Borders filed for Chapter 11 announced plans to liquidate the other day and Daniel Larison catches a libertarian, free-market response, and gives it the attention it deserves:
Via Damon Root, Anthony Gregory rejoices:
The failure of Borders is a beautiful thing, coming as it does from the market process. If voluntary competition should one day bring Amazon.com down, in the midst of a competing commercial success today unimaginable but even more friendly to consumers than that wonderful online store, we will again have reason to celebrate.
Viewed another way, Amazon has flourished as much as it has thanks to the unfairness of being able to compete with physical bookstores without the burden of paying taxes to state authorities. It has gained at the expense of other firms by evading taxation that its competitors could not evade, and it has vigorously opposed attempts to subject it to the same rules. One man’s successful business model is another man’s example of gaming the system. […]
Borders was never able to integrate their physical locations with an online presence: for a time, they outsourced their online store to Amazon, and their e-reader is an also-ran third party device. But, even though a lot of Borders’ problems were self-inflicted, there’s no doubt that Amazon flourished because of lack of sales tax, and to pretend that the glorious market is the only contributor to Borders’ downfall is shortsighted at best.
The Spy Who Loved Me
Although saving on sales taxes is a benefit, I don’t think it is that important to Amazon’s success. Great prices, the ability to comparison shop within the site, extremely fast delivery and great customer service probably accounts more for their success.
I gave my husband a Kindle for Christmas. He hasn’t darkened the door of a bookstore since. He now reads nothing but e-books.
Ron
Uh, I’m confused. If I order on Amazon, I pay sales taxes.
Silver
Amazon is great from a consumer point of view. I’d love to pretend there aren’t horrific human costs…
http://motherjones.com/rights-stuff/2011/07/ohio-warehouse-temps-unemployment
Poopyman
I always liked Borders stores. The ability to sit with a cup of coffee or tea and read a book you might or might not buy had an appeal.
Sadly, it’s an appeal that doesn’t match up with living in the suburbs, where shoppers drive in to do their buying and hop back in their SUVs to go off to the next shopping center.
I suspect they were doing OK but not great before Amazon caught on. And then they were just crushed by Amazon’s ability to deliver a product to the doorstep at discount prices.
NonyNony
This. A thousand times this.
Amazon is ripping off our state and local governments left and right and helping to drive local businesses under. They’re no better than Wal*Mart – worse because at least Wal*Mart provides local (if not particularly good) jobs for their store fronts in communities.
PurpleGirl
I’m sorry that Borders will be closing. When they closed some stores earlier this year, I lost two places I liked to go for coffee and buying magazines. Now, I’ll lose two magazine sources and public restrooms in Manhattan and one in Queens. They were good places to stop and rest or meet people.
I feel sorry for all the people about to lose their jobs — they won’t be able to get extended unemployment benefits unless the law is renewed with NEW dates for benefits.
NonyNony
@The Spy Who Loved Me
If this were true, Amazon wouldn’t spend millions a year fighting the need to collect local taxes in various state legislatures and in Congress. They also wouldn’t have to threaten to not put distribution centers in states that make them collect sales taxes or yank affiliate programs from states like California who are trying to make them collect sales taxes.
Part of Amazon’s business model depends on not having the overhead to collect sales tax in every state – that’s a good-sized chunk of the reason why their books are cheaper than Barnes & Noble’s online store – which does have the infrastructure to collect sales tax because by the rules they have to (they have retail presence in almost every state – they can’t avoid it like Amazon does).
@Ron
Where do you live? Amazon has to collect sales tax in a handful of states:
Belafon (formerly anonevent)
While it might have helped a little, I don’t think the tax issue helped as much as you are implying. To me, that would validate the Republican’s talking point that lower taxes help business, versus the small businesses saying that only demand will help make businesses better.
I view Borders in the same way that I do BlockBuster or Sony music. They were distributors. While I love being able to walk into a bookstore, which is why I will miss Borders, the truth is that distributors are the ones disrupted by a change in technology. Amazon is a new type of distributor, the same as Netflix. I credit Amazon and Netflix for recognizing that they are distributors and have to keep up with the changes, hence the Kindle and streaming. Borders and BlockBuster were not thinking ahead.
There’s a computer bookstore, Nerdbooks, in Richardson, TX. They are primarily an online seller, and you can go visit their site, but they have their warehouse setup to physically browse. If you go there and buy the book there, you pay the online price, including tax, but you don’t have to pay shipping since you are there. It’s nice to be able to compare books while I am there as well.
mistermix
@Ron: Amazon only collects sales tax in KS, KY, ND, NY and WA.
Ron
@NonyNony: Yeah, I live in NY. Didn’t realize it was only a few states.
dr. bloor
Borders was horribly managed, perpetually two steps behind the curve. They remind me of the hospital I worked in during the late eighties and early nineties, where it was thought that switching to plastic utensils would take care of the rising costs in health care (the hospital no longer exists).
Amazon has had some edges, but basically Borders got its ass kicked by a paridigm shift.
Jennifer
@ 1: This.
I have an independent bookstore 5 blocks from my house, so while I browse amazon for books, I don’t buy them there – I ask my store to order them in if they don’t already have them in stock.
But for other stuff, I love amazon. The selection is great, the customer service is great, the prices are great. FWIW, I think they should lose their battle to avoid collecting state sales taxes, but if they do, it won’t make any difference w/r/t me continuing to shop with them.
MattF
FWIW, Borders’ original store in Ann Arbor was a great bookstore. When they closed it down and replaced it with an instance of the Borders chain, it was just too bad.
Cacti
I’m sorry for the 10,000 or so Borders employees who will be out of a job. Not their fault.
But this…
Is the primary reason for their failure. Borders got left behind.
jwb
Silver: Well, that was depressing.
NonyNony
@Belafon
Amazon is receiving a government subsidy that their competitors are not receiving.
This isn’t about the overall tax rate being too high – this is about one entrant in the market having an expense that their competitors do not.
Don’t be blinded by ideology – to a “conservative” this would be an indication of “everyone’s taxes are too high” because to a “conservative” stubbing your toe is an indication that everyone’s taxes are too high. This is about competative advantage. It would go away if Amazon were forced to build the infrastructure to collect local taxes just as much as if we took the preferred “conservative” approach and said “nobody has to pay sales tax anymore”.
This isn’t an argument about taxes. This is an argument about unfair business practices and an unfair government subsidy to Amazon to drive local businesses under.
Dave
I wish this would lead to the revival of the local, smaller bookstore. But that is unfortunately a pipedream at best.
adolphus
I must be getting old. I remember when Borders started opening on the East Coast and they were considered evil corporate overlords because they drove the locally owned bookstores out of business. I recall some vehement zoning battles and calls for boycotts.
Now they are the subject of nostalgia for daze past and regret at their closing.
Never liked Borders myself. I’m a Barnes and Noble man and proud of it.
Paul in KY
I pay the sales tax. I do like Amazon for their breath of quality products & free shipping.
Sorry to hear about Borders. I liked their stores.
