http://paloaltoonline.com/print/story/print/2011/08/26/editorial-amazons-misguided-fight-against-sales-tax


Palo Alto Weekly

Spectrum - August 26, 2011

Editorial: Amazon's misguided fight against sales tax

Support local merchants by declining to sign Web giant's petition

We hope the public will wholeheartedly back local businesses, including longtime Palo Alto merchants Jeff Selzer of Palo Alto Bicycles and Faith Bell, of Bell's Books, who recently held a press conference to announce their opposition to Amazon.com's campaign to get an exemption on paying a tax on sales it and other Internet retailers conduct in California.

The company is said to be spending $3 million to collect signatures on a referendum petition that would ask voters in November to repeal an e-fairness bill that passed the state Legislature in June. The bill correctly, in our opinion, extends sales tax collection to many of the state's Internet retailers, including Amazon. The state estimates that the measure would collect some $200 million in additional sales-tax revenue annually.

A handful of other states, including New York, now require most mail-order companies to collect state sales tax. Amazon — which now sells thousands of general merchandise items in addition to books — apparently has decided that it will go all out to battle the California law, which would take away its unfair advantage over local stores and shops, including independent merchants Selzer and Bell.

In California, Amazon can claim up to a 10 percent advantage over so-called brick-and-mortar stores that must charge whatever sales tax is levied in the city and county where they operate. And although state law requires that residents who make mail-order purchases out of state voluntarily pay sales tax, the lion's share of this business is not reported to tax authorities.

At the press conference, Selzer, whose shop has been in business here for 81 years, emphasized that although online merchants may offer discounts, brick-and-mortar stores provide service and expertise. He added that local merchants sometimes see customers come in and try out new products, taking advantage of the store's knowledge, and then go home and make the purchase online.

Bell added that Amazon's claim that it now has no physical presence in the state is disingenuous, when its Kindle book readers are produced in San Jose and distributed in the Bay Area.

Many small merchants have been fighting Amazon and other big-box stores for years, charging that profits on local purchases leave the city or county and never return. Income earned by locally owned businesses circulates in the community three or four times over, benefiting local workers and companies, they say. Selzer said that all local merchants want is a level playing field, and are more than willing to compete with Amazon and other online retailers if they paid their proper share of sales tax.

Amazon, besides hiring professional signature-gatherers to drum up the support it needs to put the repeal referendum on the November ballot, immediately fired thousands of its California affiliate businesses who sold Amazon merchandise when the sales-tax measure passed in June.

In our view, Amazon's campaign is an incredible slap in the face to California taxpayers, who support local and state government by paying millions of dollars in sales taxes every year. One group, Stand with Main Street, that favors local brick-and-mortar businesses, estimates that such stores lose $4.1 billion in sales a year to online retailers who are skirting local sales taxes and not hiring local workers.

Another estimate, by Goldman Sachs, predicts that online shopping — which has more than tripled since 2000 — will jump from 4.4 percent of all retail sales now to 17.1 percent in the near future. Clearly, it was time for California to make sure this huge portion of the state's commerce pay its fair share of sales taxes, just like other businesses.

Many local governments, including Palo Alto's, have seen major drops in sales tax revenue during this and previous downturns. More and more of that is trickling away as a result of Internet purchases. It is interesting to note that the state will not license automobiles purchased out of state until the owner has paid the appropriate California sales and vehicle taxes.

There is no logical reason that some retailers should be exempt from collecting sales tax, while others are on the hook. No one is asking for special benefits for local businesses, but at least we should not have a tax policy that actually discourages patronizing local businesses. Let local businesses succeed or fail on their product pricing and service, not on the advantage of saving sales tax when purchases go to an online retailer.

Comments

Posted by svatoid, a resident of Charleston Gardens
on Aug 26, 2011 at 6:41 am

The Weekly should have recused themselves from offering an opinion on this matter since they have a major conflict of interest. Their newspaper is dependent on advertising revenue from local retailers.

