Tag Archives: financial

Taxing Amazon.com Purchases: The Good, the Bad, and the Future of Tech

It looks like 12 states governments could be taxing our Amazon.com purchases in the near future.  (I hate you, Government!) That means some of us will be saying saying “goodbye” to tax free purchases on high-end electronics and home goods and cringing at the extra 10% added on to our dreaded subtotal. Cash strapped state Governments are set to collect, but is it worth the cost to the customer and Amazon.com? Methinks not.

How Taxing Amazon Could Hurt Everyone

If Amazon.com is taxed I become poorer and so does every other middle class online shopper.  Taxes like these hit the poor and middle class the hardest too and may actually effect where we shop.

I know I have went to Amazon more than a few times to make large purchases on electronics and other items simply because I knew I could save a few bucks by avoiding the tax (plus Amazon has great prices).  I doubt Mitt Romney considers such things when he’s buying a new laptop or TV.

More taxes also means bad things for Amazon.com.  Many consumers head online instead of their closest retailer to make their purchase just to save a few bucks.  If the Government takes away the cost incentive and we consider other factors such as paying for shipping and waiting for the item to come in the mail (waiting!?) it becomes clear Amazon may take a hit.

How Taxing Amazon Could Help Everyone

On the other hand there is an argument to be made that taxing Amazon.com will do more good than bad.  For one, retailers may see an increase in revenue.  That could mean (maybe) more jobs for the local economy.

Also, since a lot of states are barely making ends meet with their current tax revenues a few million (or billion?) in revenue could mean additional public services.  And while most of us in the middle and upper class may not benefit directly from the tax – some people relying upon State Government services may reap the benefits.  However, it is worth mentioning no State Government has outlined where the extra tax money might go – or who it might go to.

Basically, an income tax on Amazon.com will serve as a transfer payment from the middle class to the poor and to the Government.  It’s hard to say if that’s a good thing or not, but somehow I doubt that anyone (especially the poor) will see much benefit or increased Government service as a result of taxing Amazon.

The biggest loser will undoubtedly be the middle class and Amazon.com.

What this means for Technology and the Internet

Honestly, I think this is bad news for technology and the internet.  Internet companies have long fought problems inherent in online shopping – such as building trust with customers, convincing people to pay shipping costs, and getting past the “I want it now” culture.  Taxes have actually been a safe haven.  The one incentive customers have (not withstanding convenience and choice) to shop on the internet instead of their local department stores.

The internet has long been the new Wild West and taxing Amazon.com is just one more small step to regulate it.  Attempts made by ISPs and the Federal Government to regulate the internet and online communication is just one angle – taxation is another.  I fear that establishing a precedence of taxation on internet sites will only serve, in the long run, as the first step in a long line of techniques to implement further regulation and governance.

Amazon.com has worked for over a decade to be competitive in the marketplace.  It has done so mostly with great customer service and by doing a great job adjusting to market demands.  Only the customer has benefited.  I say leave them alone and let retailers figure out how to compete without the help of the Government.  The rest of us will benefit with lower prices and better service – something more taxes can never promise.


Are the 1% Paying their fair share?

According to Greg Mankiw when you take transfer payments into account the one percent effectively pays the highest percentage of their income when compared to any other income group.

From Greg Mankiw’s Blog:

Because transfer payments are, in effect, the opposite of taxes, it makes sense to look not just at taxes paid, but at taxes paid minus transfers received.  For 2009, the most recent year available, here are taxes less transfers as a percentage of market income (income that households earned from their work and savings):

Bottom quintile: -301 percent
Second quintile: -42 percent
Middle quintile: -5 percent
Fourth quintile: 10 percent
Highest quintile: 22 percent

Top one percent: 28 percent

The negative 301 percent means that a typical family in the bottom quintile receives about $3 in transfer payments for every dollar earned.

This is an interesting view of the tax code. Not just what one pays, but more of an income – expenses view. I personally think this is much more telling than just the effective tax rate an individual may or may not pay into the system. I also found this very interesting:

…the middle class, having long been a net contributor to the funding of government, is now a net recipient of government largess.

I think that statement might become important later. Especially when we start to frame the middle class as beneficiaries of the state rather than a group paying into it.

Income vs. Market Income

Just in case you were thinking that Mankiw was playing with the definition of income by calling it “Market Income” (I suspected fowl play to adust the statistics) here is a definition:

Market Income: Market income is the sum of earnings (from employment and net self-employment), net investment income, (private) retirement income, and the items under “Other income”. It is equivalent to total income minus government transfers. It is also called income before taxes and transfers.

I have to say, upon further research, using the term Market Income seems pretty water tight.

