As Randall Stross described in The New York Times yesterday, Amazon.com has a long and ignoble history of refusing to collect sales taxes on the things it sells. Originally the company argued that it was only obligated to collect taxes in states where it had a physical presence, like Washington. The advantage to Amazon is obvious: If I walk up Connecticut Avenue to Kramerbooks and buy a copy of The Girl Who Played With Fire for $25.95, I have to pay 5.75% sales tax, or $1.49. If I order the same book from Amazon from my office computer, I don’t. So Amazon gets a significant price advantage over its terrestrial competitors, which is crucial when you’re competing to sell exactly the same low-margin product. This makes zero sense from a policy standpoint — I’m in D.C. in both cases, so in both cases I should owe D.C. sales tax.
As time went on and Amazon became more successful, it started to open up facilities in more states. This should have meant collecting more sales taxes. Instead, Amazon figured out a way to avoid this by paying lawyers and accountants to gin up a bunch of wholly owned shell corporations. For example, you may be under the impression that Amazon manufactures and sells a device called the “Kindle.” Not true! The Kindle is actually made by a company called Lab126, located in Cupertino, California. Lab126 is owned by Amazon. But because it isn’t legally Amazon itself, Amazon doesn’t collect sales taxes in California. CBPP’s Michael Mazerov, the world’s expert on such matters, calls this “entity isolation.”
How much is this costing the taxpayers? According to the Times, Amazon had $21.7-billion in revenue in the four quarters ending September 30, 2010. Let’s be super-conservative and say only $10-billion of that was revenue that should have been subject to sales tax, but wasn’t. Assuming an average state sales tax rate of 5 percent, that’s $500-million in lost tax revenue. States spend about 32 percent of their money on education, leaving us with $160-million in lost funding for schools and universities. Since the states are flat broke right now, pretty much all of that translates into additional layoffs and skyrocketing college tuition.
In other words, there are thousands upon thousands of unemployed teachers and financially strapped students in America, today, because Amazon CEO Jeff Bezos, number 28 on the Forbes 400 with a net worth of nearly $9-billion, refuses to perform a basic obligation of running a decent business. It’s a strange world we live in when this kind of behavior results in little or no moral condemnation.
38 Responses to Jeff Bezos Is Stealing Money From Your School
stinkcat - December 29, 2009 at 7:34 am
I put money into a 401(k) which costs my state tax money, is that immoral as well?
goxewu - December 29, 2009 at 1:12 pm
Is there a difference between a) an individual’s putting away money in an individual retirement account* and thereby having the taxes on it deferred until the individual’s retirement, and b) a large corportation using tax dodges such as “entity isolation”** to avoid collecting sales tax forever?Do the likes of stinkcat really not see a difference between (a) and (b), above, or do they practice willful obtuseness and extenso ad aburdum because they seemed to work while arguing with their parents way back when?* Deliberately encouraged by legislation* An unintended loophole in the laws
californiabruce - December 29, 2009 at 5:03 pm
I don’t think stinkcat knows the meaning of “obtuseness” and “extenso ad absurdum”.Goxewu has a good point – and also, note that money in an IRA doesn’t escape taxation; the money WILL be taxed, albeit at a lower rate, when the holder retires.
jffoster - December 30, 2009 at 7:00 am
Carey asks :How much is this costing the taxpayers?”Nothing. It’s not taxpayers’ money. This kind of tack about “lost tax revenue” assumes that all our money is the government’s and government owns it in advance. Apart from the practical difficulty of multiple Russian doll jurisdictions the ‘government owns it all’ crowd want taxes collected for, I see no reason in principle a company based in, say, Arizona, should have to collect New York, or Ohio, or some other state in which it only does mail order business’s sales tax. I think they should simply refuse to do it.
