None of us like to pay taxes. In fact I try as much as I can to avoid paying sales tax by ordering items online from companies like Amazon who do not charge a sales tax for my state. But this morning I read an article at the New York Times by Randall Stross in which he questions why Amazon doesn’t collect sales tax, except for 5 states. It seems that companies like Amazon have found a loop hole in the tax code, in which they can avoid having to collect sales tax.
In his article Mr. Stross states this:
Amazon has found a way to put portions of its business into the tax-haven equivalent of reservations. By creating wholly owned subsidiaries for the parts that are treated separately for tax matters, Amazon is under no obligation to collect sales tax. This legal technique is called “entity isolation,” said Michael Mazerov, a senior fellow at the Center on Budget and Policy Priorities in Washington.
By creating subsidiaries the company, even with a presnece in a state, can legally avoid collecting taxes. I must agree this is great for consumers, but takes away needed tax monies from states that desperately need it.
This statement hits home:
Amazon’s in-house counsel should help the company meet its civic obligations — and toss “entity isolation” in the trash can. Amazon’s employees are too scattered, its customer base and its sales too large and the states’ fiscal crisis too grave for it to continue to play tax-avoidance games.
I took a look at the purchases I personally made at Amazon this year and I may have saved about $50 in not having to pay sales tax. But after thinking about it, I believe that the extra $50 when multiplied by the millions who order online could help out the states who are having trouble making ends meet.
But what do you think? Should Amazon collect sales tax for ALL the states?