Thursday, March 11, 2010

Tax Foundation Takes On Amazon Tax

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  1. Today's Denver Post had numerous letters regarding the Amazon Tax. The lead letter was penned by Eric Grimm, Colorado Springs. My reply would not see the light of day in the Post(due to size limits), therefore I am hopeful it will here..

    Dear Grimm,

    First of all, to characterize Amazon Inc as a "predator," is beyond ludicrous. Amazon is a for-profit business working very hard to make money and be successful in the marketplace. They employ many people and strive very hard to make a profit, the very thing that creates any and all innovation and product or service improvement. Without online retailers such as Amazon, many authors and book buyers would have little access and less impetus to earn a living as a writer, or to become enlightened and entertained through reading great books. The market for books is incredibly larger today due precisely to their presence, innovations, and cost structures. Everyone wins, except unprofitable or inefficient book dealers who seem to think, as inefficient family farmers do in certain places, that they are owed a living merely due to the fact they walk, talk, and breath; realities of supply, demand and real costs to be damned. To characterize an innovator who has enriched the lives of, and caused great increases in the standard of living for, millions around the world as predatory is no different to calling Microsoft or Apple predators; incorrect, ignorant, and irrational.

    Next, you wail that Amazon does not pay its fair share of taxes. Without engaging you in this nebulous concept of "fairness," please note that Amazon is a Washington state based company with zero physical presence in the State of Colorado. They have no reason, obligation, or duty to pay a penny of tax to any entity outside of the taxing jurisdiction in which they live. You are profoundly ignorant of the fact that Amazon pays huge sums of tax in that jurisdiction, as well as to the federal government (amounts far greater than any direct benefit they receive back). Moreover, we live under a federal constitution here in the United States that requires all taxation across state lines to be equitable; imposing taxes on a Washington corporation to the singular benefit of Colorado flies squarely in the face of this important constitutional provision. You need to check your premise, it is severely flawed.

    Lastly, you state that there are direct subsidies (tax dollars) flowing to Amazon and that Amazon sells its products below wholesale cost. Again, you are simply ignorant of the facts of accounting and finance, as well as to the realities of our tax code AND the constitution. Amazon does not receive any direct tax subsidies from the government, so you are simply wrong. Such is the same misinformed notion that would argue parents of school children ought not be credited for what they pay in tuition to a private school because that would be construed as a "subsidy" for private schools - never mind the fact that without such a credit for what has already been paid, the parent is compelled by the heavy hand of the state to pay TWICE for education! The facts are that Amazon sells its goods and services at prices that meet the market and provide a profit - great and virtuous things! It is local retailers who, if they charge significantly higher prices, gouge the public under some idealistic, pollyanna, notion of the bygone days of quaint book sellers who are owed a living, and ought to be immune from any competition, simply because of their mere existence.

    Amazon is a fantastic company that is being unfairly and viciously attacked by the legislature of Colorado. Amazon is the victim here of this attack, and the many Colorado associates are sadly collateral damage.

  2. Thank you for your clear and understandable discussions of this issue. I value your work.


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