goxewu - December 30, 2009 at 8:14 am
1. Flip #4′s first point: You’re unemployed and entitled to unemployment benefits. But the state won’t pay you because, well, it just refuses to. How much is this costing you? Nothing, because it’s not your money. You’re just assuming that state money is yours in advance. Right.2. Lots and lots and lots of companies doing business by mail order by phone, mail, and the Internet collect state sales taxes on sales to customers in states where the tax is applicable. Switch the issue from tax to, say, health and safety regulations: Can something deemed unsafe or unhealthy by the laws of California or Michigan be sold in California or Michigan just because the vendor is out of state?
jffoster - December 30, 2009 at 10:05 am
Re 5.1, If I become unemployed in the Arkansas, the Ohio doesn’t owe me unemployment benefits. Re 5.2b, cant be sold in California but can be sold in Tennessee and driven into California.Re 5.2 a, only where the company has an office or place of business in the state it collects mail/internet orders for shipment into.
goxewu - December 30, 2009 at 11:24 am
Re re 5.1:Not relevant, evasive, etc. I was simply applying the terms of Prof. Foster’s argument to an individual instead of the state, i.e., if failure to collect sales tax doesn’t “cost the state anything,” then failure to pay unemployment benefits doesn’t “cost the individual anything.” Try telling that to the unemployed person trying to pay the rent and put dinner on the table.Re re 5.2b:Not relevant, evasive, etc. When somebody orders something on the Internet in California from a (say, Tennessee) company doing business across state lines, the point of the transaction is in California, not Tennessee, and California laws apply to it. Sure, it can be bought under Tennessee laws and driven into California, but not for the purpose of resale in California.Re re 5.2a:WTF?
stinkcat - December 30, 2009 at 11:29 am
Most states levy a use tax on purchases made in lower tax jurisdictions. For example, if I buy a television in New Hampshire and avoid paying New Hampshire sales tax (since it has no sales tax) then I am required to send my state the sales tax it would have charged on the television. So, who is the real tax cheat, Amazon or the greedy customers who refuse to pay the taxes that they themselves owe?
jffoster - December 30, 2009 at 11:49 am
So if I buy a book in Arizona while on vacation or the like and bring it into Ohio I am going to declare the tax difference as Ohio Use Tax and send it in. And pigs are going to fly. Actually, some states with “Use Tax” “require” tax only on such items on which a sales tax hath not already been paid in another state. Ohio’s is one of these. So when I bought a harp in Indiana and paid Indiana sales tax, I was not “required” to report its basis for Ohio use tax even though the Indiana jurisdiction has a lower rate than my Ohio jurisdiction of residence. For large ticket items, automobiles, airplanes, and the like, one pays the sales tax in the state of destination/home registration. This makes a certain measure of sense and is also readily enforceable. But a state “use tax” on small commodoties is untrackable, therefore unenforceable, and therefore “required” only by a goofy law but not in fact.
goxewu - December 30, 2009 at 12:05 pm
In terms of a SALES tax, if Prof. Foster bought the book in Arizona while he was in Arizona, he should pay Arizona sales tax, and not Ohio’s. If, however, he’d bought the book on the Internet from his easy chair in Ohio from a bookstore in Arizona, it’d be an Ohio purchase, and he should pay Ohio sales tax and the bookstore in Arizona should collect it.”And pigs are going to fly.” Catchy. Prof. Foster make it up?
stinkcat - December 30, 2009 at 12:19 pm
“So if I buy a book in Arizona while on vacation or the like and bring it into Ohio I am going to declare the tax difference as Ohio Use Tax and send it in.”If Arizona’s sales tax rate is lower than Ohio’s sales tax rate then you would be legally obligated to pay the difference to Ohio, assuming that Ohio’s use tax law is similar to most states. Now, most people won’t pay the difference, for the simple reason that they can get away with it. That doesn’t mean that they are not a tax cheat, they still are.The difference is that Amazon uses legal means to avoid taxes, which the government has held up as legal. Yet we want to criticize Amazon for legal tax avoidance and not criticize consumers for their illegal tax avoidence. Seems inconsistent doesn’t it?
