[lbo-talk] Dean Baker on how Amazon's tax subsidy > its profit

Wojtek Sokolowski sokol at jhu.edu
Fri Nov 2 08:28:01 PDT 2007


Bill:

So I'm sorry to have to correct you, but the consumer never pays sales tax in reality. They pay for the goods and services they purchase. Tax is a cost of doing business for the merchant. It really is quite important to understand that, if for no other reason than to avoid getting sucked into anti-tax campaigns organised by various capitalist sectors.

[WS:] I am sorry to correct you, but in the US it is the consumer who pays sales tax. It so, because sales taxes are imposed by the states rather than the US as a whole, and collected at sales registers. So for example, if I purchase a jacket priced at $100 in the state of MD, I will have to pay $5 in sales taxes, and my total price will be $105. In the Commonwealth of Pennsylvania, by contrast, the price of that item will be $100, since there is no sales tax on clothing in PA. Likewise, if I purchase the said jacket online from a retailer located out of state where I reside, I will pay no sales tax either. In all these three scenarios, retailers get $100 for the item, regardless of what the sales tax is. The consumer, otoh will or will not pay the sales tax, depending how he/she will make the purchase.


>From a macroeconomic perspective, all taxes on production are paid by the
final consumer of goods, not by the intermediaries. The reason why some capitalists oppose taxation is not to reduce their cost but to gain competitive advantage vis a vis other capitalists. For example, if state A imposes higher sales taxes than state B, merchants in state A may fear that consumers will favor merchants in state B, who are competitors of merchants in state A. In fact, there are bus loads of shoppers from NY to PA who travel there on their shopping sprees for the sole purpose of avoiding paying 8 -9.5% NY sales tax on clothing.

Wojtek



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