"And although state law requires that residents who make mail-order purchases out of state voluntarily pay sales tax, the lion's share of this business is not reported to tax authorities."
The weekly and the disgruntled local merchants should therefore go after the local residents and not Amazon. Naturally this would not happen since these retailers would risk alienating clients. Better to go after a faceless company like Amazon.

"Many small merchants have been fighting Amazon and other big-box stores for years, charging that profits on local purchases leave the city or county and never return. "
I thought that this editorial was about tax revenue and not profits. Is the Weekly suggesting that residents be forced to shop in Palo Alto and/or California? There are numerous reasons, too many to discuss here, why people shop online.

"One group, Stand with Main Street, that favors local brick-and-mortar businesses, estimates that such stores lose $4.1 billion in sales a year to online retailers who are skirting local sales taxes and not hiring local workers."
Once again this editorial is about taxes not sales revenue. The Weekly is confused and unfocused. In fact, Palo Alto has done it's best to discourage local retailers and there are many reasons why people shop out of town and/or online. Is the Weekly taking a stand against online retailers in general, sounds that way to me.

"No one is asking for special benefits for local businesses, but at least we should not have a tax policy that actually discourages patronizing local businesses. Let local businesses succeed or fail on their product pricing and service, not on the advantage of saving sales tax when purchases go to an online retailer."
Erroneous and unsupported conclusion. I bet you most people would continue to shop online regardless of whether sales tax is collected. The editorial is ignoring the reasons people shop on line and trying to make it sounds that if Amazon started collecting sales tax online everyone would be flocking to Bell's Books for their purchases!!

Unfortunately the Weekly has chosen to return to their "cheerleader" role, writing a poorly written editorial in favor of the people that probably keep the Weekly in business.




Posted by agree with editorial, a resident of College Terrace
on Aug 26, 2011 at 10:00 am

I agree with this editorial. Amazon is a rich company and they should need to be a good citizen. Quit abusing the sales tax system and quit abusing the referendum system. Amazon claims that they are exempt from sales taxes because they have no California presence, but then what right do they have to meddle in California politics?

If Amazon is unwilling to directly collect sales taxes on all purchases, they should at least provide state tax authorities with a list of their customer's purchase amounts so the state can catch tax cheaters. Amazon customers are required by law to pay taxes on their purchases, either a sales tax at the time of purchase or a use tax at the end of the year. If Amazon is refusing to help at either point, they are colluding with the tax cheats.


Posted by svatoid, a resident of Charleston Gardens
on Aug 26, 2011 at 10:17 am

"Amazon claims that they are exempt from sales taxes because they have no California presence, but then what right do they have to meddle in California politics?"

Let's turn that question around--if Amazon does not have a California presence then what right does California have to require them to abide by California laws?

" they should at least provide state tax authorities with a list of their customer's purchase amounts so the state can catch tax cheaters."
So we agree that the problem is not really Amazon, it is the Calfiornia residents that are not paying the use tax.

"Amazon customers are required by law to pay taxes on their purchases, either a sales tax at the time of purchase or a use tax at the end of the year."
That is why the Weekly, Faith Bell and the rest of the people unhappy with the status quo should be going after the general public.

"If Amazon is refusing to help at either point, they are colluding with the tax cheats."
No they are not. That is not their job. It is the job of the California tax authorities and the public to collect and pay taxes.


Posted by sixyears, a resident of Professorville
on Aug 26, 2011 at 10:27 am

I have heard somewhere after six years from now on,they will do it.


Posted by Jeff, a resident of Downtown North
on Aug 26, 2011 at 11:07 am

Svatoid,

My name is Jeff Selzer and I run Palo Alto Bicycles. I can understand a consumer not being in favor of Amazon or any other online retailer being required to collect sales tax. While the 8% to 9% that would be collected probably would not be enough to dissuade them from buying online it is still a benefit. One that online retailers can offer that I cannot.