jffoster - December 30, 2009 at 1:12 pm
Why, Goxewu, (10) should a bookstore in Flagstaff collect a tax for Ohio? And its 88 counties (Gad, these Eastern States are loaded with counties!), and its numerous municipalities? Government ought think twice Stinkcat (11) before it passes laws that are unenforceable. State Use Taxes, except for things like cars where registration is envolved, are more like appeals for contricutions. They aren’t trackable and aren’t enforceable.
goxewu - December 30, 2009 at 2:33 pm
Why? Because he likes you…No, sorry. Wrong reference. Why? Because it’s what the law requires (at least it does in the state in which I reside), and it’s ethical. And t’ain’t much of a burden, what with computers and bookkeeping programs. This lil’ ol’ bookstore in Flagstaff, incidentally, probably does near zero mail-order/Internet business with out-of-state customers. It loses out to online giant Amazon which, operating at the very edge of nominal compliance, won’t collect state sales taxes.What’s the weather like in the Cayman Islands?
11299051 - December 30, 2009 at 2:57 pm
Move to Delaware, we have no sales tax and the whole argument becomes mute. If you think this is fun, wait until you get the VAT…
11186108 - December 30, 2009 at 3:23 pm
While there could be tax-collection required for online sales there are some serious problems due to the great number of different tax jurisdictions (states, counties, cities, tax regions,) with different rates and different coverage coverages/rates for different items sold. This would not be an easy problem to solve, nor would it be cheap to solve.The “Use Tax” which some (many/most?) states have is an attempt to solve this problem, but impractical for the individual consumer to handle. E.g. buy an electronic rpart for a project for $4.92 + $5.50 S&H – what do I do next? Easiest to just fuhgeddaboudit. Actually, I’d rather buy it locally and pay the state/county/city sales tax – but I can’t find it locally. As far as Amazon using a legal method to reduce paying taxes – I’d assign blame to the lawmakers.
calfrye - December 30, 2009 at 3:49 pm
Just another argument to expire the regressive sales/use tax and rely on the income tax. It’s hard enough to keep track of the state of transactional sales tax in just one county in Ohio (including which articles are exempt from such tax and which are taxed extra), let alone in every jurisdiction across the country — and these change following each election. And don’t get me started on the pain of documenting tax-exempt status for non-profits with each and every vendor…Speaking of which, how many of the participants in this discussion work for tax-exempt institutions, who pay neither sales nor property taxes toward their communities? OK, I’ll pass the soapbox now…
stinkcat - December 30, 2009 at 4:33 pm
It may be that the sales tax a less variable revenue source than the income tax. In our state, when the stock market crashes we feel the pain because tax payments from our wealthier residents decrease from the lack of capital gains to tax.
allens - December 30, 2009 at 4:48 pm
I agree with calfrye about the need for reducing/eliminating regressive sales taxes. But income taxes ultimately won’t work very well either. People do earn money in one state while living in another (I’ve done so in both 2008 and 2009); among other problems (like each state claiming that their tax should take priority), this leads to taxation without representation given geographically-determined voting rights. I suggest that state taxes (as opposed to use fees) should be primarily property taxes, without exemptions, NJ’s silly refund system, etc. (And, yes, all the retirees who want to will their houses to their children – instead of doing something like a reverse mortgage to pay the property taxes – will put up a squawk. So what? You’re getting Social Security, Medicare, et cetera, people…)Taxes on property are implicitly geographically based, which is what matches with government that is geographically based.
jffoster - December 30, 2009 at 5:17 pm
Goxewu says in 13 that a bookstore in Arizona, i.e. some other state, should collect a state in which it has no established place of business’s sales tax through mail order or internet “Because it’s what the law requires (at least it does in the state in which I reside), and it’s ethical.” Ethical by whose standards of ethics? No it’s not “legal”. The Ohio General Assembly can pass laws til it’s blue in the face telling boosellers in Arizona they have to collect Ohio taxes but let them try to go to Arizona and make them.
