Our View: Don't blame Amazon
How perverse is it when wanting to keep money that you've earned is considered being greedy?
Amazon, the online retail giant, has been castigated for not collecting sales taxes in states, including California, where it has no physical presence, and therefore no legal requirement to do so.
Nevertheless, critics would have us believe Amazon has no right to do what nearly every tax-paying American probably does routinely — minimize how much of its income is handed over to the government.
One headline labeled it, "Amazon's shameful California tax dodge." Shameful? Hardly.
It's very likely the critics, just like most people and no doubt like Amazon, take advantage of every legal tax break available to them. No one is obligated to pay more than the law requires. Is it shameful to pay only what's required?
It's also probable that many of the same Amazon critics are prudent shoppers who purchase from online companies, perhaps even from Amazon, that don't collect California sales taxes. Why would they do that? Apart from the convenience and wide selection, Amazon purchases can cost much as 10 percent less than buying from a California-based company that the law requires to add state and local sales taxes.
If there's shame, perhaps it should be attributed to California online buyers who purchase from out-of-state retailers like Amazon. By California law, it is those buyers who are responsible to pay the sales tax, not the companies they buy from.
We would like to see an inventory of pundits, state legislators and tax-collecting bureaucrats who accuse Amazon of "greed." Let's see how many of them voluntarily turn over the 7 percent to nearly 10 percent sales tax California law historically has required them to pay to the government after making such online purchases.
If there's shame to apportion here, it should be for these illegal tax dodges by the roughly 99 percent of people who buy online from out-of-state retailers, but who refuse to comply with the law by writing the government a personal check for the sales tax. That's what the law requires. About one of 100 Californians comply.
Until June, the same law didn't require Amazon to collect those sales taxes. Doing so in all states would reduce Amazon sales by as mu ch as $653 million a year, Credit Suisse recently estimated.
But truly greedy politicians, eager to seize hundreds of millions of dollars from online sales by out-of-state companies, changed the law to force Amazon and others to collect what they never have been legally required to collect.
Amazon reacted, in our view, wisely. It sought to legally minimize the tax it pays. We suspect the legislators who wrote this greedy new law do likewise when given an opportunity to minimize their own tax exposure.
Amazon canceled its California-based, website affiliates that had been sending buyers to Amazon.com by hotlinks. Without California affiliates, Amazon legally can avoid collecting California sales taxes.
We've seen this eminently principled economic decision play out countless times as California government has ratcheted up taxation on people and businesses. It's one reason so many have fled the state for less tax-greedy environs.
Amazon hasn't abandoned California entirely. It is circulating a referendum petition for the ballot to repeal the so-called Amazon tax. Tax-collecting bureaucrats want to interpret the new version of the law as forcing online retailers to collect sales taxes, even without having a traditional physical presence in the state. The company says the law is unconstitutional. We hope the referendum is successful.
In the meantime, we applaud Amazon for minimizing its tax exposure, a prudent move for a for-profit business that benefits its stockholders and customers. And we deplore the money-grubbing government that presumes companies are greedy for wanting to keep what they've earned.
