The End Of Tax-Free Shopping On Amazon

[Pumapayam]

Swamplot

Worst news for 95% of my online shopping.

Beginning July 1, Amazon will begin charging sales tax on all online purchases shipped to Texas.

I am not voting for Susan Combs come next election.

[JJVilla]

In principal this makes sense...just what the needy and greedy politicians do what the money is what bothers me.

[skwatra]

wow that is terrible for my personally as well...

[marmer]

It's a miracle it lasted this long, frankly.

[LTAWACS]

Why have we not voted out of office the goons and thugs responsible for this? Get them OUT OF THERE!

[infinite_jim]

Why not get rid of all regressive taxes and institute a progressive income tax? Should be a wash.

[samagon]

I'm actually not opposed to this.

[Pumapayam]

It does put Amazon on an even playing field now with Box Box stores like BB, Wally's, and Targette. But more pissed that my digital music and likely my Amazon Prime will now be subjected to taxes.

At least I still have MacMall, JR, B&H, and Provantage.

[TheNiche]

Why not get rid of all regressive taxes and institute a progressive income tax? Should be a wash.

Since the state exempts certain categories of consumption from the sales tax, (for instance, shelter, food, medicine, baby products, newspapers, and services provided by other government entities), our sales tax is not as regressive as it may seem at first. A young, low-income family of five living in a house in Aldine that uses METRO buses to get around may not pay sales taxes on anything but a fraction of their expenditures. Mostly just electricity, a telephone line, and certain clothing items. And what they actually do purchase isn't going to be very expensive, so that it is almost guaranteed that they're paying only a sliver of the public services that they enjoy.

Now take that family and assume that they are basically responsible and rational people, the working poor. Their income is growing slowly but surely each year. They're not exactly comfortable, but they're not living hand-to-mouth, either. They want a car, but they want to be sure that they have enough savings as a cushion first. With an income tax, a small portion of their total household income would be witheld immediately after it has been earned, but it would comprise a huge proportion of their discretionary income. This keeps them in a more precarious position from month to month with respect to keeping a rainy day fund and to funding the rainy days and makes their household less flexible in terms of being able to arrange income and expenditures to be able to save rapidly to meet a goal.

So where poor people are concerned, I think that the sales tax as Texas applies it is generally fair and certainly preferable to an income tax. (Not that it couldn't be tweaked, here and there. For instance, I think that clothing items costing less than $30 should be exempt and that used cars have already been taxed once and that once is enough.) And one of the big advantages for poor people, whom are generally less educated, is that they do not have to concern themselves with any additional tax preparation, recordkeeping, or concerns for contingent tax liabilities over and above what they have to worry about for federal income taxes. It's one less thing to worry about.

And more generally, as it applies to more affluent households and the broader economy, a sales tax recognizes more precisely that people structure their lives around the appropriately-timed enjoyment of realized wealth, not merely the accumulation of paper that signifies wealth. The sales tax has absolutely no effect on how the household figures out how to time and realize consumption. That is to say, it does not (and, IMO should not) matter whether someone has worked, formed a business, or made wise investments; there should be no tax implication because a person chose to study economics instead of biology; there should be no tax implication if a person chose to work 80 hours per week at $10 per hour instead of 40 hours per week at $12 per hour. (Hell, personal sacrifices being worth something, I don't even think that there should be a tax implication on a hotshot lawyer working at a big firm that earns a $250k salary in exchange for his youth.) And there should be no tax implication to someone that invests money in order to eventually make larger purchases rather than making a smaller purchase now. A sales tax lets people set their goals and figure out for themselves how to reach them.

In contrast, a progressive income tax (if it is simple enough that people can even understand the long-term implications) will affect people's decisions as to how they reach their goals. It distorts the labor markets by changing the incentives to work smarter and/or harder. It changes how people save money; and in particular, the taxation of investments that were funded with taxed wages cause a disincentive to store wealth. Households that do not save enough money are more likely to become distressed and accrue bad debts, owe taxes, cause legal and collections battles, and to declare bankruptcy; the people in them will endure undue stress. Of course, some of this could be solved at the state level by not repeating the flaws of federal taxation...but that somehow seems overly optimistic.