cwinton - December 30, 2009 at 5:33 pm
The old saying is that in life only two things are certain, death and taxes; however, people who claim they just want a system that treats everyone fairly typically are the ones first in line to figure out how to get out of paying taxes. I’m sure every jurisdiction would love to have additional tax revenues coming in from internet sales, but the Supreme Court is still struggling with how such sales relate to the commerce clause of the Constitution. What Amazon has chosen to do is hardly a question of morality, since taxation systems always have elements that can be characterized as unfair, so advocating moral condemnation of someone who is apparently operating legally within the existing system is a stretch. If one wants to find examples of immoral behavior that have cost us all dearly, one needs to look no further than the shenigans that have taken place on Wall Street over the past couple of decades.
goxewu - December 30, 2009 at 7:50 pm
Yeah, that ol’ goxewu, the pro-tax crank, thinks that a bookstore in Arizona (you know, some little specialty shop in Flagstaff run by Barry Goldwater’s great-grandaughter, carrying leather-bound volumes of Boas, Mead and Levi-Strauss, giving 20 percent discounts to students and barely making the rent in the rear of the paneria) should collect sales tax on Internet and mail-order sales in customers’ states having sales taxes. It’s not a radical idea, Homie: “New York residents please add 8 percent sales tax” (or whatever’s appropriate); been done for decades. And sure, there are perfectly legal ways to get around it, just like there are perfectly legal ways to register a company at some off-shore address to avoid other kinds of taxes. That’s why I used the word “ethical,” as in, the right thing, even though you won’t be fined or go to jail if you don’t do it. And it’s “ethical” by most people’s standards–unless one thinks that most people think that a citizen should use every nominally legal tax dodge in the book to avoid paying the government a penny more than the absolute, threatened with prison, minimum. Believe it or not, I’m a bit of a patriot, and I think that I should pay what, ethically, I owe in taxes and not fight the city, state, or the Feds for every bloody cent. And it’d be nice if Mr. Bezos could instruct his programmers to tell Amazon’s computers to collect those frigging sales taxes. Of course, speaking strictly legally, he doesn’t have to. And O.J. is innocent of murder, too.
jffoster - December 30, 2009 at 9:05 pm
Well, OJ is not guilty of murder because a jury found him not guilty. (I agree there was an inept prosecution that failed to earn a conviction.) But if “it’s ethical by most people’s standards”, states with “use taxes” would be collecting in what are in effect contributions not taxes quite a bit more than they are. And order forms that say things like “”New York residents please add 8 percent sales tax” are usually from companies in that state, in the example case, New York. So I stipulate that kind of case’s appropriateness in commercial sales tax collection. I’ll grant that the wholly contained subsidiaries of Amazon used to avoid in-state sales tax collection are at least ethically questionable. But I don’t think it’s unethical for Amazon to refuse to collect state sales taxes in states where it really doesn’t have any other business presence than a return address on a mail parcel. I think it’s pretentious and presumptious for states to try to tax ordinary commodities bought in another state–one might argue that “ethically” it’s very close to being an import duty. And I think when government behaves pretentiously and presumptiously the people should just say no.
goxewu - December 30, 2009 at 10:04 pm
Oh, come on. Amazon isn’t some little mail-order outfit in Arizona with only a P.O. Box in a couple of other states. It’s an instantaneously national, even global, Internet giant whose customer base is about as far-flung as you can get. For Amazon to sell tens of millions of dollars worth of books and DVDs and a whole lot else to residents of, say, New York State, and then hide behind a legal technicality to avoid collecting and then paying to New York State the sales tax that is appropriately–that is, common-sensically and ethically–due to New York State, is odious coporate behavior. Legal, yes. (Amazon’s budget for lawyers could probably run a small liberal arts college.) But odious, ethically speaking.