Jim In Panama
About 10 years ago, before I retired I was in the software business. I worked directly with the executive staff at Borders (CEO, CFO, VP Mktg) in an attempt to provide automated solutions to their many problems. They, as a group were the most willfully ignorant, backwards bunch I ever encountered. When I saw the news of their filing my first thought was “damn, that took a long time”
Max B.
This is actually steaming bullshit. A 10% sales tax on a $20 is $2. The price difference between Borders and Amazon was often much, much larger – differences as large as $10. Shit, Borders was so badly managed that the prices in the stores were usually much higher then the prices on Borders.com, which were still higher then Amazon’s. Borders completely and utterly failed to offer any reason to shop there – that is by far the biggest reason they are going under.
MattF
Oh, and a good friend of mine worked at Borders for a while. From her experience, I’d say they were just gruesomely mismanaged, in point of fact.
Scribe9
Even if we (hypothetically) assume that Amazon and Borders competed on level terms in a perfectly fair free market, I don’t get the idea of “celebrating” the loss not only of many, many jobs, but also a significant consumer choice. In addition, the loss of Borders (and of “bricks and mortar” bookstores in general) reduces the opportunities for non-name writers and books with little or no publicity to gain notice and traction in the marketplace.
How is this narrowing of options and opportunities “a beautiful thing,” again? If this is the free market at work, then the free market is dysfunctional and a detriment to the social good.
If Borders ultimately failed due to a failure to adapt to changing market conditions (in other words, poor management), wouldn’t a functional “free market” find a way to correct Borders’ flaws, rather than eliminate it entirely?
Belafon (formerly anonevent)
NonyNony
I have my own evil purpose for companies not collecting taxes:
1. They can’t be considered persons if they don’t.
2. It will force more states to think about income taxes as a source of revenue, and it will take away Texas’s (my state) cheep tax advantage which is uses to destroy itself.
PurpleGirl
mistermix: Borders filed for bankruptcy back in February. Tomorrow was the deadline to have a reorganization plan in place to sell the company. Their unsecured creditors didn’t accept the possible purchaser of the company. They were concerned that being a financial firm it would buy Borders and then liquidate anyway, stiffing the creditors. So now, Borders will sell the operations and store leases to several liquidation firms and close down completely.
meh
I have never based a purchasing decision on whether or not I pay sales tax so saying Borders died, in part, because of that is like saying horse and buggies died out because buggy whips were too expensive.
Nutella
True that the tax advantage is not the only reason Amazon does better than Borders, but it’s one of the reasons.
Amazon recently dumped all its associates (bloggers with Amazon links) in California because CA, like New York and Illinois, tried to get them to collect sales tax like everybody else who sells things in California. They now claim they have no physical presence in CA without the associates but they have actual employees there. Kindle software is developed in California.
They took a different tack in New York, where they are paying the taxes and suing to overturn the law.
NonyNony
Borders was horribly horribly mismanaged. They expanded too fast because they were playing the corporate raider game to pump up their numbers and make money on paper to convince people they were worth more than they were. When the down economy hit the game was up.
But that doesn’t change the fact that Amazon has a competitive advantage over their competitors because of the government subsidy. If it isn’t a meaningful competitive advantage then Amazon should be able to collect and pay the taxes like everyone else. Instead they pay a lot of money to a lot of people every year to prevent having to collect and properly distribute their fair share of sales taxes.
Barnes and Noble is not mismanaged. They’re doing everything they can right. But they’re working uphill against Amazon because Amazon already has a number of advantages built-in because of their business model. The government handout that Amazon gets in not having to collect sales tax is one that they don’t need and shouldn’t have.
dedc79
There is nothing to rejoice here. Borders and Barnes & Nobles put hundreds (if not thousands) of small book stores out of business. Unlike the big chains, those small independent book stores didn’t need to be money making machines, they just needed to turn a bit of a profit. Now the small bookstores are gone and the big chains are going and we’ll be left with nothing but Amazon.
Walker
If you follow the agent/publisher blogs, this is very bad for books. There were many authors that Borders would carry but B&N would not (and vice versa). The loss of Borders is going to further homogenize the author pool for a while.
Jennifer
Well, as I said, I have a good independent bookstore close by which most folks don’t have, and I’m spoiled by it, so I never bothered with Borders, Barnes & Noble, or before them, B. Dalton or Waldenbooks. I pay more for my books by going to my bookstore, but that’s ok – they’re local, I love being able to go in and browse, which allows me exposure to a lot of great books I’d never know about otherwise. Also, they host bookclubs and book signings. But even more important, unlike the teenagers working the counter at Barnes & Noble, the folks who work at my bookstore actually READ BOOKS and can discuss them intelligently. They also have a customer loyalty program they call “baker’s dozen” – after 12 purchases, you get a chit worth 10% of those purchases, which amounts to at least one free book for every 12 you buy. Still not as cheap as amazon, but worth paying the extra. Unfortunately, these days I’m convinced that about the only place a store like this can survive is in a wealthy liberal enclave, which is where this one is located. I’m just fortunate enough to live in the low-rent neighborhood immediately abutting said wealthy liberal enclave so I have close proximity to said bookstore.
mistermix
@Purplegirl: You’re right, I’ve updated the post. Thanks.
someguy
Amazon is actually lobbying for a uniform state sales tax code. They aren’t trying to dodge taxes per se, they’re trying to dodge being subject to 50 different (and sometimes complex) sales tax regimes. Every state taxes different stuff, at different rates, and they don’t tax all business activities at a uniform rate, and then there’s the matter of county & city sales taxes, which are going to be a bitch to sort out. Their business model may be untenable if the states really want to press the issue hard. Which is fine with me. Crush amazon and bring back local book stores for all I care. I preferred that.
Constance
I worked for Borders for five months when the Carson City, Nev., store opened. A friend and I applied just for the hell of it (I’m retired) and were hired to help set up the store, then kept on after it opened. Setting up was hard work and fun. However, from the beginning the treatment of the employees was sad. In addition to very low pay for very hard work, management was constantly harping on “shrinkage,” or stealing. We were to watch our fellow employees and the customers like hawks. After awhile we realized that we were the enemy as far as management was concerned. The CEO’s pay in relation to my $6.25 an hour was obscene. I still shop occasionally at Borders (it’s about 10 minutes away from my house) and enjoy the coffee shop but have no illusions about the company’s contributions to a better world. A scant 35 minutes away we have one of the best independent bookstores in the country, Sundance Books in Reno. I happily pay full price there because it’s such a fabulous good time in that store. And, I’m ashamed to admit, I often buy from Amazon, particularly used books (the selection is amazing), because it’s easy and convenient and cheaper.
I’ll miss our CC Borders if it closes but unlike many, I have a fabulous option in Sundance Books when I want to fondle and savor real books.
And, I read Libertarians as misinformed at best. Do any of them study history and actually have a clue about how horrible life was for most people back in the good old days of free market excess and starvation during hard winters or–I give up. They’ll never get it.
Ron
I like small independent bookstores, but generally speaking local independent stores charge a LOT more for stuff. There was a CD for sale at our local independent music store that they were selling for $30 that Amazon has for $13.88. I don’t mind paying a little extra to support local business. But that is insane.
