Editorials Suggest Amazon.com Being Routed in Public Relations Battle

With the California Attorney General’s Office approval of Amazon.com’s petition for a referendum that will give the online retailer a chance to put before state voters the question of whether Amazon.com must collect and remit sales tax, there’s no doubt the online retailer will try to win over the hearts and minds of voters. However, based on recent editorials, columns, and op-eds, Amazon appears to have its job cut out for itself. From the Fresno Bee to Bloomberg.com to the Los Angeles Times, Amazon.com is being skewered for its attempts to avoid collecting and remitting state sales tax. 

“For many years Amazon.com has enjoyed extremely favorable media coverage,” said Oren Teicher, ABA CEO. “But that is certainly not the case regarding sales tax equity — and with good reason. As supporters of e-fairness have presented their case succinctly and clearly — and as Amazon.com continues to go to extraordinary measures to maintain its unfair advantage over Main Street — the truth has won out. Increasingly, Amazon is being recognized as the worst sort of corporate citizen — one that uses political muscle and money to garner special deals from state legislators.”

In the July 16 edition of the San Jose Mercury News, the editorial “Another Battle Over Online Tax? Sure, Bring It On [1]” states, “It’s rich to hear Amazon.com lecture California about civics and good governance. This is the company — labeled the ‘new Scrooge’ by one writer — whose idea of corporate philanthropy is selling you a book on how to get involved… And don’t expect Amazon to collect sales tax on the purchase.”

The editorial reports how California Board of Equalization member George Runner, a Republican former state senator, has publicly defended Amazon.com. “Runner laments the jobs that will be lost if the 10,000 affiliate sellers that Amazon has abandoned in California move to, say, Nevada. To this we say two things: Won’t some entrepreneurial retailer pick up these sellers and keep them in business? And — what about the jobs in the stores and shopping centers where people go to see merchandise or ask advice before they buy online? How will Californians benefit as more and more of those stores close?”

In “Amazon’s Shameful California Tax Dodge [2],” published in the July 20 edition of the Los Angeles Times, Tim Rutten compares Amazon.com to the robber barons of the gilded age, most specifically the Southern Pacific Company, “whose railways kept a stranglehold on commerce and whose operatives dominated state government.”

Rutten notes how Amazon.com “long has employed a couple of dodges to avoid [collecting sales tax], including maintaining subsidiaries here under other names. One of them, Lab126 in Cupertino, helped develop Amazon’s successful Kindle.... It’s hard to imagine anything more outrageous than a company this successful attempting to buy its way out of the minimal obligations of corporate citizenship.”

In “Greed drives Amazon and other Web merchants to fight sales tax law [3],” in the July 19 Mercury News, writer Thomas D. Elias posits: “It’s about time someone put the correct labels on efforts by Amazon.com to avoid paying any semblance of a sales tax in California or anywhere else. Those labels: Greed and fear.”

Elias contends that Amazon.com fights to avoid collecting and remitting sales tax because the unlevel playing field is part of its basic business model. “To see how predatory this company is, look no further than the action it took the day after the law passed,” he writes. “Amazon immediately severed connections with about 10,000 California affiliates — individuals, businesses and nonprofits — that earned commissions by referring customers to Amazon via links on their own websites. Dumping those affiliates was Amazon’s way of eliminating any semblance of a physical presence in California, which would force it to collect sales tax and operate equally with others. So who killed those jobs? Amazon and no one else.”

Peter Schrag, writing for the California Progress Report [4], states: “So now, after all these years, Amazon is really living up to its name. A young, lithe upstart a dozen years ago, it now throws its corporate heft around in ways that might embarrass even the Carnegies, the Rockefellers, the Fricks and their fellow robber barons of a century ago….

“For voters, the unfairness of a tax structure where brick-and-mortar businesses — bookstores, electronics dealers, appliance stores, and countless other Main Street merchants — are required to pay sales tax while online merchants do not should be obvious. Amazon, which now sells everything from books to toys and appliances, from jewelry and razor blades to shoes and luggage, competes with all of them.  It’s also unfair to buyers who don’t have access to the internet and, of course, to the state, the schools and to hundreds of other jurisdictions in lost revenue.

“Additionally, Main Street supports the community in countless other ways — as sponsors of Little League teams and scout troupes, as mainstays of the United Way and countless civic and other charitable enterprises.”

