With amazon raising taxes, some cities are excluded.


When amazon agreed last year to start collecting sales taxes in new Mexico, state officials celebrated what they said could be tens of millions of dollars a year in tax revenue.
But they did not cheer at the city hall. A year after announcing the announcement, amazon, new Mexico’s largest city, has not seen a dime. That’s because the online shopping deal applies only to the statewide tax rate of 5.125%, not the 2.375% tax levied on Albuquerque.
“The loser in this arrangement is the city,” says mayor Tim keller. “The city is really for itself.”
In recent years, amazon has imposed a sales tax in every state because of a series of deals with the state. But these deals do not always extend to local government assessments. According to a new report from the institute for tax and economic policy, a left-leaning think tank, the company still does not collect sales taxes in dozens of cities, including Philadelphia, Pittsburgh and cedar rapids, Iowa.
When other income streams are under pressure, local governments miss out on millions of tax dollars, says Carl Davis, author of the report. Local retailers, many of which are already struggling to compete with online retailers, are actually forced to charge online sellers for more products without the need for local taxes.
“It’s just a direct price advantage, showing the customer’s receipt,” Mr. Davis said. “You never want to end up being the kind of company that you offer better deals that are entrenched in your community.”
Amazon says it collects taxes in all areas that need it, and Mr Davis’s report found that the company did impose local taxes in most states. But the hodgepodge of state laws means there is no simple solution, and the city is now ruled out.

For example, if the company does not exist in the jurisdiction area, the sales tax rules based on the seller’s location may not be implemented. Compared with amazon, small online retailers can avoid collecting sales tax in more places – even if they use amazon to sell their products.
Amazon is facing increasing scrutiny of its tax policies. Although the country is one of the country’s largest retailers by revenue, amazon pays relatively little federal income tax, mainly because of low profit margins. Until a few years ago, amazon received a small state sales tax and did not collect taxes on goods sold on its platform by third parties in most states. (amazon charges such third-party sales taxes in Washington state, and this month agreed to do so in Pennsylvania.) The company is also facing criticism for requiring state and local governments to provide tax incentives to lure amazon facilities, including the planned second headquarters.
However, Mr Davies says his findings are no less than amazon’s fault, not the state’s tax system, which in some cases does not allow online retailers to collect local taxes. He says states are keen to strike deals with amazon, but not always to ensure that local governments benefit too.
“It’s just a matter of state issues,” says Mr Davis. “It’s worth less, but for these communities, it’s the dollar.”
Amazon sometimes collects taxes without taxing other online retailers. In Chicago, for example, amazon collects local taxes because it has warehouses and other facilities in Illinois. Online retailers that do not exist in the state do not usually have to collect taxes there.


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