Politically, the debate has become clouded by the rhetoric of class warfare. Neither a sales tax or an income tax is absolutely regressive or progressive; it depends on how they are implemented, what is taxed and what isn't. Those words can only be used to describe the effects of one very specific proposal relative to another. And in the end, the objective should be to find an optimal balance that enables people to be productive and to save responsibly, not merely to achieve partisan catharsis.

[OkieEric]

Not good news....not good at all. I even use Prime after getting it free for over a year through Amazon Mom and now actually pay for it. This will probably make me re-consider, though I think the typical price I find at Amazon almost always beats a brick and mortar. Though if I'm willing to pay more to get something that 2nd day I'm probably willing to pay a premium to get it immediately at a physical store

Subscribe and save is pretty awesome for certain items, though - diapers, k-cups, etc.

[crunchtastic]

As much as I like Niche's screed, I'm still scheduling maximum Amazon prime shopping for the next few weeks to enjoy it while it lasts.

Talk about pusher-man. It has turned me into freakin paranoid Baby Doc with the shopping. I'm already in for the streaming content. Why leave the compound? gardening tools I could buy at the HD down the street arrive in 2 days with no tax and no shipping? a dvd and a kitchen sink in the same day? Food, soap and shoes in one day? this is going to be some hard stuff to back off of.

[TheNiche]

As much as I like Niche's screed, I'm still scheduling maximum Amazon prime shopping for the next few weeks to enjoy it while it lasts.

Me too. It'd be crazy not to.

[Simbha]

I don't disagree with this at all, and I buy plenty from Amazon and other online retailers. I echo what JJVilla says: I have no problems paying taxes. Period. I consider it paying for governmental services and the cost of living in a secure and thriving society. However, it bothers me tremendously when government officials waste money - as it should bother all of us.

[kylejack]

Yes, we need to pay more taxes so we can fund a security detail for another Presidential campaign.

[Fringe]

This sucks but for most of the stuff I order from Amazon it won't make a big difference. It's those big ticket items that will make a real difference like a new TV or stereo. The tax savings can be pretty significant for something over a grand. Now I will have to weigh the tax savings with other online stores such as Newegg when purchasing high dollar items.

[Ross]

You still owe the tax, even if you buy online. If you don't pay it, you are stealing from the rest of us. Perhaps ther eought ot be a requirement for a 1099 like submission to states that details online purchases. Then, the states could come after the deadbeats.

I buy very little online, and can't recall a purchase that did not have tax on it.

[samagon]

You still owe the tax, even if you buy online. If you don't pay it, you are stealing from the rest of us. Perhaps ther eought ot be a requirement for a 1099 like submission to states that details online purchases. Then, the states could come after the deadbeats.

I buy very little online, and can't recall a purchase that did not have tax on it.

huh, never knew that.

http://www.window.st...es/faq_use.html

Do I owe tax on goods purchased via mail-order catalogs or Internet merchandise? Yes. A seller who uses catalogs or the Internet to sell goods is treated the same as any other seller of taxable items. If you purchase merchandise through a catalog or the Internet from a seller located in Texas, you owe Texas sales tax on the purchase. If you purchase merchandise through a catalog or the Internet from a seller located outside of Texas and use the taxable item in Texas, then you owe Texas use tax on the purchase. An out-of-state mail-order company or an Internet company may hold a Texas Sales and Use tax permit and collect Texas tax. If the out-of-state seller does not have a Texas permit or does not collect Texas use tax, the use tax is due and payable by the purchaser.

I suspect not many do know this.

[Fringe]

huh, never knew that.

http://www.window.st...es/faq_use.html

I suspect not many do know this.

I'm thinking this rule is for resellers that hold a State Tax permit. It implies if they buy something for their own use using their tax number they have to pay taxes.

[RedScare]

I'm thinking this rule is for resellers that hold a State Tax permit. It implies if they buy something for their own use using their tax number they have to pay taxes.

No, the quoted text could not be any clearer. ALL purchases by end users incur sales tax. The fact that we do not pay it does not mean we do not owe it.

I should add that is except for exempt items, such as food or medicine.

[IronTiger]

Yes, it's terrible, but we don't have to get the "local" tax slapped on top of it, right?

[Fringe]

No, the quoted text could not be any clearer. ALL purchases by end users incur sales tax. The fact that we do not pay it does not mean we do not owe it.

Well it's not that clear to me and I doubt if 99% of our state's residents know about or understand this tax rule. How is it even enforceable?

