The tax war goes online, thanks to Amazon

Is the Internet everywhere or is it nowhere?

This question will strike many readers as a navel-gazing exercise in post-modern existential inquiry, prompting reflections on the 21st-century meaning of location (is an IP address really an address?) and space (is cyberspace actually “space”?). But thanks to Amazon.com, it’s become a question about more concrete and imminent issues like budget deficits and tax fairness.

Following a 70 percent earnings increase last quarter, the company this week terminated its business relationships with its Colorado affiliates. The move was a response to new Colorado legislation compelling online retailers to either collect the sales taxes that every other business collects, or at least disclose that customers must pay the levy to the state themselves.

The bill was pragmatic, seeking to raise much-needed revenues as Colorado’s infrastructure and schools buckle under a $2 billion budget shortfall. But Amazon, indifferent to such emergencies, reacted with punitive petulance, sending a deliberate message to lawmakers in every other state: Make us play by the same tax rules as other businesses, and your state will be punished, too.

The company, you see, fears that most capitalist of principles: fair competition. It instead relies on a rigged market.

Despite the ubiquity of its Web presence and its affiliates, Amazon says it only officially exists in four states (Kansas, Kentucky, North Dakota and Washington) and that it therefore isn’t required to collect local taxes on its transactions in the other 46 states. That has allowed the company to sell goods at seemingly lower prices than local brick-and-mortar competitors, which in turn artificially tilts the market in Amazon’s favor.

In recent years, New York, North Carolina, Hawaii and Rhode Island have woken up to the scheme, passing laws that explicitly apply their local taxes to online retailers. Now, with budget crises intensifying, even more states are pondering similar legislation. And so rather than simply accepting a level playing field, Amazon opted to make an example out of Colorado as a means of pre-emptive intimidation.

This is politics at its most bare-knuckled — not surprising, considering it comes from Amazon CEO Jeff Bezos, a caricature of Information Age greed.

In the “Office Space” economy, Amazon is Initech and Bezos is the firm’s soullessly saccharine Bill Lumbergh. Like the typical dot-com shark, he shrouds old-fashioned suit-and-cigar ruthlessness in business-casual attire, ear-to-ear grins and Charlie Rose-ready colloquialisms. But beneath the earth tones and triumphalist techno-babble is the same boor who offshored a Seattle call center the moment employees pondered a union.

Punishing one state’s economy to scare other states is all in a day’s work for this guy — especially because ratio-wise, it could be a brilliant financial decision. Sacrificing some business in Colorado, where the tax was projected to raise $5 million in public revenue, may end up a jackpot investment if the move kills the initiative in places like California, where it could raise $150 million every year.

“If” — it always comes down to “if,” doesn’t it? And this particular “if” is bigger than even Bezos’ corporation.

Amazon, as one California lawmaker says, has “built an entire business model based on tax avoidance.” Unfortunately, so have many other firms, as evidenced by America’s $300 billion annual gap between taxes owed and paid. And as more commerce is transacted through tax-avoiding Internet conglomerates, that gap could grow, honest local business could be further disadvantaged and deficits could explode, forcing ever deeper cuts to public services.

This is the dystopian outcome that multinational corporations and anti-government activists aim for in today’s tax wars — and they could make it a reality.

If — but only if — states back down.

David Sirota is a syndicated columnist based in Denver. His e-mail address is ds@davidsirota.com.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Opinion

toon
Editorial cartoons for Wednesday, Feb. 12

A sketchy look at the news of the day.… Continue reading

CNA Nina Prigodich, right, goes through restorative exercises with long term care patient Betty Long, 86, at Nightingale's View Ridge Care Center on Friday, Feb. 10, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Editorial: Boost state Medicaid funding for long-term care

With more in need of skilled nursing and assisted-living services, funding must keep up to retain staff.

Welch: State Democrats’ bill would undermine parental rights

The bill would allow kids as young as 13 to make mental health decisions without notice to parents.

Kristof: Child malnutrition lost in politics over aid cuts

A young journalist describes the scene in Madagascar where a nutritious porridge provides a lifeline.

Comment: Trump sticks with NOAA official who bent to his ego

We haven’t seen the last of Trump’s Sharpie-amended reality and it’s destabilizing effect on scientists.

Dowd: Musk’s ‘Lost Boys’ join Trump’s ‘Mean Girls’ ethic to gut it all

Neither man shows any concern for the damage they threaten against individuals here and abroad.

bar graph, pie chart and diagrams isolated on white, 3d illustration
Editorial: Don’t let state’s budget numbers intimidate you

With budget discussions starting soon, a new website explains the basics of state’s budget crisis.

Curtains act as doors for a handful of classrooms at Glenwood Elementary on Monday, Sept. 9, 2024 in Lake Stevens, Washington. (Olivia Vanni / The Herald)
Editorial: Schools’ building needs point to election reform

Construction funding requests in Arlington and Lake Stevens show need for a change to bond elections.

FILE- In this Nov. 14, 2017, file photo Jaìme Ceja operates a forklift while loading boxes of Red Delicious apples on to a trailer during his shift in an orchard in Tieton, Wash. Cherry and apple growers in Washington state are worried their exports to China will be hurt by a trade war that escalated on Monday when that country raised import duties on a $3 billion list of products. (Shawn Gust/Yakima Herald-Republic via AP, File)
Editorial: Trade war would harm state’s consumers, jobs

Trump’s threat of tariffs to win non-trade concessions complicates talks, says a state trade advocate.

toon
Editorial cartoons for Tuesday, Feb. 11

A sketchy look at the news of the day.… Continue reading

Sentencing reforms more complicated than column described

I read Todd Welch’s Jan. 29 column. He is certainly entitled to… Continue reading

President Trump running nation like his failed businesses

We’ve seen it before; President Trump will do or say anything to… Continue reading

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.