Amazon Makes You Dumb

Amazon makes you dumb — or at least that’s one consequence of this point of view.  The article blames Amazon’s tax “evasion” techniques for the inability of state and local governments to earn the tax revenues needed for schools and police.   This doesn’t make much sense to me.

Amazon is already paying taxes, federal and state, for what it produces and sells.  The only tax revenue that is under question is the additional sales tax in the state the items are purchased in.  The article claims that Amazon is finding loopholes in tax law so it can maintain a competitive advantage against rivals by offering lower prices.  If you follow that  No state sales tax –>  lower price –> competitive advantage then you have to believe that adding the state sales tax to Amazon purchases would eliminate the competitive advantage.  Then Amazon wouldn’t be selling as much in those states and you wouldn’t earn (as much as you think you should) on that revenue.  And it can’t be said, with any certainty, that the increase in revenues from the added sales tax wouldn’t be offset by the loss in corporate taxes on the total revenue earned by Amazon.

I guess I’ m a tax idiot, but I’m not sure sales tax even makes sense.  And I guess that’s a larger point —  I don’t think our tax system/law is understandable in any meaningful way.  What are the underlying principles of what is taxable and what isn’t?   It seems the whole point of tax is a means to fund public services and goods.  What would happen if sales tax were eliminated — and the required tax revenue was made up by corporate and personal income tax?  It seems strange that consumers are penalized for consuming.  Sure — keep gas and cigarette taxes in effect, but it seems the administration of sales tax itself may be so difficult to manage that it may never pay out.

Further, to this point, there more complex the tax law is, the more “loopholes” that exist.  And more time must be spent on closing those loopholes.  However, until that time, as a consumer, I’m benefiting from Amazon’s effective and legal tax maneuvering.

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