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B&N continue to make hay with the "Amazon Tax"

Barnes & Noble released a statement this evening praising the Governor of California for signing the recent "amazon Tax" into law.

"We thank Governor Jerry Brown for demonstrating his commitment to California businesses by signing e-fairness into law. This legislation will directly benefit California businesses by creating a fair marketplace," said William Lynch, Chief Executive Officer, Barnes & Noble.  "We believe that e-fairness will improve the economy, add jobs, and help struggling businesses everywhere in California.  By signing this law, the Governor has made clear that his priorities are to help bolster economic recovery. This is a huge win for business in the state of California."

I’ve made my position on this clear (here), so I don’t feel the need to repeat myself.

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Chris July 1, 2011 um 5:46 pm

Distasteful. To say the least.

Mario July 2, 2011 um 4:23 am

I think not, it is fair that everybody pay tax, I see no reason for Amazon to be excluded from this. Are you making profit? Then pay tax for what you earn, simple as that.

jorgen July 2, 2011 um 11:10 am

Note that Amazon undoubtedly pay tax. They just don’t want to collect local sales tax that has nothing to do with them.

Chris July 2, 2011 um 12:01 pm

And deal with the added expense required to do it.

Richard Adin July 2, 2011 um 5:38 am

If you don’t want to pay slaes tax, elect politicians who will repeal the tax in your state. But if your state is going to require the local bookstore to collect sales tax, don’t make a false/artifical competitive/discount environment by allowing some retailers to skirt collecting the tax.

If Amazon is really a bargain, it will be a bargain even if you pay your sales tax. If the only way it is a bargain is if you don’t pay sales tax, then you are simply punishing yourself by not paying it because you force your state to make up for that lost revenue through some other tax or fee you need to pay.

Nate Hoffelder July 2, 2011 um 7:59 am


My problem here is not with whether I have to pay the sales tax; I think people should be paying.

No, I’m bothered by the people and companies hurt by a law that did not accomplish its goals. Furthermore, this law was never going to force Amazon to collect sales tax. Everyone who is not an idiot figured that out long before the the California bill was passed.

fjtorres July 2, 2011 um 9:48 am

Plus the intent of the law is to force an out of state entity to act as an enforcer of California law because its citizens choose *not* to obey their own laws.
Existing law is simple: if you buy products from outside the state, it is *your* responsibility to pay the corresponding use tax because sales tax does not apply.

So california has a law that is widely ignored and it chooses to drag in a third party to do its dirty work. Small wonder that Amazon, Overstock etc refuse to play Sherrif of Nottingham.

BTW, it can be plausibly argued that online sales take place at the site of the vendor’s servers at the time the servers validate an order, not at the (earlier) time the customer submits the order. Under that theory, California should be charging sales tax (not use tax!) to everybody who does online business with california-hosted servers. (Note that is *exactly* how cross-state financial services (like loans and credit cards) and corporate governance are managed. And why so many companies are incorporated in Delaware.) 🙂

Essentially, they’re acting like the state *owns* the residents and anybody who wishes to deal with them has to pay a vig for the privilege. (Out of good taste I’ll refrain from using the "P" word.)

Chris July 2, 2011 um 10:28 am

It’s funny that people get offended when Apple think it owns its customers, but no one gets offended when a state does the same thing.

Richard Adin July 3, 2011 um 7:44 am

Tell me again how this arrangement of Amazon’s is different from the arrangement insurance companies have with local agents? When I get my insurance bill from my insurance company, it comes from out of state but the invoice includes the appropriate instate taxes even though my insurance company’s only local presence is its agents. I have to pay the taxes even though I never had any contact with a local agent.

As far as I’m concerned, Amazon should either collect sales taxes or it should close out any and all contacts it has in a state. Eventually, when the only states' available to it are Nevada and New Hampshire Bezos will figure out that a large part of its revenue stream comes from all the local referrals that it has discarded. Self-inflicted flagellation will be good for Bezos.

Nate Hoffelder July 3, 2011 um 8:19 am

Few affiliates act as agents; most are just using the links as advertising. In fact, I’m not sure how an affiliate can do more than just use Amazon as an advertiser. Can someone tell me how that’s done?

Richard Adin July 3, 2011 um 7:47 am

@FJ — So many companies are incorporated in Delaware not because of taxes or the need to collect them but because Delaware corporate law is much more protective of the rights of management than of shareholders. Basically, under Delaware corporate law management can steal a company blind but suffer no consequences for doing so and shareholders can’t do much about it.