[RedScare]

Clearly, enforcing it is more expensive than not, since the State rarely goes after internet buyers. However, that doesn't change the fact that state law requires sales tax to be paid. If the retailer does not collect it, the buyer is responsible for sending it in.

What is stupid about this entire debate is that people are blaming the state instead of Amazon. Amazon built a huge warehouse in the stats, giving it a Texas presence, then refused to charge sales tax, as required. This is the same as if Walmart decided not to charge sales tax in any of its stores in Texas. Texas simply did its job. Why is Amazon glorified for subverting the law, and Texas villified for enforcing it?

[marmer]

I thought there was some kind of federally-sponsored "tax holiday" on internet sales, an attempt to build "e-commerce" before the 90's dotcom boom and bust. I suspect that has expired but I'll bet a lot of people are as confused as I am.

[kylejack]

According to the state, I owe it. According to me, I don't.

[Pleak]

I thought there was some kind of federally-sponsored "tax holiday" on internet sales, an attempt to build "e-commerce" before the 90's dotcom boom and bust. I suspect that has expired but I'll bet a lot of people are as confused as I am.

There was (and still is) but it only applies if the selling company doesn't have a physical presence in your state. (among other rules) Amazon does have a physical presence (see Redscare's post) but believed they were above the law. They have used this tactic is several other states - they had relationships with local sellers in Illinois I believe - which gave them nexus - when Illinois came calling - Amazon cut the ties to those sellers instead of paying taxes and a lot of the locals guys lost the bulk of thier business.

[marmer]

There was (and still is) but it only applies if the selling company doesn't have a physical presence in your state. (among other rules) Amazon does have a physical presence (see Redscare's post) but believed they were above the law. They have used this tactic is several other states - they had relationships with local sellers in Illinois I believe - which gave them nexus - when Illinois came calling - Amazon cut the ties to those sellers instead of paying taxes and a lot of the locals guys lost the bulk of thier business.

A careful re-reading shows that the end user owes "use tax" if the retailer doesn't have a physical presence in the state and "sales tax" if the retailer does. Not only is this, I'll bet, almost completely unknown, but how does it relate to the federal rule I mentioned before? I remember this issue surfaced when Lands End and Sears merged and Lands End suddenly began charging tax on their catalog items. Lands End, was, of course, not big enough (and there were way too many Sears stores) to tell the state to go pound sand like Amazon tried to.

[RedScare]

A careful re-reading shows that the end user owes "use tax" if the retailer doesn't have a physical presence in the state and "sales tax" if the retailer does. Not only is this, I'll bet, almost completely unknown, but how does it relate to the federal rule I mentioned before? I remember this issue surfaced when Lands End and Sears merged and Lands End suddenly began charging tax on their catalog items. Lands End, was, of course, not big enough (and there were way too many Sears stores) to tell the state to go pound sand like Amazon tried to.

To be clear, the end user ALWAYS owes the tax. However, the state can only require the retailer to collect the tax on the state's behalf when the retailer has a physical presence in the state. Amazon is attempting to get an undeserved "discount" by refusing to collect the sales tax owed by its buyers, a tactic unavailable to those retailers who actually pony up and build the state of Texas' economy by locating here and employing Texans. Not only do I see no need to praise Amazon for its chickenshit tactics that cost Texans tax revenue, I believe they should be shunned for the disdain they show for our state and our laws.

It should be noted that those internet fanboys who always brag that ecommerce will render brick and mortar retailers obsolete are only encouraging the destruction of our local economy. Many of these internet "hipsters" rush to "like" Facebook pages that lambaste Walmart, even though Walmart employs over 148,000 Texans, collects over $1.5 Billion in sales taxes, and pays $318 million in state and local taxes. So, while Walmart paid direct or indirect taxes to Texas governments nearly $2 Billion, Amazon pays zilch, and closed down its warehouse when asked to abide by the same rules as other retailers...and internet geeks applauded them. I give them the middle finger.

[TheNiche]

Amazon pays zilch, and closed down its warehouse when asked to abide by the same rules as other retailers...and internet geeks applauded them. I give them the middle finger.

I'll remember to click the checkout button with my middle finger during the brief time that we have left together.

[RedScare]

That would make me feel better. Thank you.

[TheNiche]

That would make me feel better.

I should be more precise with my use of pronouns.