Tuesday, April 10, 2012

Taxing Amazon, an amazingly taxing task.

Taxprof links to Travis Cavanaugh (J.D. 2012, Iowa), Note, Iowa Can do Better Than the Affiliate Tax, in which the author suggests how states could get to Amazon and make them withhold and pay over sales tax.  I don't know why sales to customers can't be seen to generate the necessary nexus if the provision of a platform for resale could--probably I need to re-read International Shoe or something in addition to this Note.   In international tax we learn that the U.S. does not typically consider sales alone to be sufficient to justify source-based taxation but this is mostly based on historical thought that nexus had to involve some sort of physical presence; exceptions have been made and someone could likely make the case that sales alone ought to suffice for international tax purposes.  Mostly the impediment is not theoretical but practical, how to catch the thief.  


  1. Stories like this lead me to believe the eventually end game for US Consumption tax policy has to be some type of nationally imposed tax akin to the Canadian GST/HST or the Australian GST. The issue is I don't how you get to from point A to point B on this issue in the context of US politics. What states if ANY would even favor giving up their own sales tax at this point in time to the Federal Government even for equivalent revenue sharing. I do note the Canadian system works if you go to Amazon.ca notice the tax collection policies.


    I did notice that Amazon.ca doesn't collect Saskatchewan PST or P.E.I. PST. I don't know why this is. PEI might be switching to HST within days according to media reports.

  2. What states would favor ceding this ground to the fed: quite right, it's zero. The Amazon link is interesting. It would be even more interesting to see what the equivalents in other countries look like. It seems that paying tax is not a deal breaker for Amazon, it's still worth doing business in Canada despite those exorbitant taxes...look at them! 15% in Nova Scotia, and that's on top of the normal 5%! Presumably they wouldn't go under if they were similarly collecting taxes in the U.S.--on the other hand they'd lose their ability to put bricks and mortar competitors out of business...cf Borders.