Chris July 3, 2011 um 11:16 am

So, all the companies that incorporated in Delaware did so, not because of a more favorable (DE’s still not a right-to-work state) business environment, but so that management can rob their companies blind.

Gratuitous assertions, much?

fjtorres July 3, 2011 um 2:34 pm

So you basically agree with me that companies will venue shop according to the rules they have to deal with and that they routinely pit one state against another. Different companies look for different "perks" but they all do it.
Whether it be fights over use tax, forced unionization, or blue laws, every company wants to maximize their take and minimize their costs. Focusing on one industry, online retail, or one "ee-vile" company, Amazon, is disingenuous because they all do it; from the whiners to the winners.
Again, the issue here isn’t Amazon at all but the bankrupt state government that is trying to coopt them into doing their dirty work.
1- California can’t charge import duties on out of state purchases because it is unconstitutional.
2- California can’t charge sales tax on out of state purchases because the transaction crosses state borders and settled constitutional precedent says companies need a physical presence in the state to be subject to its whims.
3- Amazon affiliates aren’t agents—like the insurance vendors–because they don’t actually sell Amazon products themselves, all they do is host links that take customers to the Amazon site where they may or not make a purchase. It is an advertising deal, the equivalent to a banner ad. Now, is California going to make everybody collect use tax that advertises in state? I’m betting they won’t, because they can’t. Which automatically makes application of the law arbitrary and… 🙂
Well, the law is a lawyer’s delight; billable hours for a case of settled law.
California will see not one red cent added revenue.
They will see a loss of business income but that is hardly new.

Chris July 3, 2011 um 8:31 pm

I forgot to point out that Delaware’s chancery court has a well-earned reputation for dealing with matters swiftly and efficiently.

Chris July 2, 2011 um 10:40 am

I left a sales tax state for a non-sales tax state a while ago. Actually, the thing offended the hell out of me was the "work privilege tax" my company had to collect for the state. But still.

I don’t have a personal dog in this fight. I simply find it offensive when Company A can deal a blow to Company B, either actively or passively, via use of legislation.

That, and it offends basic logic that folks don’t think that a state increasing the cost of doing business there won’t cause businesses to move elsewhere. Or that such legislation ever affects the target instead of all the unintended targets it actually hits.

Nate Hoffelder July 2, 2011 um 10:50 am

It’s almost as if it were pulled from Atlas Shrugged, isn’t it?

In a number of states the "Amazon Tax" was passed due to the pressure brought by brick-and-mortar retailers (B&N, Wal-mart, etc). They couldn’t compete directly so they got a law passed that hobbled their competition. Tell me that’s not something Ayn Rand would write.

Note that I’m not espousing the ideology here, just pointing out the similarity in the details.

Chris July 2, 2011 um 10:59 am

Life imitating art imitating life. The truly scary thing is, it’s not like Rand made that stuff up. It’s nothing new.

Jim July 2, 2011 um 8:37 pm

As a practical matter, the law that requires California residents to voluntarily pay sales taxes on things they buy on-line is simply unenforceable. It’s as if It’s an archaic law from the days when mail-order was such a tiny portion of retail sales that it had no real effect on state revenues.

Now that buying from out of state retailers is commonplace, the rules need to be updated. Clearly, state residents are flaunting the unenforcability of state law. They avoid paying sales taxes – and companies like Amazon enable this behavior. Thus Amazon can’t escape blame, here. Somehow the playing field needs to be balanced again. You can cry all you want about legal angles, but until something is done there will be less and less revenue for roads, schools, police and fire protection, etc. if we’re not willing to pay for these services through some kind of tax, we’ll get what we pay for – NOTHING!

Chris July 3, 2011 um 12:25 am

Let’s see… this is from the same Jim who was kvetching about how Amazon left them in the lurch due to his state’s legislature’s actions.

See, this is why I have zero tolerance for Californians. They are so mind-numbingly prone to wanting their cake and eating it too.

fjtorres July 3, 2011 um 7:21 am

Uh, Jim….?
If you’re unwilling to pay for something you can afford, getting nothing is in fact the proper outcome.
Getting something for nothing is one of the very few things that really does violate the laws of nature. 😉
Who was it that said, "The problem with socialism is that sooner or later you run out of other people’s money?"
All the talk about "balancing" the B&M vs online competition is baloney because online in general, and amazon in particular, is simply cheaper even with use tax and shipping factored in.
This "issue" is just a smokescreen to hide a bankrupt social contract.

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