Jennifer
@ 35 – Most books have a PSRP imprinted on the back cover or the inside fly of the dust cover; I doubt you’d find any independent bookseller trying to charge MORE than that price. That having been said, that suggested retail price is typically several dollars more than amazon pricing.
Crashman
It’s a beautiful thing when people get fired.
/libertarian’ed
Belafon (formerly anonevent)
NonyNony
The point of my quote is that I’m not blinded by the taxes-are-too-high argument. But I think you are seriously overstating how much not paying taxes or collecting them helps Amazon. They already have that in some states. But, I’m sorry, Amazon has seriously been kicking butt in the way they ship products to their customers and their customer support.
Amazon was charging a flat rate for all books they sold on the Kindle, $9.99 for a new book if I remember correctly, but when Apple joined the e-book market, Apple actually made a deal with publishers that caused the price of e-books to go up. And I’m sorry, but as with all things electronic, the price of the second copy of something is zero. There was no justification for the price increase.
Not sure what your beef is with Amazon, but it was Border’s crappy management and failure to adapt that killed them.
JustMe
Hm. I’m sorry to see Border’s go, because I liked it, but Barnes & Noble fulfills the niche of “brick and mortar bookstore” when I need to go to one, and we already have plenty of those where I live.
Ohio Mom
In addition to the sales tax thing, the other free-rider effect is that one got to browse through all the books at Borders, serendipitiously discovering all sorts of goodies, and then go home and order them from Amazon.
This is a big beef of a friend of mine, whose ex-husband owned a local bookstore: he was reduced to serving as advertising and marketing for Amazon.
PurpleGirl
An example of the mismanagement: I began reading a book series when I friend gave me the first book of the series (Outlander by Diana Gabaldon). Sometime last year she published a new book in the series. Borders sent me an email on the hardcover being available. Nice but. Barnes & Nobel, on the other hand, put out a cardboard rack with copies of the earlier books in paperback. I was able to buy a few of the other books from them. Borders never did stock the other titles in the stores. I mentioned this to a store manager, who seemed not to understand my point.
MikeJ
@someguy:
Of course weverybody hates the big player, but there are lots of little guys making a living on the internet too, and yes, having a thousand different sets of laws to obey would be a bitch.
Amazon could do it if they had to (something no catalog based company has ever had to do in the US), but small businesses that depend on the internet will cease to exist.
Nutella
@someguy:
Taxes are messy to calculate, true. That’s why there are services you can buy to add on to your order entry system that will calculate them for you. Another expense Amazon doesn’t want to take on.
A uniform state tax code would be nice, I guess, if you think every state should be the same. But that’s not going to happen. If we do get something like that, it will be a national VAT or sales tax.
Mudge
There are 50 states, there are zip code recognizing software progranms, so an order from zip code XXXXX is charged a sales tax Y. This is not rocket science.
Nutella
@MikeJ:
No, small businesses that depend on the internet will have the additional expense of paying for a service to calculate and pay the taxes for them.
Small brick-and-mortar businesses have to pay taxes even when it’s an inconvenient expense.
There’s a business opportunity here for the tax services to make their product very easy to use for small internet businesses.
Origuy
I don’t see how hard it is to set up a database relating zip code of purchaser and product type with sales tax. Sure it changes once in a while, but not often enough to keep a single person busy. Amazon could recoup their cost by selling access to the database as a web service. Brick and mortar stores have to have their cash registers figure out which items are taxed and even Amazon has to track where they do charge sales tax.
cmorenc
@Ohio Mom:
This. But ask me how I know, and I’ll plead the Fifth Amendment.
PurpleGirl
Mudge — that was my argument with Lane Bryant when they were selling a large-sized woman’s magazine. I live in NY and NY doesn’t collect sales tax on magazines or newspapers. The Lane Bryant store went to charge me sales tax on the magazine, so I took it out of the group of things I was buying. I told the clerk about NY not collecting tax and she replied that it would be too hard to program the cash registers. I told her “that’s why they computerized them.” (I wanted to add, “you idiot”.) And in NY, you already had two sets of sales tax rates — the statewide and the local — that registers had to be programed with.
gene108
This is a decades old issue. LL Bean was that “devil” 24 years ago:
http://www.nytimes.com/1987/05/14/business/mail-order-sales-tax-studied-by-house-panel.html
Mail order / on-line sales has always coveted not paying state sales tax, while brick and mortar chains complained.
I can’t be hating Amazon for benefiting from the same laws that allowed companies like LL Beam to prosper a generation earlier.
PeakVT
I never understood why Borders partnered with Amazon for their online store for so many years. Partnering with the greatest threat to one’s business model seemed at best to be buying time. Maybe the Borders execs were hoping Amazon would buy them out or something.
Ken J.
Borders made many, many, many mistakes.
One of the biggest, way back in the 1990s, was moving into CDs in a big way, on a scale to compete with Tower Records. When CD sales collapsed in the early 2000s, Borders still had to pay rent on the square footage which used to hold CDs — but they couldn’t find anything else to sell in that space. This may have been their biggest mistake. Every other national retailer who offered a broad and deep CD selection, like Borders did, has been gone for several years now. (Find, if you can, the chart showing Borders declining sales per square foot since 1999. I bet a lot of that decline is the CD wipeout.)
Other mistakes: borrowing to expand rapidly, and getting caught short with loans due when the economic crisis hit in 2008. Responding to that crisis by thinning the number of titles carried, which eroded a key part of Borders’ appeal to serious book buyers and which made Amazon’s selection all the more appealing.
Other mistakes: Expanding vigorously internationally instead of tending the business at home. Hiring a succession of CEOs who believed books could be sold just like any other consumer products, starting in 1999 with a CEO from Jewel/Osco food & drugs. Renting a lot of expensive, high-visibility real-estate for stores (my favorite example was the wonderful Chicago store at Water Tower Place).
Outsourcing the web site sales to Amazon didn’t help. That Web thing will never amount to much, they thought.
Finally, as all the other problems were falling down around them, Borders had no resources left as the e-Book era came in.
Wormtown
Our Borders closed with the first round. I was surprised because it was always packed; full parking lot, hard to find a seat at the cafe; always a line to check out. I don’t know anything about business; but it seems to me that we are in a strange time when a place so popular can’t make money. Will we be buying most everything on line in the near future?
Villago Delenda Est
Sales taxes suck. Period. In all jurisdictions, at all times.
Income taxes are the way to go. With a significantly higher rate on capital gains than earned income, because capital gains are not earned.
Nutella
@gene108:
Please. We’re not hating the tax-avoiding companies that are getting subsidized by tax-paying companies — we’re saying they should be paying taxes like everybody else. That book you ordered from Amazon was delivered by a truck driving on local roads which were paid for by everybody else’s sales taxes. This is not equitable and needs to be changed.
Fargus
The actual sales taxes aren’t the only cost of sales taxes. Like people have noted upthread, the infrastructure and jobs necessary to sort out local tax law, process taxes, pay the proper municipalities, etc., would have to get priced into things too. It’s not just that you save the sales tax by shopping on Amazon, you save whatever percentage of what THEY save by not having to process your sales tax.
