You’ve heard the basic arguments, I suppose.
Independent booksellers are the guardians of our reading culture – local businesspeople who care deeply about the titles they stock, staffed with book lovers that will hand-sell deserving authors. They provide the local chapels where those of the literary faith can congregate. Try scheduling a reading/signing gig on Amazon and see who shows up. You can commune in the flesh with both the books you love and your fellow readers – snuggle up in a comfy chair with a cup of Joe and sample pages to your heart’s content.
Amazon breaks down the brick-and-mortar walls separating authors from audience. With no space constraints, they can carry virtually every title and in every format – trying buying an e-book down at Mom and Pop’s House of Books. They democratize the review process, letting all readers weigh in, not just Kirkus or the New York Times. And their business model means you’re paying less, sometimes a lot less, than you do at your local independent.
Both arguments have merit, but there is one disingenuous element that needs to be addressed. On the price front? Part of Amazon’s advantage stems from their joyful exploitation of an outdated tax loophole. When you shop at Amazon, you don’t pay sales tax. What that means in dollars and cents depends on where you live, but the average sales tax rate in the US is 9.64 percent. That’s a record high, by the way. That means, on average, almost 10 percent of the price advantage that Amazon attributes to its superior business model actually comes from starving state and local governments of their tax revenue.
By the way, those sales taxes you don’t pay when you shop on line? You still owe them, you know. They are actually called sales and use taxes. In cases where they aren’t collected as sales taxes by the vendor and transmitted to the appropriate taxing jurisdictions (such as in interstate internet transactions) they are still owed as use taxes by the buyer. That’s right. You are supposed to keep track of your non-taxed purchases and remit the appropriate taxes to your state and local taxing authorities.
You aren’t, of course. Nobody is. And there is no practical way for state and local governments to make you. That’s part of Amazon’s argument – that they aren’t cheating anybody out of tax revenues, it’s you, their scofflaw customers that are doing that.
Sales and use tax laws were written and adjudicated decades ago, when something like the internet wasn’t even a gleam in Al Gore’s eye. The key to sales taxes was and largely remains nexus – a seller has to have a physical presence in the state or local taxing jurisdiction where a purchase is made before it can be required to collect taxes on that purchase. The fact that sales taxes aren’t collected on mail order purchases has always been an irritant to brick-and-mortar businesses, but mail order never approached the level of commerce that the Internet now sees.
So what, you say. So I save a little scratch and the swollen Leviathan of government hasn’t figured a way to get it out of me. What’s the problem? I suppose I could make a civic duty argument, that, as a citizen who freely partakes of the goods, services and infrastructure that these taxes pay for, you have a moral obligation to pay your fair share, but civic duty isn’t much in fashion these days. So I’ll make a practical argument instead.
Remember how I said that 9.64 percent average is a record high? Part of the reason is the shrinking base of sales on which those taxes are collected. As more and more business avoid collecting sales taxes via the Internet, and as more and more consumers take advantage of that situation by not stepping up and paying those taxes themselves, the sales tax base shrinks. When tax bases shrink, tax rates tend to go up. It’s not like you can avoid sales taxes everywhere, not unless you’ve found some way to buy your gasoline and groceries on-line from out of state vendors. So you save on sales taxes by buying your books from Amazon, and you end up paying higher sales taxes when you buy your milk at your local grocer. If sales tax revenues drop further and stop providing the funds state and local governments need, then they will turn to income taxes or property taxes. One way or another, you’re gonna pay.
I understand that a lot of people have a bug up their butts about taxes. I get it. I think of the trillions of dollars flushed down the Iraq toilet and I wanna puke. But sales taxes don’t go to boondoggles like that. Sales taxes tend to go to things like fixing potholes and paying teachers and mowing parks and having libraries – they go to the nuts-and-bolts local stuff where the citizen rubber meets the government road. That’s a road we all have to help pay for or we won’t have one to drive on. If you’re one of these off-the-gridders who doesn’t think you should pay any taxes anywhere, well, you probably don’t read anyway, so I guess you don’t much care about local bookstores. Oh, and by the way? Fuck you.
States have been trying a variety of tax law solutions to get the Amazon’s of the world to play fair on the sales tax front, which attempts have met with varying success. Fortunately, a few cases are wending their way up toward the Supreme Court where, hopefully, the judges will rule in such a way that outdated nexus standards are replaced with something more befitting our increasing virtual economy.
On the business model front? Hey, we can all make our choices and we can all live with the results. But the sales tax issue unfairly tilts the table in Amazon’s direction. Consumers who think they are benefitting from this tax dodge are kidding themselves, because they will end up paying in the end. They only ones benefitting are Amazon and its fellow on-line retailers.
That makes them bad corporate citizens and it makes us dupes for putting up with it.