d_f_b - December 31, 2009 at 1:53 am
Actually, whether it’s moral or not doesn’t matter–what matters is whether it’s legal.Also, the non-payment of taxes isn’t necessarily a bad thing from a legal point of view. After all, a number of laws are written in such a way as to encourage a particular part of the economy by making it tax-preferred or even -exempt. (Mortgage interest tax deduction, anyone? Or as another pointed out, anyone here work for any tax-exempt non-profit organizations?). Whether this is right or wrong doesn’t matter–if tax law has been set up to encourage this sort of shell-gaming, well, so be it.The remedy, then, wouldn’t be to argue about use tax laws, but to get legislation passed to fix the problem (which would probably have to be done at the federal level, the commerce clause being what it is).
jffoster - December 31, 2009 at 7:10 am
Agree with d_f_b 24 except that I don’t think it’s a problem. I don’t think the states should be able to levy a sales tax on mail/internet purchases when the vendor has no business establishment inside that state.
goxewu - December 31, 2009 at 10:03 am
Re #24:Yes, it does matter whether it’s moral–I’ll use the term “ethical”–or not. Should Amazon be perceived as behaving unethically, some consequences might follow, such as Mr. Carey’s post, other media attention and, perhaps, some customer falloff. Granted, it’s a longshot, or at least a long and winding road, and Amazon will probably withstand any unfavorable publicity. Still, a negative attitude toward Amazon can grow into something. And there’s a link between perceived unethical corporate behavior and the eventual illegality of it, especially in such a financially strapped place as New York State. The appropriate sales taxes uncollected by Amazon has resulted in legislation affecting the way it does business there.Abstracting the Amazon issue into “the non-payment of taxes” generally doesn’t contribute anything to the discussion. In amount, purpose, source, method of collection, impact of different constituencies, etc., taxes vary too widely to be lumped together under the topic “the non-payment of taxes.”Re #25:Of course it’s a problem. States and municipalities deprived of the sales tax revenue uncollected by large corporations selling goods and services within those states and municipalities definitely have a problem. New York’s probably amounts to seven figures. Brick-and-mortar businesses, especially independent bookstores, suffer an unfair disadvantage–they have to charge sales tax–in competing with online operations who don’t charge sales tax.Anyway, as I understand the current situation, Amazon has lost its lawsuit against New York State and a 2008 law obviating its “Amazon associates” sales tax dodge and requiring it to collect sales tax on sales within New York State. Ethics and legality seem to have converged.Finally, if a customer in a state makes a purchase within that state (e.g., from his or her computer or local post office), that state’s sales tax should apply, no matter whether the vendor has, technically, “no business establishment inside that state.” It’s a minor computer bookkeepping task to keep track of the various state sales taxes collected, and to remit them quarterly or annually. To penalize customers who patronize local brick-and-mortar businesses, and to allow large online corporations such as Amazon an unfair competitive advantage in not collecting sales tax is unethical and, at least in New York State, illegal.
jffoster - December 31, 2009 at 10:53 am
Something is effectively illegal only if a state can enforce it. And you’re not “ethically” entitled to something just because you pass a law saying that you are. States are like universities–their wants will always be virtually unlimited. You say “of course it’s a problem” but not if a state isn’t entitled to money just because it wants it. But we obviously aren’t going to agree on this, but Happy New Year anyhow.
goxewu - December 31, 2009 at 3:13 pm
Illegal = contrary to the laws on the books. Period. (“Effectively illegal” is waffling.)”…illegal only if a state can enforce it”: a) Parking in front of a fire hydrant is illegal even if it’s a holiday and all the parking enforcement scooters are in the municipal garage. Spousal abuse is illegal even if the spouse won’t press charges and the town can’t station a cop inside the home. And so on. b) Enforcement methods change and improve. Taking a handgun onto an airline flight was illegal, even before there were metal detectors or X-ray machines to detect it. c) Subpoena Amazon’s records for NY State sales (or whatever state is seeking the sales tax revenue); bill Amazon for the sales taxes not paid; fine Amazon for noncompliance–bingo, enforcement!”…but not if a state isn’t entitled to money just because it wants it”: Ignoring the garbled syntax…the state doesn’t just “want” the money, it’s legally entitled to it.This weird states’-rights-fetish corner into which Prof. Foster has painted himself has gotten mighty tiny. I hope the paint of refutation all around him dries in time for him to step out of that corner, put on a party hat, have a flute of bubbly, sit down at his computer and order a book from Amazon, ethically fill in the box for sales tax, and have a Happy New Year!