The Sacramento Bee column “Viewpoints: Amazon should compete on a level playing field [5],” by Angelo DeSantis, contends: “[R]equiring Amazon to collect sales tax would not impede interstate business. Innumerable companies collect sales tax online without disruption. It’s inconceivable that Amazon, with its cutting-edge technologies such as Whispernet and Cloud Drive, would have any difficulty collecting taxes in multiple jurisdictions….

“Amazon does not need an unfair competitive advantage. It’s time to let Amazon compete on a level playing field.”

“More dangerous for Amazon will be that a referendum turns attention to the kind of business it is in the first place,” writes Christopher Caldwell in “Why Amazon’s tax-free landscape needs bulldozing [6],” published in the Financial Times. “It is the tax exemption, not the technology, that most distinguishes Amazon from its rivals. Its price advantage is the most important thing about it. The ruthlessness with which Amazon is resisting tax reform might be a measure of the centrality of tax-privilege to its business model. One can look at the collapse of Borders, not to mention independent booksellers, and ask whether government policy has undermined the bricks-and-mortar retail economy to protect a will-o’-the-wisp.”

In the Knoxville News blog Rant$ and Rave$, Roger Harris, in his posting, “Will Amazon Ever Do the Right Thing? [7]“ notes: “Amazon.com continues to attract the kind of publicity that most companies seek to avoid. From coast-to-coast, public voices are blasting the online retailer for its refusal to collect sales taxes.”

In the article “Amazon Takes the Low Road [8],” in the July 17 edition of the Los Angeles Times, writer Michael Hiltzik discusses the difference between a court fight and a referendum battle. “In court, Amazon would have to painstakingly muster credible legal arguments and present them to a judge who, more often than not, is no fool. In a California ballot campaign, one can try to mislead voters by deploying half-truths, outright lies and flagrant deceit. Lie to a judge, and you might end up with a stiff fine for contempt and maybe jail. Lie to the California electorate, and you might win an election.... [I]s there any mystery why it preferred to start with a ballot measure?”

Hiltzik continues: “The deceit and misrepresentation and lying has already started. In claiming that its referendum was all about jobs, for example, [Amazon.com] managed to gloss over the fact that the only people whose jobs were threatened were those it voluntarily cut off. The company also failed to mention the thousands of people whose jobs are threatened by the fake price advantage it enjoys, along with many other online merchants: the employees of its brick-and-mortar competitors, ranging from mom-and-pop bookstores to national department stores.”

The July 15 Bloomberg.com editorial “Amazon.com, Infant No More, Should be Charging Sales Tax: View [9]” states: “In pushing the referendum, Amazon has been arguing that California needs to do more to attract business, not drive it away. That’s doubtlessly true, but it’s hard to see how lenient tax treatment for online retailers furthers that goal. As the sponsor of California’s new law rightly put it in May, ‘If you oppose this bill, you support tax evasion.’”

The Charlotte Observer editorial “Amazon Flexes Muscle to Avoid Sales Taxes [10]” notes: “Amazon argues that forcing it to pay sales tax will cost jobs. Faced with a big sales tax bill, Amazon will cut its connections to its affiliates, as it did in North Carolina, and close warehouses and call centers, as it has threatened in Texas and South Carolina. But those jobs are minimal…. In any case, they are offset by the jobs a level playing field would preserve at bricks-and-mortar businesses.”

The July 15 Fresno Bee editorial, “Amazon Still Trying to Avoid Internet Sales Tax [11],” talks about fairness: “While it may be Amazon’s business model to gain competitive advantage by not collecting sales tax, that does not make it right. Amazon has avoided $83 million a year in California alone. Uncollected sales taxes from all online sales in California could exceed $300 million a year, according to state officials. All the while, honest retailers follow the law, and collect sales taxes. Amazon’s strategy unfairly takes business from law-abiding retailers.”

In “Why Not Tax Amazon [12],” the Stockton Record argues that the fight “is not just about California. Other states are scrambling to capture sales taxes from Internet retailers that they used to collect from bricks-and-mortar stores.

“Again, though, why should online retail sales be exempt? And do we want a system that allows out-of-state retailers a competitive advantage over local retailers, an advantage that further undermines their ability to survive?”

Regarding Amazon.com’s petition for a referendum vote, in “Amazon to California: Drop Dead [13],” Paul Whitefield of the Los Angeles Times wonders: “But hey, while we’re all voting, why don’t we also ask Californians if they think they should have to obey the speed limit? Can’t we just ignore those pesky stop signs? And income taxes: Do we have to pay those too? Vote! Vote! Vote!”