Amazon Paid My Taxes on Prime Day

July 17, 2019

By Shayne Spence

Much hubbub has been made on the Democratic presidential campaign trail about tech giant Amazon, and their now-infamous ability to pay $0 in federal income taxes some years.  Candidates like Bernie Sanders and Elizabeth Warren have targeted the online retailer for years, charging that their low tax liability is akin to the federal government subsidizing their business model.  Ignoring Amazon’s hundreds of billions paid in taxes to state and local governments, their rising wages, and the fact that Sanders himself gets away with paying a very low tax rate considering his millionaire status

Amazon’s Prime Day was this week, a misnomer, since this year the sales will span two full days.  And while Amazon workers in several cities were busy striking against their employer, Amazon itself was doing a barely-noticed service to the American taxpayer, by essentially paying all of their sales taxes on large transactions, plus some.

Let me explain.  First, it’s important to remember that just a few years ago, Amazon was in a bit of a no-man’s land when it came to sales tax. Some states explicitly required Amazon to collect and remit sales taxes to them, while others had not set policy to deal with this shift in the Internet age.  Because of this, Amazon, for the most part, did not have to charge sales tax for sales made through its website, giving it a massive advantage over brick-and-mortar shops in high tax areas, like, say, Vermont.

However, a recent Supreme Court decision, South Dakota v. Wayfair, made explicit each state’s ability to charge sales tax on all purchases made by citizens within that state.  Since that decision in 2018, 31 states have updated their sales tax statutes to include interstate online sales.  Amazon, as a result, has started to collect and remit sales taxes to those states.

Which brings me to now.  On Prime Day this year, I decided to take advantage of the huge savings on certain big-ticket items.  I’ve needed to buy a new PC for a while, to take my design business to the next level, as well as unlocking some more frames per second when I’m gaming.So this year I decided to splurge and get that new PC, a liquid-cooled CYBERPOWER gaming PC with a top of the line graphics processor.  (For those who know what that means, I was drooling too.)  But these machines do not come cheap. The list price of this new PC is $1,849.  Luckily I’ve been saving my pennies for a while, and held on to most of my tax refund check, so I figured the time was right to bite the bullet and make the purchase.

Some of you are probably wondering, “How did Amazon pay your taxes, silly millennial nerd?”  I’m getting to that. The savings Amazon was offering on this crazy-expensive piece of equipment were $350, for Prime members.  I paid my membership fee forever ago, so that $10 monthly was well out of my mind when I made this purchase. But I was thinking to myself, “Holy cow! $350 is enough for at least 5 Starbucks coffees!”

Screen Shot 2019-07-16 at 10.39.57 AM-1.png

But the real shock came when I took a look at the final receipt, which you can check out below.

You can see the free shipping, which is one of the fundamental perks of a Prime membership.  You can see “Deal of the Day”, a $350 (or 18%) rebate. But down a little further, you can see “tax to be collected”, at $89.94.

Now, I don’t shop on Amazon often, I much prefer to pay a little bit extra to support a local business and have a face to face conversation with an actual human.  For me, my Prime subscription is made worth it through all of the various add-ons, not necessarily the two day shipping or other sales. But, it would appear to me that on Prime Day, at the very least, Amazon has found a way to not only bring customers like me into the “store” for the day, but they’re also willing to eat the added costs that state governments have been imposing on consumers ever since the Wayfair decision.

All of this may have just sounded like a #paid Amazon advertisement (if any execs are reading this, contact me for my PayPal) but I see it as a firm rebuke of the philosophy of the Sanders/Warren left.  They, and others of their cohort, have made Amazon out to be a greedy, evil corporation, devoid of any sort of human compassion. They’ve ceaselessly attacked Amazon, instigated labor disputes at Amazon facilities, and chased future Amazon development out of their cities.  Amazon, for its part, has increased wages, increased benefit packages, improved working conditions and more.

And now they’re willing to go the extra mile for their customers, by making sure that the first Prime Day since the new sales tax laws went into effect, those customers would not have to pay any additional taxes on Prime Day sales items.  It’s this kind of creativity and, honestly, generosity on the part of private actors that make it so the free market will always be better than government.

Shayne Spence is a former Legislative Coordinator for the Ethan Allen Institute. He now lives in Johnson with his partner Athena and their two cats.

{ 1 comment… read it below or add one }

William Hays July 26, 2019 at 12:58 pm

Solution to the e-commerce ‘sales tax problem’: outlaw sales taxes nationwide. We do fine, in Montana, without one. Sorry, politicos…
Bill

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