The recent tax hoopla with California and Amazon has raised a few questions in my mind. Such as, does this affect me? If I have a link to my book on Amazon, am I considered an affiliate? Meaning that Amazon won’t let me have a link to my book.
And just in general: as a self-pubbed author, am I responsible to collect and pay sales tax if Californians buy my book directly from me? Do people in other states have to pay the California sales tax if they buy the book? (Because I, with “I” being the business entity, live in California?) Sigh. This will require some research. My last business was a service business, which California doesn’t charge a sales tax on. So it’s not something I’ve had to worry about before.
I’m curious how this affects Smashwords, too. They are based in California, but don’t collect a sales tax from California residents. But I haven’t seen or heard anything from them on this topic.
What do you think? Should online businesses be required to collect and pay sales tax on the products they sell? I don’t completely buy the argument that online retailers can sell the product more cheaply than a brick and mortar store can. After all, I usually have to pay shipping when ordering something online, and that can cost a bundle. It’s easily as much as the sales tax. Often, it’s far more expensive. I don’t have to pay shipping if I drive down to the local store.
Do governments have the right to use businesses as tax collectors? This may be the heart of the problem. On one hand, there’s really no other way for them to do it – the state has no way to know when or what people buy. So it deputizes the businesses to collect a tax on every item it sells, and to send that money to the state.
Notice that the business does not have to collect the tax.
It just has to pay it.
So as it turns out, the businesses have not really been forced by the state to collect this tax. The state only forces them to pay it. Yet it’s not a tax on the business. It’s a tax the buyer owes, so the business must collect it from the buyer. At extra cost to the business, mind you, as it must hire a bookkeeper to track it all, and do the paperwork.
Which brings us round to the real heart of the problem: should governments be taxing our purchases at all? Sales tax is always an unfair tax – rich and poor alike must pay it, but it’s much harder for the poor. True, the rich are buying (and paying taxes on) many more, and more luxurious, items. But the poor still must buy clothes, shoes, gas, household supplies, etc. The sales tax eats into their income far more than it does for the rich.
Add this unfairness to the practice of forcing businesses to be tax collectors – I’m beginning to think the sales tax is a Bad Idea, one that creates more problems than it solves. So, while I think Amazon’s “solution” (severing ties with all affiliates in any state that forces them to pay the sales tax) is unreasonable, I can certainly see their point. It’s just that the problem is much bigger than the issue at hand.