All I have ever wanted was a level playing field. One of the arguments I have heard is retailers do not pay the tax all they do is collect the tax. This is true but if I as a retailer do not collect the tax the state still requires me to pay the tax. So as a retailer in California I do not have a choice. Every sale I make the state requires the tax be paid. It seems to me unfair that another retailer (albeit an internet retailer) should get a tax break that I do not. I do not view Amazon as the enemy. Heck I order from them from time to time. I am just frustrated that I am required to tax my customer when my competition is not. My goal is not to get into a protracted argument with you or anyone else. I respect your opinion and you have a right to it. I just wanted to offer the rational as to why I am in support of the law that was passed that requires online retailers play by the same rules I am required to play by.


Posted by svatoid, a resident of Charleston Gardens
on Aug 26, 2011 at 11:19 am

Jeff--thanks for your comments.
I still say that even if Amazon or other online retailers would have to collect taxes, it would not make a major dent in online sales and would not result in people rushing to local brick and mortar stores. Heck, people in states that shop where taxes are collected for online purchases still buy online.

I would have thought that you would be against the new law:
Web Link

"One key change in the proposal launched Thursday is an increase in the threshold of annual sales that online companies have to meet in order to be required to collect the tax."

In fact, you should be against the original law as well since it exempts certain businesses and does not "level the playing field", so to speak and does not make all online retailers play by the same rules.

As I stated before, I feel that your argument should not be with Amazon,but your fellow citizens who do not pay their use taxes each year.





Posted by The-Internet-Is-Disruptive, a resident of Another Palo Alto neighborhood
on Aug 26, 2011 at 11:45 am

The Weekly's editorial is predictable, but like most Weekly positions on local matters, not particularly honest. As already pointed out, the Weekly is dependent on advertising from local businesses and real estate ventures. The Weekly does not receive much (if any) funding from its readers. So, it's primary commitment has to be to its revenue stream—no matter what it tells its readers.

What the Weekly has failed to do is to talk about the "elephant in the parlor"—the skyrocketing cost of rents in the downtown area. And that "elephant" is Jim Baer and his history of raising rents to the point that "marginal" businesses can not longer survive. Many years ago, one restaurant owner made the claim that before Baer bought his building, the monthly rent was $1,200/month. A few years later, about the time the restaurant went out of business, the owner claimed that the rent had jumped to $7,200/month. (Keep in mind that the occurred over ten years ago, so the rents must be even higher now.)

Back in the day, there was: Bookbuyers, Stacey's, Chimera, Megabooks, Stanford Books, and a small bookstore on Hamilton that disappeared when a fire took out a group of shops where it was located. Bell's Books still remains, but that is clearly because they own their building, don't have a lease/rent, and don't pay even $1,000 a year in property taxes. With almost no large fixed operating expenses, this store still seems to be "struggling" without having adapted to the world-wide reach of a Internet-available customer base.

The Weekly is in bed with Jim Baer, now, so it's not likely they will ever have the courage to call a spade a spade--when it comes to the "disruptiveness" of unreasonably high rents. Clearly paying $7-$10/square foot to store "inventory" which might well not "move" for years makes no sense. In short, businesses like book stores, novelty shops, and quite possibly most retail, are not good fits for locations with very high rents and greedy landlords like Jim Baer.

Retail in places like downtown Palo Alto needs to rethink its business model. Maybe having a storefront where a limited amount of merchandise is demonstrated makes sense, with orders being taken on-line, and products delivered to customer's homes reduces the costs and maintains the illusion of downtown "retail". But with rents only likely to increase in the future, any worries about Amazon's having an "unfair advantage" is clearly a "smoke an mirrors" diversion from the unfair advantage Amazon has for not renting from Jim Baer.

Maybe it's time for people to recognize that the costs of operating a business are directly linked to the cost of the site where the business is located—and that Palo Alto has priced itself out of many markets because of greed.

People paying three prices by shopping in Palo Alto are not supporting the merchants so much as they are supporting very greedy land owners and property developers. The Weekly has failed to point that out in this less than compelling bit of logic.


Posted by registered user, Walter_E_Wallis, a resident of Midtown
on Aug 26, 2011 at 1:07 pm

What does Amazon get from the city? Bell's et al get fire and police protection and parking enforcement. Amazon just gets the use of streets, paid for by UPS & Fedex taxes.


