Amazon’s shameful California tax dodge

by on July 21, 2011 · 14 comments

in California, Popular

By Tim Rutten / LA Times – Sac. Bee /  July 21, 2011

At the turn of the last century, as the robber barons’ first gilded age lingered on, many Californians came to regard one powerful enterprise as the symbol of oppressive avarice and of big money’s corrupt appropriation of the political process.

That company was the Southern Pacific, whose railways kept a stranglehold on commerce and whose operatives dominated state government. The firm’s malevolent influence was the inspiration for one of California’s first literary classics, Frank Norris’ “The Octopus,” which – along with Upton Sinclair’s “The Jungle” – helped usher in a period of progressive reforms. Among those adopted in California were the initiative and the referendum, which were conceived as popular democracy’s check on the influence of big money over government.

That lent a special sort of piquancy to Monday’s news that Inc. – for all intents and purposes the octopus of cyber-commerce – has been given the OK to collect signatures on a proposed referendum to exempt itself from having to collect California sales tax on items it sells to residents of this state.

Amazon and other online retailers have argued that they ought to be exempt from collecting state sales taxes under a 1992 U.S. Supreme Court ruling that said cyber-merchants could not be required to collect sales levies unless they maintained a physical presence, such as a warehouse or office, in that state. As a consequence of that ruling, The Los Angeles Times’ Nathaniel Popper reported Tuesday, “California alone could be out $1.9 billion” in tax revenue this year.

This state is the nation’s biggest retail market, and Amazon is the biggest of the cyber-merchants doing business here. The fact that it refuses to collect sales taxes obviously gives it a competitive advantage over all the brick-and-mortar bookstores and appliance showrooms with facilities here. Moreover, Amazon, which does business all over the world and has a current market capitalization of $98.45 billion, is hardly some start-up. That’s why the Legislature, struggling with budget cuts that have inflicted deep pain, recently passed a measure requiring Amazon to collect its fair share of the sales tax.

The company long has employed a couple of dodges to avoid doing so, including maintaining subsidiaries here under other names. One of them, Lab126 in Cupertino, Calif., helped develop Amazon’s successful Kindle. It’s fair to wonder whether any of the engineers and scientists who worked on that project were educated in the California universities to whose support Amazon refuses to contribute. In fact, 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.

Robert Stern, president of the nonpartisan Center for Governmental Studies, pointed out to me this week that taking the referendum route gives Amazon a leg up because with “a referendum, a ‘no’ vote accomplishes the purpose of the measure. People tend to vote no when they’re uncertain or confused.” With Amazon’s deep pockets – Stern estimates that as much as $20 million probably will be spent on both sides of the question – there’s likely to be all the confusion that skilled political consultants and a blitz of TV and radio advertising can buy.

Still, Stern, who may have analyzed more ballot propositions and their aftermaths than any other observer of California politics, wonders whether Amazon – even if victorious – ultimately will find that this game wasn’t worth the candle. “Amazon has such a good name in this state,” he said, “and this referendum undermines that. I think it really has hurt their image here already.”

Worse will come for the company when Californians, hard-pressed by these desperate times, begin to consider the implications of a highly profitable multinational corporation operating in this callous fashion.

If Jeff Bezos, Amazon’s founder and chief executive, has a spare moment there in Seattle, he might go on his website and buy a copy of Norris’ “The Octopus.” (As a resident of Washington state, he’ll have to pay sales tax.) In any event, he might skip to the end of the first chapter and consider how it might feel to have Amazon regarded as the poet-narrator describes the Southern Pacific:

“The leviathan, with tentacles of steel clutching into the soil, the soulless Force, the iron-hearted Power, the monster, the Colossus, the Octopus.”

Timothy Rutten is a columnist for the Los Angeles Times. Readers may send him e-mail at

{ 14 comments… read them below or add one }

avatar Patty Jones July 21, 2011 at 10:11 pm

As a former affiliate I have to say that this whole thing with Amazon has me preferring to spend my money right close to home, with a retailer who will do the right thing.


avatar tj July 22, 2011 at 10:00 am

Here, here!

Amazon is like most corporations – greedy, self-serving & heartless. May they get in the end what they truly deserve.

“Think globally, shop locally” – preferably buying goods – Made in the USA!


avatar doug July 22, 2011 at 7:31 pm

does the usa still make stuff?and i don’t know what color your hair is,nor your political affiliation.keep exercising your first amendment rights,there are people uot there that don’t believe in the first amendment,BEWARE!


avatar Patty Jones July 22, 2011 at 8:08 pm

Poor doug is mad because I deleted a sexist comment of his and referred him to our comment policy.

You are free to go out and spew in the street but we don’t have to publish it.


avatar doug July 23, 2011 at 7:10 am

you just proved my point.


avatar Patty Jones July 23, 2011 at 3:11 pm

And what point was that?

We wrote our comment guidelines long before you ever showed up here. There are not many of your comments that I agree with and ALL but the one of where you insinuated I am stupid based on what color you think my hair is, has been published.

There are many people who have worked thousands of hours on this site to provide a forum for progressive views that will not be published anywhere else. Not in the U-T, the Beacon, or any of the local news outlets. We are proud of the quality of the comments that we receive here and the thoughtful discussions that occur, and we reserve the RIGHT to remove comments that don’t contribute to the discussion. When you write a letter to the U-T are they under any obligation to publish it? No.

I sent you a personal email explaining my reason for removing your comment but you never responded to it and have chosen instead to continue ranting here. Give it a rest.


avatar doug July 23, 2011 at 3:43 pm

i’ve posted many comments at the ut,none of them have ever been censored,thank you for making my point again.


avatar doug July 23, 2011 at 3:49 pm

oh and sign on san diego as well.thank you have a great day.


avatar Patty Jones July 23, 2011 at 5:16 pm

SignOnSanDiego… thank you for making my point.


avatar doug July 23, 2011 at 5:22 pm

just can’t let it go,can you.


avatar doug July 23, 2011 at 6:14 pm

just can’t leave it alone can you


avatar Glenn G July 29, 2011 at 9:30 am

Thanks Tim. Good read! It makes me think twice about Amazon…. But what are ya gonna do? Pay 30-50% more for the same thing from ma & pa bookstore in this economy? I guess it’s off to the library again.

Patty, I guess I will have to refrain from my misogynist comments if I want this post to be read.


avatar Patty Jones July 29, 2011 at 9:40 am

Please do Glenn and you won’t have any trouble with me!

Check out, they catalog books from thousands of resellers (many ma & pa stores) where you can get gently used books real cheap. I started using them years ago and have found some pretty obscure stuff. If you can’t find a title you are looking for they have a service that will notify you if a copy becomes available.


avatar Franklin & Marshall February 23, 2012 at 6:18 pm

Carlos, At that time, while we mention during the online video, there’s no signal that knowledge leaves ones own device in addition to being synching to your equipment where everyone support your current cellular phone.

Neither of the two Pete neither of the two on my own believe that there is virtually any conspiracy theory occurring, even so our company is each focused on the following a higher standard detailed specific location files currently being available on the market in your wild.

And the cellphone managers already have it data, it needs some court order for getting this there. Now you can perform the equivalent by merely going out of an individual’s iphone 4 in the drink station. That show up to all of us?


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