Villago Delenda Est
I’ll wager that Borders’ execs have nice little nest eggs tucked away in the Caymans. They’ve made their pile…they’re not hurting.
Loot your own firm, and personally profit! That’s the new definition of “fiduciary”
mrmcd
As a few other people have pointed out, Amazon charges sales tax for NY residents anyway, and I still love my Prime account to death.
In addition to this, when you file your NYS income tax returns, there’s actually a section where they make you cough up the unpaid sales tax for internet and other out of state purchases. You even get to choose between paying a flat rate they decide based on your income level or save every single receipt for every out of state purchase that year and claiming that instead, presumably risking an audit in the process.
It’s not that Amazon didn’t get an advantage in many states because of not collecting sales tax, but every Internet seller has that advantage, and there’s plenty of not bankrupt or liquidating retailers that don’t have that advantage and still do well. Also, if you want to be technical about it, it’s not Amazon that’s evading taxes, but the consumers, who are still obligated to pay sales tax on everything they buy online.
The problem is that our state and locality based sales tax system is a train wreck filled with loopholes and particularly ill suited to the age of online shopping and free overnight shipping. Many people take advantage of this fact, but it’s not the reason Borders died.
stinkfoot
@adolphus
You took the words right out of my mouth. In the last 15 years in Portland, where a consistently literate community supports its local libraries and bookstores, I have seen many small book stores with great selections driven out of business by both the Borders and Amazon models. The same goes for record stores. OMG, I lament the lost of Tower Records these days. Sad.
adolphus
@ 52 Wormtown
We lost ours in the first round too and it was always empty. Their location really sucked.
One of the things to remember with retail chains is that even when one store is packed and doing great, the whole company could be going under. Your store could have been making money hand over fist, but it might not have been enough to cover larger expenses or the stores not doing well.
And just because a store or restaurant is packed, doesn’t mean it is doing well financially. It’s possible that packed Borders was losing money on each sale due to high overhead, especially rent, or poor management.
gene108
I lived in Ann Arbor from 1977 to 1984. I was three, when I moved there and 10, when I moved out. For the life of me, I can’t remember the original Borders store.
My mom says she took us book shopping there, but I’ll be damned, I just can’t remember.
I somehow feel cheated :-(
Superking
I’m going to miss Borders. There still isn’t a good way to browse online, and I knew when I went to Borders that I would probably find something I hadn’t seen before. They also had a better selection that Barnes & Noble. It seemed that Barnes & Noble has a lot of very popular books, but Borders had a wider variety and more depth in their selection. It wasn’t just the newest bestsellers. So, I’m sorry to see them go.
Citizen_X
Ha ha, yes! Because if there’s anything worth celebrating in the worst recession since the Depression, it’s yet another company going out of business and laying off all its employees.
Fucking libertarians.
And their understanding of competition is bizarre. To them, it means a succession of giant monopolies, one after another. This could mean that the new one is “even more friendly to consumers,” or it could just as easily be something more negative (hires more illegals, is more ruthless at crushing small stores, has a better legal team that enables it to skirt local laws, etc). Whatever. The market doesn’t care.
I think this is because they have a constitutional objection to any kind of anti-trust action. Ah, but then they would have to recognize that concentrated economic power can be as destructive as concentrated political power. Must avoid that at all costs.
gene108
To earlier points about Amazon paying sales taxes in some states. Wherever on-line / mail-order businesses have physical locations, such as distribution centers, they have to collects sales taxes for sales in those states.
I don’t know why on-line/mail-order sales are exempt from sales or what type of act of Congress would be required to change this.
I just can’t fault Amazon for a decades old status quo, with regards to mail-order/on-line businesses.
If you want Amazon to collect sales taxes on all sales, then you need to lobby Congress to change the laws.
Chad N Freude
@The Spy Who Loved Me: … and you chose to buy tax-free from Amazon rather than Best Buy or Target, who have to charge sales tax.
malraux
While I recognize that amazon is arguing this, I feel it’s in bad faith. It strikes me as a great example of intentionally making the perfect the enemy of the good to delay having a solution.
Personally, I think moving to income tax is a more sensical solution, as sale taxes are inherently regressive.
Stefan
How is this narrowing of options and opportunities “a beautiful thing,” again? If this is the free market at work, then the free market is dysfunctional and a detriment to the social good.
Free-market fundamentalists often proceed on the assumption that a free market will act to maximize choice and increase the common good. In actuality, a free market does no such thing — all it does is set a price. If good, desirable things are more expensive than other options, or not easily valued, then the free market will push them out.
Nutella
@gene108:
Yes, the federal law about having to have a physical presence in a state to be required to collect state taxes there needs to be changed.
Even without those changes Amazon is flouting existing law, in California at least, by claiming not to have a physical presence there when it has employees working in California.
Wapiti
If the big catalog stores, like Amazon and L.L. Bean, need to collect sales taxes for all states, then so do the small internet concerns. And the small internet retailer, the quilt supply store in Iowa for example, needs to send collected sales taxes to every state’s revenue office.
There is a market for a system that not only calculates and collects the tax, but also sends it to the various states. I’m an anti-Libertarian, so figure that this is an ideal function to be be filled by the Federal Government rather than a private vendor.
Amanda in the South Bay
Well, living here in the SF Bay Area, I’d say Borders opened up too many stores. Every suburb in the East Bay had one, and there were four in SF proper (I think the one near AT&T park closed even before the round of closures earlier this year). There were stores both at San Francisco Centre and Union Square as well, waaaay too close to each other.
Personally, I haven’t been able to afford new books for a long time, and mostly hit up the local library. FWIW I much prefer dead tree books to their digital equivalent.
Tommy D
Figure that sales tax cheating by Amazon goes a long way to paying for free shipping. Or, that it will more than pay for the astro-turf and legal war they have begun to avoid paying sales tax in California.
PS. Note that these guys sell darn near everything but refrigerators and cars. They are cheating my state and city, and they are cheating those that do play fair including Best Buy, Home Depot, my local hardware and office supply store, even the grocery. (They sell disposable diapers, tax free, that are disposed of in my tax-supported landfill.)
Villago Delenda Est
Let me provide some insight from an obscure 18th century author on this very subject:
“The interests of the dealers, in any particular branch of trade or manufacture, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow citizens.”
Jennifer
Have to agree with what others have said upthread about collection of state sales taxes – it ain’t the tax itself, but all the accounting and paperwork that goes with it. I run a business where we have to collect state and local sales taxes, and because we don’t have a brick and mortar store but conduct sales via brochure all over the state, we have to deal with the following tax rates: 1)the state sales tax on food; 2)the state sales tax on everything else; 3)the county sales tax (we have 75 counties); 4)city sales taxes (we have some 300 of those that collect taxes).
Multiply that by 50 states, require everyone who ever sells anything to anyone from another state to collect, report, and pay the correct amount of sales tax, and you’ve just put every ebay seller out of business.
Only huge companies could afford the manpower to keep up with that. Probably what we need is a nationwide reciprocal sales tax – one that says, “for every sale made to someone out of state, you collect x% in sales tax and remit to the state in which the purchaser resides”, with all states signing on in agreement. Otherwise, you just create a market in which individuals or small businesses can’t do business. Which is not what we want to do, I don’t think.
gene108
You can have employees without having a physical location in a state.