Posted by narnia, a resident of another community
on Aug 27, 2011 at 6:07 am

Actually, Walter, Amazon derives the same benefit from the city I do when I shop in Palo Alto and pay sales taxes. They should collect taxes. They are not being ethical I think.


Posted by registered user, Walter_E_Wallis, a resident of Midtown
on Aug 27, 2011 at 4:34 pm

Amazon does NOT themselves use any city or county facilities. That portion of their local connection, the delivery vans, certainly pay their fair share. When you shop in Palo Alto you get to hold the purchase in your hand and take it home then. Amazon purchasers have to wait weeks or pay outrageous fees for quick delivery. I imagine Amazon pays significant tax on its facilities wherever they are. They just ain't here.


Posted by narnia, a resident of another community
on Aug 27, 2011 at 8:01 pm

Amazon DOES business and a lot of it in Palo Alto. People on Amazon's behalf execute orders so that the orders get to costumers. With Walter's reasoning we could have a company operating in International waters, doing business everywhere, using in fact if not in name, facilities and never pay a cent at all, syphoning resources and making residents pay. Would that be fair an ethical?


Posted by safeheaven?, a resident of Southgate
on Aug 27, 2011 at 8:08 pm

A storm is coming,I hope there is a safe heaven for you.


Posted by registered user, Walter_E_Wallis, a resident of Midtown
on Aug 28, 2011 at 5:54 am

Narnia, we do indeed have businesses in international waters, and they trade the very real need for ancillary services for independence. Some are moderately successful, many are not. There is a real advantage for a store to be right here, for the ability to handle and take delivery of the merchandise. You could never sell ice cream cones by internet order. Few would buy a car without driving one. There will always be a need for Frys even in the face of thousands of internet sources, but some markets are natural to the internet. The desire to tax those businesses that do not burden our resources is just greed, pure and simple.


Posted by Need moraaity, a resident of Midtown
on Aug 28, 2011 at 5:54 am

Irrelevant nonsense.Whether they use the streets etc. They do business here so they should pay the taxes here like everyone else.
It's the same ruse used by GE top pay ZERO taxes in the US. They put their offices off shore. We need a little morality in business not just lawyers and business mentalities looking for loopholes.


Posted by The-Internet-Is-Disruptive, a resident of Another Palo Alto neighborhood
on Aug 28, 2011 at 9:49 am

> Irrelevant nonsense.

What's irrelevant is this poster's comments--since they are off-point.

> They do business here so they should pay the taxes

Amazon pays its taxes. The issue is whether it should collect taxes for the State of California to insure that Amazon's customers, who are Californians and who do not pay via their income tax declarations, are forced to pay by Amazan's becoming the State's tax collector.

> We need a little morality

Well, talk to your neighbors .. who obviously are not complying with state law.


Posted by registered user, Walter_E_Wallis, a resident of Midtown
on Aug 28, 2011 at 3:35 pm

So the State, County and City have a claim on every penny I spend? No way, Jose'.


Posted by USA expenses are Bloated, a resident of College Terrace
on Aug 29, 2011 at 2:55 pm

If Amazon charges me sales tax, I am going to buy the same things from Shenzhen, China.

Adios USA.



Posted by move there, a resident of Adobe-Meadows
on Aug 29, 2011 at 3:11 pm

expenses:

hint - if you move there, you can save the shipping costs

just saying, cuz it's not like you care much about supporting your community. shenzen is in communist territory, ain't it?

don't let the door hit ya where the good Lord split ya

liberal pinko commie sympathizers

;-)


Posted by USA expenses are Bloated,, a resident of College Terrace
on Aug 29, 2011 at 3:20 pm

Hi "move there":
Last I checked your house was packed with Chinese goods.
People in glass houses should not throw stones at others.

So much for hypocrisy. I don't blame you - you and I have a lot in common.

Truth hurts does it not.





Posted by JQP, a resident of Old Palo Alto
on Aug 29, 2011 at 3:27 pm

Misguided? Hardly. It's settled law that there's a limit to which a state can dragoon a business into being a tax collector.

