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Amazon takes its tax battle to the ballot
Trucks drive into one of online retailer Amazon's distribution centers.
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Kai Ryssdal: If you're looking to learn a little more about American exposure to Eurozone debt, you might consider some some light reading on currency futures or the Euro's role in the sovereign debt crisis.
There are plenty of choices on Amazon we could recommend to you. And if you buy today, chances are, you won't pay any sales tax. That's obviously a huge issue for states. In California -- a $300-million-a-year issue. Which explains why there's a new law here that forces online retailers to collect those unpaid taxes. Now in the true spirit of direct democracy, Amazon's fighting back. It's pushing a ballot referendum that would let Californians decide whether we want to be taxed.
Marketplace's Jennifer Collins reports.
Jennifer Collins: It's not really hard to imagine how shoppers will feel about this referendum -- hm, tax? No tax?
Shaun Bowler: Californians don't like tax increases.
Shaun Bowler teaches political science at the University of California, Riverside. Amazon is proposing a ballot initiative to overturn California's law. The company's state sales tax bill would amount to $83 million this year.
Bowler: I mean there's clearly a lot of money at stake.
Bill Dombrowski of the California Retailers Association says all states are watching California's battle.
Bill Dombrowski: Because every state is having revenue problems and is looking for solutions.
California is the latest state to pass a law to collect online sales tax. Amazon has pulled up stakes in some states and is challenging a New York law as unconstitutional.
Sucharita Mulpuru tracks e-commerce for Forrester Research. She says Amazon's rivals are concerned about unfair competition.
Sucharita Mulpuru: This is really about giving the competitive balance of power in many ways back to the large big-box retailers who've lost it.
Walmart, Target and Best Buy feel they're at a disadvantage because their shoppers have to pay taxes. And Dombrowski says retailers are prepared to spend millions to defeat any Amazon referendum.
Dombrowski: I don't think there's any limit to the checkbook. It's a direct threat to their business model.
If Amazon succeeds in California, it could put pressure on other states to re-think online taxes.
I'm Jennifer Collins for Marketplace.
A transnational corporation trying to spend millions of dollars to overturn a decision it doesn't like is the "true spirit of direct democracy?"
Plenty of people support the bill because exempting internet retailers from sales tax collection is an effective 10% government subsidy that cripples small retailers.
Amazon has no legal case because it has operations all over California, affiliates or no, as shown here: http://bit.ly/amazonnexus
NPR's increasing corporate bias is disturbing.
This story ignores a key issue in the debate regarding taxation of online sales. This isn't simply a matter of states deciding whether or not they want to collect tax from online retailers. The U.S. Supreme Court has held that a state may not collect sales tax from a retailer unless that retailer has a physical presence (employees, contractors, property) in that state, and that physical presence must relate to creating a market for the retailer's products in that state. Otherwise, collect sales tax from the retailer violates the Commerce Clause of the U.S. Constitution. So, states like California have been coming up with creative ways to get around this requirement and tax Amazon and other online retailers by latching onto whatever minute physical presence they can find. It's not clear whether these efforts pass constitutional muster. So, ultimately, the issue is a legal one, not a political one.
