Amazon starts charging sales tax in California

While book giant Amazon is now required to charge customers sales tax in some states, it's already planning its next move: widely available same-day shipping.

Rick Wilking/Reuters
Amazon will start charging a sales tax in other states, including New Jersey and Virginia, next year.

Amazon is losing some edge over its competitors as it starts collecting a sales tax this Saturday in California, a change which will also occur in other states starting next year.

Amazon had battled with authorities for some time over the fact that it didn’t charge its customers a sales tax. The book giant argued that if it didn’t have a physical presence in a state, such as a warehouse or office, it was not required to do so, basing its reasoning on a 1992 Supreme Court decision which stated the same.

Senior fellow at the Center on Budget and Policy Priorities Michael Mazerov said that the Internet companies were originally allowed to skip out on the tax because of a sentiment that Internet companies should be given a chance to get on their feet, an ironic sentiment now that Amazon is forcing many brick-and-mortar stores out of business.

"The original justification for this de facto tax exemption was that the Internet ought to get some growing space,” Mazerov told The New York Times.

However, after negotiations, Amazon agreed to add to its list of states where it’s charging the extra money, which already includes New York, Pennsylvania and Texas. It will begin adding the tax in New Jersey in July of next year, Virginia in September of 2013, and states including Indiana and Nevada in 2014.

The tax kicks in on Sept. 15 for California, and that prompted a flurry of purchases from Golden State customers who wanted to save money while they still could. Californian Derek Daniels ordered household items that included trash bags and Superman memorabilia as future Christmas gifts for his son.

“We are hoping he won't fall in love with Batman by the time November rolls around,” Daniels told the Associated Press.

Consumers who bought items off Amazon in California were technically supposed to send the sales tax they would have been charged to the state, but fewer than 1 percent have done it in the past, reported the Associated Press.

President of the Northern California Independent Booksellers Association Michael Barnard told The New York Times he thought it was about time Amazon started charging the sales tax.

Oliver Wendell Holmes said taxes are the price of civilization, but Amazon did not want to pay,” Barnard said.

Meanwhile, as Amazon concedes and begins charging the sales tax, it’s eyeing another goal: same-day shipping. The company is already able to achieve it in cities such as Seattle and Boston and is now building 18 warehouses in all to try to make the dream a reality, including one in Patterson, Calif., one near Los Angeles and locations in New Jersey, South Carolina, and Virginia, among others.

“We want fast delivery,” Amazon CEO Jeff Bezos told the New York Times.

The Patterson warehouse is set to add hundreds of jobs, if not more, to the area.

News of the sales tax is good for independent booksellers, but Amy Thomas, who owns three bookstores in San Francisco, said that there will still be problems.

“Amazon is so aggressive on so many fronts,” she told the New York Times. “It’s hard to keep putting out fires everywhere. They sell e-books. They’re becoming publishers. And now they want to do same-day shipping. They’re an octopus.”

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