because nobody has yet reported any specific response from Amazon regarding the pending California bills. I strongly believe that if Amazon adopts the same position (stating that it will terminate California affiliates and will not collect tax), then the entire purpose of the law will be undermined: the lost income tax would then far exceed the forseeable revenue.
I had assumed, based on Amazon's response in New York, that it would simply "surrender" and begin collecting the tax. And given California's size and the importance of Amazon's California affiliates to the company, I expect that Amazon won't make a similar threat in California. But if Amazon decides to terminate its California affiliates if this law passes, then it would present a huge obstacle to California legislators, who would then be forced to decide whether to sacrifice California jobs and income tax just to "call Amazon's bluff."
This puts me in a strange, awkward position: while I don't want Amazon to terminate their advertising relationship with me, I also recognize that their decision to do so (if the law passes) would actually reduce the probability that the law might pass.
Finally, Amazon and other folks (opposing the Hawaii bill) seem to suggest that the only viable alternative (to force out-of-state retailers to collect sales tax under the "Quill v. ND" decision by the US Supreme Court) is the "Streamlined Multistate Sales Tax" project, which surprises me. In my view, there are two ways to address the "undue burden" problem: one is "tax simplification" and the other is "technological implementation." The Streamlined Sales Tax effort requires states to modify their sales-tax laws to make them more uniform; I think a "technological alternative" is also viable (if states joined efforts to create tools and procedures to eliminate or substantially reduce the "computation cost" and "compliance costs" by providing a clear and easy way for merchants to identify, compute, collect, and remit sales taxes to many states, even if those states have very complex and different sales-tax laws). I also believe that under the "Quill" case, it is potentially possible to have more than one "sales tax system" in place (for example, one system might be adopted by 30 states, and a second system adopted by 12 other states, and companies might be required to use both).
I'm posting this in the California thread because nobody has yet reported any specific response from Amazon regarding the pending California bills. I strongly believe that if Amazon adopts the same position (stating that it will terminate California affiliates and will not collect tax), then the entire purpose of the law will be undermined: the lost income tax would then far exceed the forseeable revenue.
I had assumed, based on Amazon's response in New York, that it would simply "surrender" and begin collecting the tax. And given California's size and the importance of Amazon's California affiliates to the company, I expect that Amazon won't make a similar threat in California. But if Amazon decides to terminate its California affiliates if this law passes, then it would present a huge obstacle to California legislators, who would then be forced to decide whether to sacrifice California jobs and income tax just to "call Amazon's bluff."
This puts me in a strange, awkward position: while I don't want Amazon to terminate their advertising relationship with me, I also recognize that their decision to do so (if the law passes) would actually reduce the probability that the law might pass.
Finally, Amazon and other folks (opposing the Hawaii bill) seem to suggest that the only viable alternative (to force out-of-state retailers to collect sales tax under the "Quill v. ND" decision by the US Supreme Court) is the "Streamlined Multistate Sales Tax" project, which surprises me. In my view, there are two ways to address the "undue burden" problem: one is "tax simplification" and the other is "technological implementation." The Streamlined Sales Tax effort requires states to modify their sales-tax laws to make them more uniform; I think a "technological alternative" is also viable (if states joined efforts to create tools and procedures to eliminate or substantially reduce the "computation cost" and "compliance costs" by providing a clear and easy way for merchants to identify, compute, collect, and remit sales taxes to many states, even if those states have very complex and different sales-tax laws). I also believe that under the "Quill" case, it is potentially possible to have more than one "sales tax system" in place (for example, one system might be adopted by 30 states, and a second system adopted by 12 other states, and companies might be required to use both).
