Gordon Yu Published in “State Tax Notes” for ‘Amazon’ Taxes Article

In his article “Formulation and Enforcement of ‘Amazon’ Taxes,” published in the February 4 issue of State Tax Notes, law student Gordon Yu discusses the laws that states can choose to pursue in order to remit taxes from online retailers such as Amazon. 

Many states currently attempt to obtain these taxes from its residents by asking them to include online taxes on their tax return; however, consumers rarely report these online purchases making it difficult for states to enforce and track these taxes.  This also creates a loss of billions of dollars in tax revenue in the country overall.  When states make an effort to enact Amazon taxes, they are attempting to circumvent the issue of a lack of consumer reporting of online-taxes, and instead remit the taxes from the online retailers themselves.

One of the questions Yu’s article attempts to answer is what role politics, particularly political party and ideology, plays in whether states decide take action against online retailers, like Amazon, to obtain these online sales taxes.  In theory, Yu states, Republican-leaning states would be less likely to support Amazon taxes, because of their strict party opposition to tax increases in any form.  On the other hand, states that have a Democratic majority are generally not opposed to tax increases, making it easier for these states to support enacting new Amazon taxes. Yu found that ideology cannot alone explain state action, and that other factors, such as utility of potential tax dollars received, may be more of a motivating factor for states to take action against online retailers.

Yu also found that Amazon itself tends to have a similar motivation as the states when determining whether to comply with Amazon tax laws or remove their state vendors, which would allow Amazon to dodge paying the taxes in most cases.  When dealing with states with a higher market share, such as California, Amazon is much more likely to comply with Amazon taxes, than when states with a lower market share enacts such a tax.  Amazon is also in support of a nationwide sales tax collection, which could potentially reduce Amazon’s competitive no-tax advantage, but also allow the online retailer to place warehouses all around the country, making them even more convenient than other big name retailers.

Gordon Yu is graduating in May 2013 with a joint JD and MBA graduate from The George Washington University Law School and School of Business.  He has served as a teaching assistant for business law and financial accounting.

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