For example, you are based in North Carolina, but get a contract to do work for someone in California. You hire someone to do the work in California. You have an employee in California, but not a physical location.
I’m not sure how Amazon can manage this, because I doubt they do much subcontracting.
EconWatcher
When I was studying at the University of Michigan in the late 80’s, the original Borders store on State Street was a great place. There were so many unemployed intellectuals in town that prospective store clerks had to take a competitive exam on their knowledge of literature and other relevant topics to get a job there. They didn’t sell coffee at the time, but the place had the feel of some kind of intellectual coffeehouse.
I remember one time I wanted to learn about poetic meter (to avoid my law books for a while). A ponytailed, hippie store clerk, who seemed to know everything about everything, instantly referred me to Paul Fussell’s great book, Poetic Form and Poetic Meter. Try that in any bookstore now.
That Borders died a long time ago. The company operating under that name today is a soulless corporation that will not be missed.
handsmile
Jennifer (#31):
Each and every sentence of your post is an exact match of my own sentiments and experiences. Thank you.
Et al:
Many thanks as well to the variety of well-informed comments about Border’s history and operations.
I am saddened by this inevitable news of Borders’ liquidation. Since the recent wave of store closings, however, the bookshelf stock (at least in its NYC branches) has been little better than what one would expect to find at an airport. (With the single astonishing exception of American history which has remained comprehensively stocked!)
Of course, one reason for my sadness is that Borders has a members’ reward program (without the annual fee charged by B&N) that has saved me likely thousands of dollars in recent years. (I buy a lot of books.)
For my abiding love of bookstores and the ineffable pleasures of browsing there, I strive to avoid placing orders with Amazon.
Joel
Larison is right and wrong.
He’s right that Amazon vigorously opposes taxes on their sales, which sucks balls for local retailers in the states they’re competing in. He’s wrong in using that as an explanation for why Borders went down (or why Amazon enjoys a competitive edge). Amazon has an edge because their model means they can (1) move a lot of products (2) establish low prices (3) employ minimal numbers of low-paid people. I wouldn’t be surprised if those low paid people lose their crappy jobs to automation, as well.
Now that sucks for a lot of reasons, but it’s not like Amazon’s competitors are doing better.
malraux
Nitpick: those other big box stores aren’t exactly pristine in this fight either. They’ve been working the property tax exemptions pretty hard (ie we’ll only open a Best Buy in your town if the town/county agrees to exempt us from most property taxes). I’ll agree it sucks for the small businesses, but HD/BB/walmart all play the same sorts of games.
Karen
To someone who has Rheumatoid Arthritis and no car and has to depend either on a cab or someone’s good will to get to a mall, Amazon and Amazon Prime has been a G-dsend for me. I’m sorry about Borders but I cannot hate Amazon because for people like me, it’s a way to get products (and books) I’d never have access to otherwise.
handsmile
Jennifer (#31):
Oops! Perhaps I should have read your comment a trifle more closely, as you do in fact write “I never bothered with Borders…’ And clearly I bothered with them quite a bit.
But I too have the great luxury of being able to patronize and be delighted by several independent bookstores here in the city. So please permit me to amend my previous comment to read: “Most every sentence of your post….” :)
Svensker
The one issue in the debate about on-line vs bricks & mortar that gets left out is that the US post office subsidizes on-line stores to a great degree. 1st class mail has almost entirely disappeared as a profit center for USPS and they rely a great deal on parcel shipping for their revenue. Books are eligible for “media” rate, which is insanely cheap — the average price to ship a book from NY to LA is $3.99. The cost to ship a book in Canada from Toronto to Vancouver is $12.99. The USPS is losing money hand over fist. If they raised the price for shipping books to anywhere near a rate where they weren’t losing money, on-line book sellers would probably have a big problem.
Amazon and other on-line sellers also compete against B&Ms by selling used copies of new books for $.99. So a new book comes out, price at a new book store is $29.99 plus sales tax. Or you can order a slightly used copy on-line for $.99 plus $3.99 shipping and no tax. Unless you need the book right this minute, your decision is clear. The big box book stores also haven’t developed a relationship with readers so that a buyer might spend a little more to keep the B&M open in the neighborhood, another factor when it comes to weighing cost for buyers.
And of course book reading is a dying art. “Media” delivery is changing radically, but book writing and book selling as a means to make a decent living are horse and buggy concepts.
gex
@44 – actually it is more complicated than that. My company provides services nationally but is based in Chaska, MN. One thing we’ve encountered is that there can be differences in the sales tax rate based on the street address of the purchaser. Same zip code, different block, different sales tax. It’s a royal pain in the ass. It’s really hard to find out what you are supposed to be collecting, but you’ll know if you get it wrong when the auditors come calling.
@46 – that’s more difficult than you would imagine too. If every city can make a change based on the street address, every county makes changes based on area code, etc. and rates change at various times throughout the year it would be incredibly difficult to maintain that database unless you could get the people in charge of the rates to update said database.
I’m the programmer for my company and I had to do some work allowing us to collect sales tax. It’s interesting how easy many of you assume it is, when it most certainly is not.
Enhanced Voting Techniques
Amanda in the South Bay @ #69
Yes, in the East SF Bay Area there was a Borders about every 10 miles or so. Boarders was competing with Borders, not Amazon.
opie jeanne
I have never been fond of Borders because of the remarkably low number of books in their stores, and that might have added to their demise.
I spend quite a bit of money at their competitor, both in the store and online, and I sometimes spend a tiny amount at Amazon, mainly because I can rarely find what I specifically want at Borders. The Amazon used books are a good service, but there are some books that I want to read as soon as they are available so the B&N is my first choice. I think part of my loyalty to them was founded in the 90s when I first saw the Oakland bookstore, which was simply a temple dedicated to books.
Matt in HB
Happened to go to Borders over the weekend — I wanted a book ASAP and thought I’d just pick it up there if the price was reasonable. I get there and find the book in question and it’s listed at $49.99. Check Amazon and it’s listed at $27.99. Check Borders website and it’s listed at $39.99. So, I ask the girl who helped me find the book if they’ll match their online price and she says no . . . just flat no. Under the circumstances, why would I buy at the store or even from Borders.com? Bought at Amazon with free shipping and it arrived yesterday. It’s fair to say that I wasn’t terribly surprised to read about Borders shutting down yesterday.
Davis X. Machina
I hate online book-shopping — there is no satisfactory on-line analog to a trip to a bricks and mortar store, the bigger the better. If I want a specific title, good, I’ll wait till the postage makes sense, and order in one go from Powells or the like.
Serendipity is a function of density. Six or seven algorithmically chosen “You may also like…” at the bottom of the screen isn’t close.
I have a Kindle — great for book-books, unbeatable for traveling, but lousy for anything with graphics, or maps. and that’s most history.
