Amazon Circumvents Sales Tax Laws To Beat The Prices of Local Retailers
On big ticket items (computers, TV’s, etc.) Amazon.com has a significant price advantage over local retailers in most U.S. States. A TV store in Chicago, for example, has to collect 9.75% sales tax on every TV they sell. On a $1500 flat screen, that’s $146.25 in taxes. Amazon.com, however, does not collect sales tax because of an obscure 1992 Supreme Court ruling. As a result, Amazon.com can sell the same TV for $146 less than the local store in Chicago.
Obviously this is bad because Amazon.com:
- Doesn’t employ anyone in almost all of the communities they sell goods in.
- Doesn’t pay employment tax, property tax, or income tax in almost all of the places they sell their wares.
- Doesn’t contribute to local charities like a lot of local businesses do.
Supporting Amazon.com is bad for local businesses.
Amazon.com Manipulates Affiliate Marketers, Many of Whom Are Small Business Owners
On March 1st, 2010, the state of Colorado passed a law ordering Amazon.com to tell them who bought goods from the company without paying sales tax. Colorado’s goal was to level the playing field between Amazon.com and local Colorado retailers.
How did Amazon respond? The “fired” all of their affiliates in the State of Colorado in a misguided effort to “send a message” to Colorado’s legislature. The trouble is, many of these affiliates are small business owners who depend upon referral fees from Amazon.com’s affiliate program. Even worse, Colorado’s law (unlike similar laws passed in New York state, Rhode Island, and North Carolina) did not use affiliate relationships as the legal grounds to tax Amazon.com. Yet Amazon terminated their affiliates anyways.
How can Amazon.com fire thousands of affiliates to send a political message?