Amazon.com and taxes

It’s simple: We need businesses in California.

But while we are open for business and we certainly want to encourage new enterprise, that doesn’t mean we’re willing to give away the state just to keep certain companies happy. After all, generations of California businesses have been paying their own way and shouldering their share of the tax burden all this time—including collecting sales tax.

Yet, here we are, back again to Internet sales giant Amazon.com. A little more than a year ago—after a showdown in which Amazon threatened to pull out of California entirely if forced to collect sales tax on items sold to the state’s residents—the cyber-retailer agreed to start collecting sales tax this fall, as well as to go ahead with plans to set up two California order “fulfillment centers” that will employ about 1,000 people. We’re good with that.

But a recent Los Angeles Times report indicated that the two cities in which these centers will be opened—San Bernardino and Patterson—are planning to offer “sales tax rebates” to the retailer, effectively giving the local government portion of the sales tax collected by Amazon back to Amazon.

Essentially, since California sales on Amazon will be taxed as if they occurred in San Bernardino or Patterson, the Internet marketer will pocket those cities’ portion of the sales taxes Californians pay them instead of forwarding those tax receipts to local government. What might have been a big bonus for the strapped local governments—and Patterson, just west of Turlock, has been hit especially hard by this down economy—turns into a cash cow for the notoriously sales-tax averse Amazon.

So we’re back to this: Amazon’s dead wrong and exhibiting the worst sort of unrestrained capitalism. Competition is one thing, but when its competitors are playing by the rules, collecting sales taxes and turning it over to state and local government—not to mention funding its own capital improvements, including new facilities—why should Amazon get more? And where will California’s economy be when Amazon has successfully swallowed those small, local retailers who actually pay their taxes?

Yes, Californians should be more honest about paying the use tax for Internet purchases. But when every other business in California is required to collect and pay sales taxes, letting Amazon continue to pretend that the law doesn’t apply to it—and it is hardly a “virtual” business, with warehouses and distribution centers all over the nation—is anything but a free market. Instead, it’s a free pass to a monopoly. It’s unfair to Californians.

The city governments in San Bernadino and Patterson no doubt are already acting under pressure. It’s time to put some of that pressure on Amazon.

Collecting sales taxes and keeping them as a “rebate” for doing the right thing? Nope, that’s not going to fly. Contact Amazon and let it know that, in this economy, everyone needs to hold up their end of the bargain. Taxes collected should go to the government, not business.