YellowDog
Borders lost their way. In the 80’s, the Ann Arbor store was an experience. To work there, employees had to pass an exam. The children’s section was considered the best in the area. The technical and science sections were up-to-date and carried titles that you would only find in specialty bookstores. There were no music or video sections–there were record stores down the block and everyone rented videos. And nothing was discounted. After the expansion, Borders became just a big bookstore with discounts and employees who did not know their inventory. They went from being the Little Shop Around the Corner to Fox Books. A part of me is nostalgic for that original bookstore, but I buy my books, music, and movies on Amazon because that bookstore ceased to exist.
opie jeanne
@Jennifer, I’ve never seen a teenager working at B&N. Every store I’ve been to not only has adults working there but Mature Adults, and the ones I’ve encountered were Readers.
Roy G
Borders was no better than an airport mall bookstore – magazines, bodice-rippers, the pimped out ‘bestsellers’ and a few greatest hits novels. While all of that can be diverting, it’s a a thin stream of gruel. What people should really be up in arms about is the defunding of public libraries, which have much broader mandates for selection than ‘will it sell?’
Bruce S
The gloating over legal tax-evasion – especially considering the budget crises in so many states – is puke inducing. There’s nothing “smart” about smarm. I hate this kind of “glibertarian” bullshit. There truly is something fundamentally sociopathic and sophomoric underlying too much of it.
(That said, Borders tended to royally suck for reasons others have noted above. B&N appears to be in good shape, although all I know is my experience shopping there.)
Brachiator
@mistermix:
Lack of a sales tax is part of the market, inglorious or otherwise. Kinda like Borders and other big box book retailers leveraging their size to put small book stores out of business. Or retailers using size or promises to get favorable location deals from city governments.
And are there any purists here who never shop online?
And how many of you in California pony up that Use tax that you are supposed to pay? In fact, anyone who says that they don’t mind paying higher taxes should never shop online if the retailer does not collect sales tax.
Two other issues complicate the Amazon/Borders problem. Amazon got rid of all their California affiliates, for example, since this allowed California to claim that Amazon had a physical nexus in California via the affiliates. So, a big affiliate, like tech’s Leo Laporte noted that this cost him about $20,000. So, this means that the state will not be collecting income tax on this money, which might have been an acceptable tradeoff for foregoing the sales tax.
I was in Glendale, California the other day. There used to be a huge Borders store at the corner of Brand and Colorado. It is an empty shell, now, and a great deal of the lively foot traffic that used to exist in that area is gone, along with jobs and a draw for other businesses in the area.
It ain’t just the sales tax. Any Internet business threatens brick and mortar stores. You know, kinda like how iTunes and other online resources killed Tower Records, The Wherehouse, Music Plus and other physical stores. But nobody is going to give up the Internet.
Superking
I honestly don’t understand the nostalgia for small “locally-owned” bookstores that Borders supposedly displaced. They were selling books, not food. If they didn’t have the goods, they were going to lose out, and they didn’t have the goods.
YellowDog
efgoldman
The reason WalMart and Sears charge sales tax is that they have physical stores in your state. Buying online from these stores is considered the same as going to one of their brick and mortar stores. Amazon doesn’t have stores per se (distribution centers that are not open to the public). Amazon could charge sales tax for your shipping address, but they are not required to do so. Instead, you are required to pay that sales tax to your state.
liberal
Someguy wrote,
The idea that this would be particularly difficult to do is laughable.
comrade scott's agenda of rage
This. Other massive online retailers who collect sales tax in every state is Guitar Center and their mirror, Musician’s Friend.
The little guys would have problems but the big players like Amazon? They’re simply blowing smoke up some collective asses.
liberal
Brachiator blithered,
This is every bit as moronic as right-wingers who say similar things about liberals who support higher income taxes.
b-psycho
Why did it take so long before someone mentioned this? Why are people defending a regressive tax at all?
As for Amazon, most of the books I’ve bought on Amazon have been used copies. New books cost too damn much regardless of where you get them now.
liberal
Brachiator blithered,
Which misses the point entirely. Which is that giving internet businesses an exemption on the sales tax is unfair, and essentially corrupt.
YellowDog
Superking
My nostalgia is for a time when there were no intertubes, inventories were not computerized, and if you could not find a title on the shelf, you ordered it through the bookstore or directly from the publisher. I was an academic back then and did a lot of ordering that way. You browsed the shelves first, but either way you needed a knowledgeable staff. Because the staff was knowledgeable (in Ann Arbor, many were former graduate students), you often had interesting conversations and/or received suggestions for other titles to check. You were paying higher prices, but part of that price was for the service that went with the purchase.
Old joke: homeowner calls a repairman to fix the washing machine. The repairman spends 10 minutes working on it and pronounces it fixed. The bill is $100.50. Outraged, the homeowner demands an itemized bill. The repairman writes out the bill: $0.50 for a washer and $100.00 to know that it only needed a washer.
liberal
b-psycho wrote,
The point, which you seemed to have missed, is that if we’re going to have sales taxes, they should be applied fairly.
Stillwater
This has probably already been mentioned, but isn’t it revealing that for a Libertarian, businesses going bankrupt is the key indicator of a healthy market?
liberal
Brachiator blithered,
LOL. The exemption for internet retailers isn’t part of the market, it’s a government-granted privilege.
aimai
A combination of factors killed the Butler…I mean Borders. I buy and read a *lot* of books, especially history and non fiction. I read fiction so fast and so furiously that I don’t bother to buy it full price anymore but buy only used that I can recycle immiediatly. But I (used to) buy a lot of hardcover anthropology, history, philosophy–whatever caught my fancy. In those days having a great Borders was a delight. It was a place to go, sit down and consider, and to emerge with an armload of books. I have a much more targeted relationship with Amazon. For one thing I use them for their used book feature. IF there’s a book I know I want and the pricing makes sense I’ll order it off of Amazon. Now that I also use Kindle I’ve occasionally succumbed to buying a book at midnight just to have it in my hot little hands when I need to be reading it.
I’m within a twenty minute walk, still, of one great independent bookstore (the Harvard Bookstore). I used to be within walking distance of 12 independent or used bookstores but they’ve all gone down to the dust. One thing that killed them was the Barnes and Nobles and Borders creation of the hybrid cafe/bookstore (in my opinion) because you could no longer linger comfortably and check the books out.
Maybe this is an idiosyncratic point but it seems right to me. When bookstores moved into suburban/mall territory they lost the quick walk and drop by visitor that used to use them. Sort of like the difference between a New York Korean grocer, who relies on you dashing in several times a day as you walk by, and Costco which has to be a destination for a once a week or month trip. Bookstores had to become bigger, and offer more of a destination feel to attract customers looking for an overall experience (recreation/food/bathrooms). That puts pressure on the bookstore to be bigger and offer more than just books. But it also means that you aren’t relying on foot traffic or dedicated book readers but people looking for entertainment. YOu are actually competing for a different set of dollars.
aimai
Stillwater
@Brachiator: In fact, anyone who says that they don’t mind paying higher taxes should never shop online if the retailer does not collect sales tax.