It's beyond dispute that a state like CA cannot require a business like Amazon to collect sales tax if the business does not have a physical presence in the state. The Supreme Court of the United States settled this in 1992.

And no, the presence of enabling software/computers in the state doesn't amount to a physical presence. This was an aspect of North Dakota's failed argument in 1992.

And no, affiliate companies don't amount to a physical presence of Amazon.com either. Corporate and tax law lays out what the distinctions have to be. As long as they are careful on this, A9, Lab 126, etc are distinct companies from Amazon.

Sorry, if CA wants to collect its Use Tax, CA will have to do the work to collect it.





Posted by move there, a resident of Adobe-Meadows
on Aug 29, 2011 at 3:42 pm

expenses: if your house is full of cheap commie chinese junk, then maybe its your expenses that are bloated

quit supporting dictators and start supporting America

"Last I checked your house was packed with Chinese goods."

no, its not, if you were the friendly type, you'd be invited here to see, but you are the kind of hater who wants to throw rocks at other houses and buy from elsewhere

typical commie sympathizer, making assumptions to deflect from their own anti American behavior.

you know what they say about those that assume

"you make an @## out of Uma Thurman"

(courtesy stuart smalley)


Posted by common, a resident of Southgate
on Aug 29, 2011 at 3:50 pm

you are not telling the truth,your house is indeed full of chinese goods,if not where did you get it?We have nothing in common


Posted by USA expenses are Bloated, a resident of College Terrace
on Aug 29, 2011 at 4:16 pm

It is interesting to note that the Amazon (sales tax) debate is really a symptom of the Chinese (globalization - beyond America's borders)

move there: Truth hurts does it not - you seem to be bleeding; you are bleeding so much that you have fallen to calling me names like commie.

The reason Chinese stuff is cheaper is that our work force is expensive - due to many factors - not the least the expenses borne by the working class aka due to the bloated govt expenses.

You can tax me more (add on another 10% sales tax, on top of fed/state payroll taxes) - but I will find a way to get the most value for my money - that is normal behavior - no need to get into name calling.

[ PA Weekly - please do not edit the name calling messages - I am not hurt at all - actually is part of a healthy discussion which actually shows the extent we as Americans can accept the truth ]




Posted by move there, a resident of Adobe-Meadows
on Aug 29, 2011 at 4:17 pm

I don't buy the latest electronics, maybe when i replace i'll have to look where they are made, somebody other than communists i hope

my furniture is from the carolinas and here. one piece of ikea swedish socialist junk. socialism way better than communism, right, mr expenses?

;-)

clothes - you can find clothes from all over if you stay out of anti-American commie chinese sympathizer stores like wallmart - remember when wallmart used to be proud to sell American made? now just a commie front

more clothes - there's lots of trade deals that means labels from all over india,korea, africa, even communist viet nam. look at your labels if it's not from commie wallmart

food is as local as I can get, for my kids health. no chinese coal slag in protein supplements for baby formula

it's chinese coal slag in imported commie food products that makes people turn mean like mr expenses

not flouride

;-)


Posted by USA expenses are Bloated, a resident of College Terrace
on Aug 29, 2011 at 4:19 pm

Bring the sales tax down - I will probably bring my business to the local stores.

Let that not surprise you.


Posted by move there, a resident of Adobe-Meadows
on Aug 29, 2011 at 4:23 pm

mr expenses

I did not call you a communist

I said

liberal pinko commie sympathizers

theres a difference

a communist is a commie; one who supports commie countries through his actions is a liberal pinko commie sympathizer. facts are important.

no worries. I put you and wallmart in the same sympathizer boat.

;-)


Posted by move there, a resident of Adobe-Meadows
on Aug 29, 2011 at 4:26 pm

texas has no taxes. north dakota too

you can also move to your favorite - china

you clearly don't like it here enough to be a member of the community

do you pay use taxes on out of state internet purchases?


Posted by USA expenses are Bloated, a resident of College Terrace
on Aug 29, 2011 at 4:30 pm

move there: You are not understanding the problem.

I hope other readers got quite what I was trying to say. It is impossible to teach sense to everyone - I can live with that.


