So here’s the situation, online sales giant, Amazon, refuses to pay sales taxes in the state of California, even though a law on the matter had been drawn up 2 years ago. Political figures in California have accused Amazon of not caring about the people of California as the taxes would be used to help better the state, where it is needed. The argument is that e-commerce companies are making it hard for businesses like neighborhood bookstores to prosper so this proposed taxing is a sort of divine retribution if you will, to let Amazon share in the tax payout that other struggling companies already have to pay. Amazon however, is trying its best to resist this tax as it would then have to succumb to other taxes across the country if it loses its footing in California. To appease the calls to tax, Amazon states that it would open two warehouses in the state of California which would then generate 7000 jobs. This is obviously a tempting offer considering the state of California’s 12% rate of unemployment and the nation’s rather high 9.1%. On the other hand, this whole issue affects many small time online retailers who are affiliates of Amazon in California, which it has decided to cut ties with to avoid taxes.
This tax law, if it falls through, is proposed to provide approximately $300 million in revenues for the state. And if what Amazon fears also comes true, it could also provide millions in revenues for other states. However, with other online stores not wanting to comply with this tax as an online store owner states in the article, is the Government looking for money they can’t attain? With that said, it is my opinion that the government take up Amazon’s offer of creating jobs in this time of high unemployment, if this effort is all for naught.
It will be interesting to see what happens in the future for Amazon because one of its biggest appeals to consumers is the fact that there is no sales tax. If they were to put stores in California, what is stopping other states from requiring Amazon needing to open stores in more states with bad unemployment? After reading the article, California is already dependent upon the money they hope to get from Amazon in this deal. Businesses are hiding behind the fact that Amazon is hurting their sales which is hurting the economy, but I look at it like the consumers are still purchasing, they are just choosing the best offer and that doesn’t include more tax. The consumers aren’t hurting the economy, they’re just making the politicians think of a different plan than to raise taxes and politicians never really want to stray away from the usual plan..
ReplyDeleteWhile I know that this is an economic class... There is absolutely NO WAY California should be able to tax Amazon. Amazon conducts interstate commerce, a federally regulated trade that states have no jurisdiction to tax over. It's sad that California is justifying its bad economy as a reason to be able to tax a private company.. Let's tax Microsoft because Detroit needs jobs...?? Amazon is obviously offering the alternative to maintain their image, but really, they have no obligation. Neighborhood bookstores, like record stores, or video casette stores, or even newspapers, are dying out due to new innovations. If not Amazon, then another company would have surely led to their demise. I feel that this is another example of the political blame game that California politicians are using. They are blaming a large company so that their obvious failures would not be under such scrutiny..
ReplyDeleteI agree with Andrew here, the neighborhood bookstores and video stores are dying out. Boarders Bookstore just went under and Blockbuster was recently bought out of bankruptcy by Dish Network. Rather than hold on to the vestiges of outdated system, California should at least consider Amazon's proposal.
ReplyDeleteI also agree with Andrew. The politicians are really just using Amazon as a way of now bailing California out of its economic distress. Having forced that proposal out of Amazon should be enough for them.
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