Is that really the solution to the problem, or are you just trying a cheap gotcha here?
liberal
Belafon (formerly anonevent) wrote,
Really? An advantage of (say) 5-10% in a very competive market is negligible? That’s laughable.
b-psycho
No duh. They shouldn’t exist at all though.
replicnt6
@Mudge:
I agree that it’s not rocket science, but it is considerably more complex than you seem to appreciate. First, there are not just state taxes, but also local taxes. Then each state has different rules about what gets taxed. In many cases there’s a cap on the sales amount that’s tax free. If I recall correctly, in MA, where I used to live, clothing was tax-free up to $150 per item. After that it was taxable.
It’s obviously doable, and it would be a cinch for Amazon, but small mail/web retailers would really be strained to get it all right.
b-psycho
Over emphasis on “creative destruction”, which when taken to this length ironically assumes a zero-sum market.
MORE competitors would be a real indication of health, not the disappearance of one big one.
Joel
Easy solution, then. Amazon (or someone else) writes software/algorithms to do all of this automatically, and keeps it up to date with input from local governments. Then retailers buy the software. Think “TurboTax”.
mike in dc
Suprisingly, Books a Million(which would now be the new #2 B&M bookstore chain) doesn’t actually suck. I’ve found stuff in there that I couldn’t find at Borders or B&N. I’ve heard that Amazon will now be offering college textbooks in e-reader format–it will be interesting to see what effect that may have on the market(and on B&N, which operates hundreds of college bookstores).
Cris (without an H)
All I know is that we’re going to go a few months in this valley without a single bookstore that sells new books. Borders was the only game in town since they took over Waldenbooks.
Larkspur
aimai at 103: You saw the sign posted at one of the closing Border’s stores, right?
replicnt6
@liberal:
Go for it. Build it. Keep it up to date with changes, etc. Get back to us. If there is a federal mandate that all retailers must collect sales tax, you’ll make a mint if you can make it easy to integrate into people’s accounting systems.
The examples that people here are giving of mail-order/online retailers that charge sales tax in other states are all $100M – $1+B companies. Their ability to do this doesn’t serve as evidence that it’s easy. It’s not. It’s not brain surgery, it’s not rocket science, but it’s just not that simple. In addition to the complexity of various localities besides the state level are the complexity of how various types of items are taxed in different states/localities.
Alex S.
I haven’t got much time, so forgive me if I repeat something someone already said here.
Maybe there will be a time when all the main internet marketplaces are in public hands. Amazon is THE place to find books online. Everyone buys and sells there. Or take Facebook. A personal online presence becomes more and more necessary nowadays. Facebook and MySpace can’t coexist because most people are just going to use one page, the one their friends use… the concentration of users is precisely the point of these platforms. Also: Ebay and Google.
drkrick
It’s not “doable,” it’s BEING DONE. If the tools companies like Sears or WalMart are already using can’t be applied to their system as a simple patch, adapting them wouldn’t be much more complicated. This issue is just a red herring.
Brachiator
@liberal:
RE: And how many of you in California pony up that Use tax that you are supposed to pay? In fact, anyone who says that they don’t mind paying higher taxes should never shop online if the retailer does not collect sales tax.
If you are in California or a similar state, answer the question. Otherwise, your cheap sarcasm is just weak sauce.
Isn’t that what entities, from corporations to unions do, exploit government-granted privilege?
I enjoy the blather here as much as the next person, but no one here is connecting the dots and showing how the collection of sales tax on the part of Amazon or other online retailers is going to help any brick and mortar store. This is one of many areas in which even the loftiest sentiment doesn’t really make a damn bit of difference.
@Stillwater:
RE:In fact, anyone who says that they don’t mind paying higher taxes should never shop online if the retailer does not collect sales tax.
Do you have a solution? Otherwise, you sound like the GOP morans who talk a lot of crap about China, but then buy up Chinese made goods at the lowest possible price.
Also, I noted the human toll. There are three Borders relatively near me. I see the impact of their closure on the neighborhood and the people who live there. But other than yelping about what is “unfair” and “corrupt,” what else have you got? Sincere outrage makes a lot of noise, but otherwise is as pointless as a GOP budget plan.
Oh yeah, and here in California the biggest opponents of the new sales tax rules are the Walmarts and other super big retailers who also have a big online presence. Wonder why that is.
malraux
My experience with BaM is exactly the opposite. Every time I go in I have trouble with the whole I give the clerk money/cc and they give me the products I have selected. Either the bar code won’t read and they don’t know how to key it in manually, or there’s just no cashier around to run the till, it just never seems to go as smoothly as it should, making checkout take 10s of minutes even with no line.
Larkspur
I can’t afford an e-reader. I can’t afford books, even discounted via Amazon. On the rare occasion that I have to buy a book – like a manual or guide of some type (and believe me, it’s been months since I’ve done that) I will buy or order it from my very good local independent bookstore. (I’m fortunate in a way similar to Amanda in the South Bay and Jennifer.)
Mostly I go to the library. Everyone else, do what you like. I am no Luddite, far from it. An e-reader thingie would be convenient and fun. I might want it, but I don’t need it.
Brachiator
Davis X. Machina:
Yep. I went to my local Borders a while back and wanted to buy a bunch of books. I was dismayed to see how limited the selection was.
Tablets are slowly shifting the tide here, especially as ebook vendors start to get into textbooks. I would love to see a Civil War history book, for example, that not only had graphics, but animations of battles.
Nutella
To the people saying sales taxes are too hard to calculate: Are you really proposing that internet businesses shouldn’t have to pay taxes because paying taxes isn’t easy enough to do?
My 1040 is kind of complicated to fill out so should I just not pay any income taxes? Or should I try one or both of these approaches:
1. Push for simplified tax regulations for everyone while paying what I owe.
2. Use services like TurboTax to make it easier for me to pay what I owe.
Amazon has nine physical locations (actual offices with employees) in California so they are subject to California taxes and are pulling legal shenanigans to avoid paying what they owe. In the meantime, others are paying for the roads that their goods are delivered on.
Stillwater
@Brachiator: you sound like the GOP morans who talk a lot of crap about China
You sound completely unhinged! I really don’t know what you’re arguing here. Someone upthread said that the lack of local sales tax presents an unfair market advantage to Amazon. You argued that it’s part of the market, or somesuch, so deal with it.
But that entirely misses the point, no?, which is that Amazon derives an unfair advantage over brickandmortar books stores because of non-market forces. You don’t have to be a libertarian to argue that
this is a wonderful thingstate involvement is disrupting ‘free market activity’.To your other point: no I don’t have a solution to this, but that doesn’t mean there is no problem here worth addressing and getting clear on.
George
I used to work for the company that owns Lane Bryant. They employ(ed) 8 people to just work on sales tax, and the people in that department had constant turn over because they were over-worked. There simply wasn’t good third party vendor software that handles all this: coordinating with IT to keep the registers updated with rate changes, dealing with 50+ auditing agencies, filing 50+ tax returns every quarter, etc.
Every new vendor that was tried ended up just causing more work, because it wasn’t the vendor that would get severe tax penalities for getting it wrong, and with so many localities that are constantly changing, they’d inevitably get it wrong, and we didn’t have contract leverage to make them pay). At the time, the company had over $1B in revenues, so hiring a team of 8 wasn’t too much of a burden, but when you’re small online company only has 5 people or less, it’s unworkable.