Posted by move there, a resident of Adobe-Meadows
on Aug 29, 2011 at 4:45 pm

I have a clear understanding of your problem.

You support communists in shengzhen or wherever you said above and don't want to pay your fair share of keeping our great community great.

Everyone understands you belong elsewhere with likeminded tax cheats. Enjoy the winter in Sioux Falls.

Too bad you didn't answer the use tax question, guess you're not proud of the answer.

It's the law.

It's funny how some say it's a strong moral position to not pay taxes, when they won't get caught, and in an anonymous forum. But won't lift a finger to change the law when they can't save a buck for their greedy selves.

Come out, come out, wherever you are.

Tell us your name and how much you saved by not following the use tax laws, oh brave communist sympathizer.

Come out, come out.


Posted by cop, a resident of Palo Verde
on Aug 29, 2011 at 4:52 pm

Where?where?where is the thief?are you the thief?


Posted by JQP, a resident of Old Palo Alto
on Aug 29, 2011 at 5:27 pm

In the end, because Amazon's position is so strong based on what the Supreme Court of the U.S. has made beyond dispute (see my note above), I wouldn't be surprised if CA eventually offers Amazon a significant tax break to physically locate here and in turn collect CA's use tax.

In other words, much less CA tax on Amazon.com if Amazon does CA's work in collecting Use Tax from residents.

And maybe Amazon would agree, for business reasons. Then, you'll see big Amazon food warehouses in Salinas/Central Valley delivering fresh groceries, meats, etc. ("Amazon Fresh") to your door, as they do in other states.


Posted by USA expenses are Bloated, a resident of College Terrace
on Aug 29, 2011 at 5:37 pm

JQP: Here is another thought to consider, my guess it Amazon will not bite; the reason being that they are really competing for business globally. They are worried about online stores popping up in other parts of the world that can deliver in USA without the corresponding tax.

This strategy can be suicidal. It is also a one way street; Amazon can make the deal with the state of CA but will not be able to get out of it at a later time.

There is also a possibility that may be right.





Posted by USA expenses are Bloated, a resident of College Terrace
on Aug 29, 2011 at 5:38 pm

Correction to the last line:
There is also a possibility that you may be right.


Posted by move there, a resident of Adobe-Meadows
on Aug 29, 2011 at 5:56 pm

mr bloated expenses

I'm sure it was an oversight. You neglected to tell us about whether you pay use taxes on your online purchases.

It's important so we know about the veracity of your other statements, such as

"If Amazon charges me sales tax...

Adios USA."

We know your feelings about hypocrisy, because you told us - "So much for hypocrisy. "

Time to make your bold declaration about CA's use tax.

Come out, come out. Share with us. It's the law.


Posted by USA expenses are Bloated, a resident of College Terrace
on Aug 29, 2011 at 7:09 pm

I already came out:

I am you.


Posted by cop, a resident of Midtown
on Aug 29, 2011 at 8:23 pm

Can we mix water with fire,boom,all gone for good.


Posted by move there, a resident of Adobe-Meadows
on Aug 30, 2011 at 10:48 am

"I already came out: I am you."

No. You are the self-identified tax cheat above; someone who wants others to support this great community while you skate. And too hypocritical to use your real name in making your "moral" (ha!) stand against taxes.

Unlike the original tea party that wore costumes and hid behind Native American garb, today's tea baggers are just a cheap, cheating, self centered fringe that is afraid to identify their behavior in public.

You don't care about this community or our great country and say "Adios USA."

The good citizens, law abiding and upstanding, reading this say "goodbye, don't let the door hit ya, we ain't gonna miss ya."

For once, do what you say you would do - move there.

Go away.


Posted by registered user, Walter_E_Wallis, a resident of Midtown
on Aug 31, 2011 at 5:04 am

"today's tea baggers are just a cheap, cheating, self centered fringe that is afraid to identify their behavior in public."
Afraid to identify their behavior in public? That's funny. I see no masks or other means of disguise at their meetings. They are clear in their intentions and honest about their concerns. Liberals hate them just like they hate any connection with reality.