Amazon lobbies to pay more tax in the US

Yes, you read that right.

The American Senate has passed – with a fairly overwhelming 70-24 majority – an early version of the "Marketplace Fairness Act", which aims to give states a route to collect sales tax for goods sold online. That progress will please one of the bill's most surprising supporters: Amazon.

In the US, sales tax for mail-order purchases is supposed to be paid in the state of the buyer, not the seller. This means that the retailer doesn't charge any tax, and the customer is supposed to declare that they owe a certain amount to their state's tax collector. In practice, of course, this doesn't happen, and purchases from out-of-state retailers are essentially tax-free.

Naturally, retailers who do have to pay sales tax – both brick-and-mortar stores and online retailers shipping largely to their own state – are unhappy with this state of affairs, as are the people in charge of trying to plug the multi-billion dollar shortfall that occurs. But the support of Amazon is less obvious: after all, the company takes advantage of tax planning measures worldwide, and ships a huge number of things across state lines, avoiding tax in the process.

But Amazon has fought this battle before. Until a few years ago, it stubbornly resisted paying sales tax, but in Autumn 2011, it switched course. Slate's Farhad Manjoo reports that:

Over the course of the next couple years, Amazon will begin collecting sales tax from residents of Nevada, New Jersey, Indiana, Tennessee, Virginia, and on July 1, it began collecting taxes from Texans. It also currently collects taxes from residents of Kansas, Kentucky, New York, North Dakota, and its home state of Washington.

As Manjoo points out, the reason for the shift is pretty clear. If you're trying to deliver things within a week or two of their being ordered, it makes sense to centralise your operations in one state to minimise your tax take. But if you're trying to deliver within a day or two – or even an hour or two – of the order, you're going to need physical locations in every state, and most major cities. And if that's the case, then you've given up your tax advantage – so it makes sense to get your competitors to give up theirs, too.

So the Amazon of today can't use the sales tax loophole, because it's not shipping out of state any more. And if it can't have it, no one else can either.

That's going to be a shock to brick-and-mortar retailers, who might have hoped that more equitable tax treatment would make competing with the company easier. But fundamentally, they are having the same problems that HMV had: Amazon isn't impossible to compete with because it avoids tax; it's impossible to compete with because it has no real desire to make a profit.

Forcing the company to pay tax may raise its prices slightly; but they will still be lower than almost any competitor could match. And the loops it jumps through to avoid that tax – like not being based in state – are things that competitors can use to their advantage. In other words, small retailers of the world: be careful what you wish for.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Why the Liberal Democrats by-election surge is not all it seems

The Lib Dems chalked up impressive results in Stoke and Copeland. But just how much of a fight back is it?

By the now conventional post-Brexit logic, Stoke and Copeland ought to have been uniquely inhospitable for the Lib Dems. 

The party lost its deposit in both seats in 2015, and has no representation on either council. So too were the referendum odds stacked against it: in Stoke, the so-called Brexit capital of Britain, 70 per cent of voters backed Leave last June, as did 62 per cent in Copeland. And, as Stephen has written before, the Lib Dems’ mini-revival has so far been most pronounced in affluent, Conservative-leaning areas which swung for remain. 

So what explains the modest – but impressive – surges in their vote share in yesterday’s contests? In Stoke, where they finished fifth in 2015, the party won 9.8 per cent of the vote, up 5.7 percentage points. They also more than doubled their vote share in Copeland, where they beat Ukip for third with 7.3 per cent share of the vote.

The Brexit explanation is a tempting and not entirely invalid one. Each seat’s not insignificant pro-EU minority was more or less ignored by most of the national media, for whom the existence of remainers in what we’re now obliged to call “left-behind Britain” is often a nuance too far. With the Prime Minister Theresa May pushing for a hard Brexit and Labour leader Jeremy Corbyn waving it through, Lib Dem leader Tim Farron has made the pro-EU narrative his own. As was the case for Charles Kennedy in the Iraq War years, this confers upon the Lib Dems a status and platform they were denied as the junior partners in coalition. 

While their stance on Europe is slowly but surely helping the Lib Dems rebuild their pre-2015 demographic core - students, graduates and middle-class professionals employed in the public sector – last night’s results, particularly in Stoke, also give them reason for mild disappointment. 

In Stoke, campaign staffers privately predicted they might manage to beat Ukip for second or third place. The party ran a full campaign for the first time in several years, and canvassing returns suggested significant numbers of Labour voters, mainly public sector workers disenchanted with Corbyn’s stance on Europe, were set to vote Lib Dem. Nor were they intimidated by the Brexit factor: recent council by-elections in Sunderland and Rotheram, which both voted decisively to leave, saw the Lib Dems win seats for the first time on massive swings. 

So it could well be argued that their candidate, local cardiologist Zulfiqar Ali, ought to have done better. Staffordshire University’s campus, which Tim Farron visited as part of a voter registration drive, falls within the seat’s boundaries. Ali, unlike his Labour competitor Gareth Snell and Ukip leader Paul Nuttall, didn’t have his campaign derailed or disrupted by negative media attention. Unlike the Tory candidate Jack Brereton, he had the benefit of being older than 25. And, like 15 per cent of the electorate, he is of Kashmiri origin.  

In public and in private, Lib Dems say the fact that Stoke was a two-horse race between Labour and Ukip ultimately worked to their disadvantage. The prospect of Nuttall as their MP may well have been enough to convince a good number of the Labour waverers mentioned earlier to back Snell. 

With his party hovering at around 10 per cent in national polls, last night’s results give Farron cause for optimism – especially after their near-wipeout in 2015. But it’s easy to forget the bigger picture in all of this. The party have chalked up a string of impressive parliamentary by-election results – second in Witney, a spectacular win in Richmond Park, third in Sleaford and Copeland, and a strong fourth in Stoke. 

However, most of these results represent a reversion to, or indeed an underperformance compared to, the party’s pre-2015 norm. With the notable exception of Richmond’s Sarah Olney, who only joined the Lib Dems after the last general election, these candidates haven’t - or the Lib Dem vote - come from nowhere. Zulfiqar Ali previously sat on the council in Stoke and had fought the seat before, and Witney’s Liz Leffman and Sleaford’s Ross Pepper are both popular local councillors. And for all the excited commentary about Richmond, it was, of course, held by the Lib Dems for 13 years before Zac Goldsmith won it for the Tories in 2010. 

The EU referendum may have given the Lib Dems a new lease of life, but, as their #LibDemFightback trope suggests, they’re best understood as a revanchist, and not insurgent, force. Much has been said about Brexit realigning our politics, but, for now at least, the party’s new normal is looking quite a lot like the old one.