M. Gillett
There have only been two posters who seem to even know what was really happening at a corporate level, so let me give you a little more insight. Why did Borders go with Amazon? Do you realize the expense of starting up a corporate website to do online sales? Do you realize you have to have regional distribution centers to send out your ordered products? They went with Amazon for a couple of years till they had their site up, and yes they ended up late with their own online presence.
Corporate was trying to get new blood and real book lovers in (George Jones came out of retirement and brought a lot of good people who comitted to moving to Ann Arbor to try and turn it around when Media (dvd, cd) tanked. Most director level staff hardly live within driving distance of there Corp.s now days. To be honest, B&N is in equally as bad shape, they just weren’t carrying the debt load from some mistakes in the early 2000s.
Yes, I will admit they changed at a glacial rate, and there were several stupid aspects of corporate culture that stimied innovation, but they were still trying to shake off the cobwebs of their years under Kmart’s ownership.
At least read Wikipedia.
aimai
Is MA the only state where they assess you a guesstimate of your taxes on internet purchases? Because they certainly do it here. We could save all the reciepts for any internet purchases and go over them to see if we did or did not pay some kind of local sales tax on them but instead we are assessed a generic fee, by the state on our income tax, according to our income (because they figure that’s a pretty good proxy for how much internet shopping we do.)
aimai
aimai
Oh, and Larkspur way upthread. Very funny sign!
aimai
blondie
Ahh, it’s glorious when thousands of people lose their jobs overnight. Like the smell of napalm in the morning.
Paying wages to workers is just so inefficient.
Catsy
@MikeJ:
This.
I don’t think all the people who are salivating at the idea of sticking it to Amazon have really thought through the unintended side effects of forcing online retailers to pay local taxes in every location to which they sell. This would be a dramatic shift in how taxes are assessed on all online sales–not just Amazon.com–and it would have an absolutely devastating effect on small businesses.
Catsy
This is an incredibly silly assertion. Whether or not a business has property or employees in a given state has no rational relationship to whether or not they should pay sales taxes in that state–which are, after all, taxes on transactions.
Sales tax is utterly irrelevant where they, for example, manufacture the Kindle if they’re not actually selling anything there.
Catsy
@Catsy: FYWP, extend the blockquote to the second paragraph too.
Stillwater
@Catsy: This would be a dramatic shift in how taxes are assessed on all online sales—not just Amazon.com—and it would have an absolutely devastating effect on small businesses.
Why? Some ingenious entrepreneur writes code that automatically catalogues where sales originated, taxes are collected and sent out to states during the quarterlies, the tax is born by the consumer.
Sure it’s disruptive. But why would it be devastating? And that leaves aside the actual purpose – and principle – of local sales taxes, and the effects of diminished state and municipal revenue.
Alternatively, if you’re opposed to taxes full stop, I can see how changing the status quo could be seen as devastating.
PurpleGirl
aimai — NYS also requires you to note on your tax return taxes owed for on-line purchases. You can total it up from receipts or they have table based in income as to what you owe. Since I don’t buy on-line very often, I save my receipts and do my own total.
KXB
I have to admit that I am part of the problem. Borders is a place I would go to and kill time, but I did not do a lot of buying. There was one near the movie theater, so we would be tickets, then head to Borders to read until the movie started.
Amazon has helped our small business find arcane engineering books that you would not find in Borders or B&N. Also, we buy from independent booksellers who use Amazon as a selling platform. Overstock is also very good for books.
It was not just shopping for myself. Amazon and similar companies like Overstock make it easier to shop for far flung friends and family. When it comes time to do Christmas shopping, it is simply a lot easier for me to sit at my computer, drink beer, listen to music and do my shopping, and have the items shipped to relatives in California, New York, and Illinois. I hate crowds, don’t care for malls, and hate standing in line at a register.
marybdvm
I didn’t shop there because they were predominantly Republican donars. I shop at Barnes and Noble because they are predominatly Democratic supporters. I hope that B & N is better managed and is able to keep going.
marybdvm
Sorry-Should have read what I wrote before sending (donor)
hengiquai
NonyNony #28
Late, as usual, but I’ll still bravely soldier on.
Now then. What are you talking about ? What “government subsidy” ? You mean the local sales taxes they don’t collect, and which they would then forward on to the relevant local governments ? Note that the company is not profiting from this money, but simply collecting a sales tax. And if you are so strongly outraged by Amazon not collecting thoses taxes wherein they, by the rules as laid down in applicable law and the 1994 Supreme Court ruling, convince your Federal representatives to work to change the freakin’ law.
marybdvm
Fercripesake – predominantly too.
kestral
Dang it! My town had only one (one!) Borders here. And even during the big building boom, they only added one in Oracle. That one got shut down during the latest closings sweeps. And now the other one’s going, too?
This leaves B&N as the only big book store in town. Bookman’s is kind of a crap-shoot when it comes to stock, and the little local indie bookstore’s clear across town from me. This bites.
What’m I supposed to do now? I don’t have the means to buy from Amazon.
Brachiator
@Stillwater – July 20, 2011 | 2:26 pm · Link
I never said just deal with it, and I purposely included the real, tangible, and painful example of the hole in Glendale caused by the closing of the Borders store on what was previously a high traffic corner. I specifically noted the jobs lost and the other businesses affected.
This is one of the reasons I have no patience at all with libertarians, who have a pathological disregard of the impact of economic policy on real human beings. But I also have little patience with other Balloon Juicers who want to indulge in simplistic arguments about markets and taxes.
To be blunt, California doesn’t give a rat’s ass about brick and mortar stores; they’re just trying to balance the budget. This may be reasonable, but it is also cynical and opportunistic. And pointless.
As the Sacramento Bee points out, Amazon and other retailers have been operating this way for 16 years. Everyone applauded this because it was spurring the growth of the Internets, the innovations of high tech companies, and spurred the ginormous growth of companies like Apple and google, which are based in California.
As the story notes, when Democratic governor vetoed an Internet tax bill in 2000, “he said that the e-commerce industry was too young and fragile to be taxed.”
And for years, Californians were supposed to include the use tax for their purposes (the legal equivalent of the sales tax) on their individual tax returns. Nobody ever does this. Ever.
But there is a tradeoff. Amazon is ending its affiliate program in California (ya know, like the Amazon links on this here blog page). So, they may look to gain some sales taxes, but they will lose income taxes. A fair trade? I don’t know, but I am betting against it, since some affiliates were in the top tax bracket.
In the article, the owner of the Avid Reader bookstore in Davis and Sacramento, California complains about the unfair playing field. And yet, in another news story, this same guy complained about the unfair advantage that Borders had when they came to town:
Did the big box stores have an unfair advantage over smaller brick and mortar stores? How do you propose to remedy this?
The larger point is that there ain’t no absolutely free market, and state involvement is part of the cost of doing business. In turn, companies leverage whatever advantage they can. This also means that no one gets, has, or even wants a fair advantage.
At one point, there was a strong feeling that it was in the public interest to allow Amazon and other e-commerce stores to thrive. Now, the sentiment has changed. But it is just fantasy to pretend that this represents a new found concern to institute some kind of commercial fairness.