Thoughts on these findings?

PERSONAL RESPONSIBILITY: not just a conservative buzz word

Personal responsibility has become quite the buzz word.  I think it almost annoys some people.  A lot of conservative republicans have kind of hijacked the phrase and “responsibility” has almost become synonymous with neo-conservatism.  It’s a shame too.  Because really personal responsibility is what America is all about.

What is personal responsibility and what it’s not?

Personal responsibility is helping your neighbor when they need to paint their house.  It’s giving generously to a charity that feeds the hungry.  It’s giving your friend a few groceries to get by when times are tight. It’s busting your ass doing something you love week in and week out so you can get meet your own goals. 

Personal responsibility isn’t looking down on the poor or believing that everyone can be rich.  Those are lies the conservatives on TV seem to believe and liberals spread. 

It’s almost like everyone wants something for nothing.  They expect the invisible pocketbook of the system to pay for it all.  I think that’s where a lot of my distaste for government programs stems from.  Sure – it’s great that there is safety net in place to help out those who can’t help themselves, but it seems so much more moral if the people would do it themselves.  That is – instead of the government helping – we would help our own neighbor. It’s almost like people have become lazy.  Big Brother government will take care of us.

I’m not saying we should disband all government welfare programs.  Hell, keep them all!  I’m just saying lets change the culture and attitude of everyone.  Lets make “help thy neighbor” popular again.  Tax me less so I can give more to my Mother.  Spend less on fighting with Iranians and spend more on hungry Americans (hungry anybody!).  Maybe I’m being overly optimistic about the nature of our fellow humans, maybe no one would give shit unless they were forced to, but surely a system that provides people with the opportunities to take on responsibility for themselves is better than one that is our babysitter.

An example

A perfect example is in my own neighborhood.  We have an optional home owners association fee of $25 a year.  That’s it!  $25 to keep our neighborhood beautiful and home prices high.  We have a volunteer crew that does “handyman” work around the public spaces.  It’s the perfect example of a free market system – helping yourself helps everyone and visa versa.  However, of 185 households only about 35 households have paid the voluntary dues this year.  I suspect eventually around 50 will pay.  Why such a low participation rate for a service that so obviously benefits you directly?

The desire to pass the buck is an obvious tendency.  What if it were a mandatory $25 fee?  The neighborhood would be much nicer and happier – but a little less free.  Which is better?  I have to admit that I think that enforcing the rule may benefit me more (this time), but what about later when I disagree a rule?  What about when that fee is increased to $100, $500, etc.?  

Any Government or system of power has the incentive to keep taxing you more and more because it benefits the decison maker – where as a voluntary fee has the incentive to stay low – so people will actually pay it.  Which system is better?  Both have their benefits, but I choose freedom.  Especially when those enforcing the rules aren’t living in your neighborhood.

The Third Option

A third option exists.  One where everyone freely does the right thing –  everyone would do their part and take responsibility.  All 185 household would pay the $25, the neighborhood would be beautiful.  We could be both rich and free – not just one or the other.

Unfortunately there are always those who will buck the system.  Not do their part.  Some that can’t do their part.  That’s the problem.  How do we solve it?  I don’t know, but I do know that it starts with each and every one of us taking responsibility for ourselves and doing as much as we can for the rest of mankind – Maximizing Liberty and Happiness.

The Truth about Healthcare, Culture, and Taxation in the US

I discuss the myth that higher taxes will result in a better healthcare system and compare the United States to Japan and Switzerland (both countries with Universal Healthcare Options) .

I also touch on the myth that higher healthcare costs and lower life expectancy in the United States versus other developed nations is a result of not having a Universal Healthcare Option. *You can see the charts and statistics better if you expand the video to full screen.

You can check out the all the stats used in this video here.  Also thanks to Phil Ebersole’s Blog for the inspiration on this topic.

Poorer in 2012: Increased Social Security and Income Taxes in 2012

I was paid today. That’s normally a good day, but when I saw that my paycheck was about $20 less than it was in 2011 I became angry. I decided to do a quick bit of research to make sure there were no errors. I mean that’s about $250 a year I could be giving away for nothing. After a few quick Google searches I learned that there was a tax increase in Social Security. Great.

A program that I will probably never benefit from in any way is taking more money out of my wallet. The funny thing is – the government pulls cash out of the Social Security savings fund all the time – like some sort of emergency savings fund! So right when you think, “at least the people who have paid into the system their whole life are getting something back” you realize the guys in control in Washington are stealing from you.