stinkcat - December 31, 2009 at 5:02 pm
I still don’t understand why we fault Amazon for using legal methods to avoid paying taxes, while giving the consumers who cheat on their use taxes a free pass. After all, there is nothing unethical about using legal means to avoid paying taxes. If Amazon is cheating, let the state of New York bring them to court to assess damages.
goxewu - December 31, 2009 at 5:41 pm
1. New York State passed a law about collecting sales tax on online sales to New York residents. Amazon sued New York over the Constitutionality of the law, and lost. If that decision from early in 2009 hasn’t been overturned, then the state of New York did, in effect, “bring them to court.”2. We “fault” (i.e., say out loud that it’s odious, unethical, bad-faith behavior) lots of people and companies for doing lots of technically legal things. Examples: Lots of abolitionists in the years before 1863 “faulted” slaveowners for perfectly legally owning slaves; lots of integrationists “faulted” Jim Crowists for perfectly legally requiring African-American to drink from separate public drinking fountains; lots of civil libertarians “faulted” various police forces for perfectly legally not informing arrested suspects of their right to an attorney before undergoing interrogation. And so on. “Faulting” precedes actual legal reform.3. Just because “consumers who cheat on their use taxes [get] a free pass” doesn’t make Amazon innocent. And those consumers who cheat on their use taxes and aren’t punished aren’t necessarily the result of government policy. Tens of thousands of consumers cheating at ten bucks a purchase are harder, and sometimes budgetarily impossible, to track down and dun, than a few big corporations cheating in the millions.
jffoster - January 1, 2010 at 7:41 am
Goxewu in 28 hopes i will “order a book from Amazon, ethically fill in the box for sales tax, and have a Happy New Year!”Thank you, I am having a Happy New Year, which will be even happier when our Bearcats have T-Bow steak for supper and Auburn creams Northwestern. But as to “checking the state sales tax” block on Amazon orders — there isn’t any. Not the last time I ordered a book from them there wasn’t and that was only about 6 or 8 weeks ago. They don’t collect Ohio sales tax. Ohio “expects” its patsies, er “citizens” to track it and send in the “use tax” along with their state income taxreturn. Ohio cannot collect it. They have no way of tracking it, not short of breking into private mail. So it’s a request for a contribution. One of the best ways of getting rid of a bad law quick is for the people to widely disregard it. And we obviously don’t entirely share the same notion of what’s “ethical”.
goxewu - January 1, 2010 at 9:39 am
Ohio’s legislature should get on the stick and do what New York’s did vis-a-vis Amazon and other big online retail corporations.Sharing the same notion of what’s “ethical”: I think ethical is doing the right thing (or at least trying to do it) even when the law doesn’t specifically say I have to do it. Prof. Foster seems to think “ethical” is not doing anything and everything that’s to one’s personal advantage only when the law specifically forbids it.* To him, I’m probably a “patsy.”* e.g., the famous “I’m not leaving” football coach, Brian Kelly.
jffoster - January 1, 2010 at 10:26 am
Goxewu in 32 says that “Ohio’s legislature should get on the stick and do what New York’s did vis-a-vis Amazon and other big online retail corporations.”How could Ohio enforce it? How does New York enforce it on companies which have no property in New York they can confiscate? If it is unenforceable, then it’s an illeviable levy.
