Alliance for Main Street (Walmart and Target) Press Amazon on Taxes; In Praise of Amazon

Mom and pop bookstores and other retailers have had enough. They cry foul on Amazon for not collecting state sales taxes. Moreover, Walmart and Target have now entered the battle and have sided with mom and pop against purported evil-doers like Amazon that have an unfair advantage.

The Wall Street Journal reports Retailers Push Amazon on Taxes

Wal-Mart Stores Inc., Target Corp. and other large retailers are ratcheting up a political campaign to force Amazon.com Inc. to collect sales taxes, sensing opportunity in the budget crises gripping statehouses nationwide.

The big-box stores are backing a coalition called the Alliance for Main Street Fairness, which is leading efforts to change sales-tax laws in more than a dozen states including Texas and California.

Until now, the group has been largely associated with mom-and-pop stores, spotlighting stories of small toy shops and booksellers who argue Internet merchants that aren't legally required to collect sales taxes enjoy an unfair advantage with shoppers.

"The rules today don't allow brick-and-mortar retailers to compete evenly with online retailers, and that needs to be addressed," said Raul Vazquez, Wal-Mart's executive vice president of global e-commerce.

Amazon has feverishly fought efforts to compel it to collect sales taxes. The Seattle-based online retailer says it complies with the law. Under a 1992 U.S. Supreme Court ruling, only merchants who have a physical presence, such as stores, in a state have to collect sales taxes. Amazon currently gathers those taxes in just five states: Kansas, Kentucky, North Dakota, its home base of Washington, and New York.

U.S. Sens. Richard Durbin, an Illinois Democrat, and Mike Enzi, a Wyoming Republican, are considering more direct legislation to force online retailers to collect sales taxes, people familiar with the matter said.

Hours after Illinois Gov. Pat Quinn, a Democrat, signed the Internet sales-tax law last week, Amazon cut ties with its roughly 9,000 Illinois affiliates to avoid collection there. Amazon took similar actions in Hawaii, North Carolina and Rhode Island after those states passed legislation similar to the New York law, which Amazon is challenging in court.

Wal-Mart, Sears and other store chains publicly offered to work with the Amazon affiliates. A group representing the affiliates estimates they paid $18 million to Illinois in the form of income taxes, and are likely to see that amount drop by 25% to 30% this year.

Targeting affiliates is just one of the tactics retailers are supporting to pressure Amazon.

In states including Texas and Arkansas, store chains are also backing legislation that seeks to make clear that Amazon must collect sales taxes if it controls in-state warehouses through related companies.

Amazon last month said it would close a Texas distribution center amid a tax dispute with Republican State Comptroller Susan Combs, who contends that Amazon owes $269 million in uncollected sales tax because of the facility's physical presence in the state.

"Amazon is choosing to be a bully" by dropping affiliates instead of collecting taxes, said California Assemblywoman Nancy Skinner, a Democrat who is carrying legislation supported by Wal-Mart and other retail chains, similar to what became law in New York and Illinois.

I Commend Amazon

I commend Amazon. The real bullies are the states raping taxpayers and handing money over to pubic unions for untenable pension benefits.

Regardless of how you feel about that statement, mom and pop stores are for the most part dead. Ironically, most blame stores like Walmart, Target, and Amazon.

However, If you want to blame someone, blame consumers. They are the ones shopping at Walmart, hoping to save a buck. They are the ones using a Kindle or an iPad instead of buying a book. They are the ones shopping at Amazon.

I happen to think Walmart is a godsend. The country needs lower prices. Walmart provides them. If you disagree, you are free to shop elsewhere. For the record, I generally shop elsewhere, but my vote is meaningless in the grand scheme of things. I am outvoted by Walmart lovers but I am with the Amazon lovers.

Affiliates Dropped, Including Me

If anyone is entitled to speak out as to who is the bully is, then I am. Every month I get an affiliate check from Amazon. Rather I used to.

Here are my last three checks.

$214.99
$356.47
$246.62

The average of those is $818.08 or $3272.32 annually. Thus, I expect this move by Amazon will cost me somewhere between $3,000 and $4000 a year.

Do I feel bullied? Yes, I do, but not by Amazon. I feel bullied by California Assemblywoman Nancy Skinner and by Illinois Governor Pat Quinn.

Am I going to stop linking to Amazon? No I am not, unless Amazon service degrades or some other issue props up.

Meanwhile, I will be out $3000 to $4000 annually and Illinois will be out taxes on that amount (multiplied by everyone who feels the same as I do). Thus, instead of Illinois getting any benefit from my affiliation with Amazon, the money will all go to Amazon because I am still going to promote them unless and until I have a reason not to.

Amazon provides excellent service to me (I use them all the time) and I assume they provide excellent service to everyone who orders from my book list on the left as well. That is what matters to me, not $3,000.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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