You might also be interested to know that the guys stealing from us in Washington aren’t tied to Social Security. Congressional pensions are seperate – they don’t pay into Social Secuirty and do not recieve any.  (They actually do pay into Social Secuirty, sorry for the bad information – most ARE wealthy enough not to have to rely on it though…)Funny the guys deciding the rest of the countries fate have almost no stake in the outcome. What incentive do they have to use the system fairly? They can tax us, use the money, and then tax us again to prop up the system a little longer. What a flawed system.

You might even be thinking – well at least we have a few rich lobbyist fighting for us “regular” guys, but you’d be wrong. Rich peopld don’t care. There is a $110,000 cap on taxable income for social security. That means a guy making $110,000 is taxed the same as a guy making $110 million. I’m not for higher taxes – not for anyone, but it’s no wonder main street doesn’t have a say in this whole thing. Social Secuirty is a failed program paid for by the poor and middle class, used by the political machine, and designed to make everyone feel okay about it.

Personally, I wish I could opt out.

We may also see a 2% hike in taxes come March 2012. The renmints of the Bush era tax cuts are coming to a close and congress just approved an extension through February. If nothing more is done the rest of us migh see about a 2% total decrease in their take home pay come March. (For a grand total of about 5-6% in 2012) Inflation and taxation – Happy days!

I’m sure my analysis and summary of what’s going to happen is off here and there. You can check it out for yourself here or here.

Greg Mankiw’s Blog

I do my best to say an intelligent thing or two about economic issues with varying degrees of success, but I ran across Harvard Economics professor Greg Mankiw’s Blog and think where my little blog falls short – his picks up the slack.  I wanted to share it here – especially since it affirms a lot of my own beliefs. :)

an intellectually honest discussion: HIGHER TAXES DOESN’T ADDRESS WEALTH INEQUALITY

No – this isn’t going to be another conservative defense of “trickle down” economics.  My opposition to additional taxes has nothing to do with my desire to further sheild the rich from taxes in hopes that they may use that extra money in a way that will somehow benefit the rest of us.  Rather my oposition to taxes is a logical oposition to government and my lack of confidence in its ability or desire to use taxes to benefit the people.

We are a country with $15 trillion of national debt and growing.  We could increase the tax rate to 100% and still not pay that amount off in the next century.  The income the government does recieve is spent on an already bloated military to further expand our empire.  The military industiral complex, the corporations, and the politicians are the beneficiaries – NOT the people and especially not the poor.  Who are we kidding?

Perhaps an argument for higher taxes is based on good intentions, but it’s an illogical argument at best.  Those who argue for higher taxes are either in denial or totally ignorant of the government they trust.  People were disgusted with Mitt Romney’s astronomical income and seemingly low tax rat of 15% (still higher than 80% of America’s tax rate).  They ignore that Romney also gave about $7 million dollars to charity (about 15% of his income).  Who among us can say that?  I’m not defending Mitt Romney, but the point that I am trying to make is that charitable donations are far more efficient and effective in addressing the income inequality than giving more money to a government that has already shown they can’t be trusted to manage wealth.

Conservatives get a lot of grief for their distaste for taxes and government social programs.  Often getting the label of greedy and not understanding or empathizing with the poor, but I think there is a fundamental misunderstanding of why fiscal conservatives think this way.  It is not our desire to keep the money from the poor and needy, but rather our desire to keep the money AWAY from the government.  A belief that additional taxes would be used to help anyone is a fallacy.  Additional taxes only serve to further chip away at the liberty of every American, expand our empire, wage wars, and pad the pockets of corporate politicians and lobbyist. 

If anything, higher taxes only kill the poor by aiding the government to wage and fund wars – where the poorest of our sons go to their slaughter to settle the agenda of the elite in this country.  Don’t be fooled – this is the cold sad truth – the faster we recognize it the faster we can change our way of thinking.  We can stop expecting the government to take care of us and our poor, we can stop passing the buck to our government, and take responsibility for this situation ourselves.  Lower taxes empower the people, not the super-rich. 

Warren Buffet once wrote a very popular article saying he wouldn’t mind being taxed more – I say keep the taxes – if you want to give more of your money – give it to a charity where it can be much better utilized.  His article was a brillian PR stunt, but a fantacy.  When has any rich man ever had a problem finding a way to give more of his money away?  If the government does’t want to take it – there are an infinite number of organizations who will.  If anything, his article was a perfect example of our over reliance on the government.

Look folks, the government already takes about 50% of our income (income tax, property tax, sales tax, etc.).  If they can’t make ends meet with half of the country’s wealth then they aren’t doing something right.  The answer is far more simple and MORAL than raising taxes.  Stop waging war, stop expanding the empire, and spend that money on the people who need it.  The country would be that much more peaceful and well fed.