goxewu - January 1, 2010 at 11:42 am
Ohio could subpoena records of online sales to Ohio residents, calculate the tax owed, and bill the corporation for it. Should the corporation not pay, Ohio could fine it. Should the corporation not pay the fine, Ohio could sue in Federal court. (In the case of Amazon, the corporation does have de facto business property in New York, in the form of tax-dodge “Amazon associates” companies. Should the court rule that those “associates” are de facto Amazon property, they can confiscate or otherwise encumber them.)Prof. Foster is a very smart guy. He knows the above. #33 is just rhetorical willful obtuseness.Even the disgraceful, unethical (but perfectly legal!) conduct of Brian Kelly cannot, however, prod me to root for the overdog, Florida. So I hope that the Bearcats (whatever that is: “binturong: arboreal civet of Asia having a long prehsile tail and shaggy black hair”?) do pull off the upset. What does this have to do with Amazon unethically not collecting and remitting sales tax? I don’t know. Prof. Foster brought it up in #31.
jffoster - January 1, 2010 at 12:52 pm
Goxewu says in 34 “Ohio could subpoena records of online sales to Ohio residents, calculate the tax owed, and bill the corporation for it. Should the corporation not pay, Ohio could fine it. Should the corporation not pay the fine, Ohio could sue in Federal court.”Id like an experienced lawyer’s opinion of this. The states aren’t merely provinces but sovereign units. There are state matters that the Federal government may not legitimately interfere in. But it works both ways; the Federal government is not simply a collection agency for collecting taxes that a state cannot. I don’t know whether such a subpoena from an Ohio court would have any effect in another state and Ohio cant send its Highway Patrol into another state to enforce an Ohio subpoena. Thanks for your wishes re our Bearcat. what it has to do with is the Happy New Year you graciously wished me, and which I wish for you too.
goxewu - January 1, 2010 at 5:14 pm
Bottom line, Prof. Foster is a class guy. He may occasionally practice feigned obtuseness (one of the more common sins of “Brainstorm” commenters–not one of mine, but I have many others), but he plays by Marquis of Queensbury, gives good info, accepts incoming info, and evidences intellectual flexibility. He deserves a Happy New Year. One filled with disagreement on “Brainstorm,” but a happy one nevertheless.
d_opiniated - January 4, 2010 at 7:00 pm
The courts have ruled that tax avoidance is legitimate. If you are going to condemn corporations for structuring their operations to minmize the tax consequences, then you must question virtually every significant decision. Tax consequences impact everything. Even as individuals, we make decisions based on the tax consequences. How about questioning the ethics of states that pass laws that are in conflict with the constitutional rights of US individuals (including coporatate entities)? These are laws that are not enforceable, because the laws themselves are illegal. Put the state legislators in jail.
goxewu - January 5, 2010 at 10:27 am
“Legitimate” is the operative word in #37. It means that corporations are within their legal rights in “structuring their operations to minimize the tax consequences.” That means in turn that the corporations cannot be fined, otherwise penalized, or its officers put in jail.But that’s ALL it means. It doesn’t mean that corporations cannot be “condemned,” i.e. are somehow safe from public opinion, boycott, bad publicity, etc., for having squads of lawyers take advantage of every legal technicality in order to pay the absolute minimum in tax. A drop in the bucket, sure, but I (who try to buy my books from independent bookstores, or at least brick-and-mortar chains anyway) won’t be ordering any books from Amazon anytime soon, and I’ll badmouth the company and Jeff Bezos every chance I get. What Amazon does is legal, but so is what Blackwater, Vivid Video, AIG, Goldman Sachs, the Bunny Ranch, the makers of Hydroxycut and Vicam, and the producers of “Jersey Shore” do. Welcome to the distinguished club.Laws passed by states are deemed to be “in conflict with the Constitutional rights of US individuals (including corporate entities)” only by the courts, after which they are no longer in force. Hardly any post-Jim-Crow laws DELIBERATELY in conflict with the Constitution have been passed. State laws (enacted, remember, by a majority of legislators in both houses, and then signed by the Governor) are passed in good Constitutional faith and, if declared unconstitutional, are only declared so after years of pondering by justices on various courts. If every living state legistlator who’d ever voted for a law that was eventually declared unconstitutional were jailed, the overcrowding of prisons would be even worse than it is.