"Sometimes...it's better for a man just to walk away. But
if you can't walk away? I guess that's when it's tough” -- Willy
Loman, “Death of a Salesman”
The old saying is “You can’t fight City Hall.” That is
partly true. City Hall is huge and more powerful than you. The gods of
government have resources denied to the little people, but then government is
supposed to be on the side of the little people, as is the media, a presumed
joint support that tends to even the perpetual battle between the lions of the
market place and … let’s call him Willy, after Willy Loman, the chief character
in Arthur Miller’s play “Death of a Salesman.”
The Willy of this piece is a Connecticut salesman – there
are many of them – who do business with Amazon. And Willy has a problem that
will not be settled by the usual white-hatted Attorney General of Connecticut
or legislators who weep over the little guy or the media, afflicters of the
comfortable and comforters of the afflicted. You can bet your house on that.
In the world of commerce, Amazon is bigger than god. It
seems only hours ago that the equivalent of City Hall in Connecticut, state
government – not only in Connecticut and its environs, but everywhere in
the nation – was breathing heavy in strenuous attempts to lure
Amazon into their beds, the better to ravish the e-commerce giant with taxes.
New York’s
Governor Andrew Cuomo was dashed when Amazon, searching for
a place in the Northeast to locate part of its headquarters, kissed the state
goodbye. Pummeled by progressives in New York -- among them Mayor of New York
City Bill de Blasio (birth name Warren Wilhelm Jr.) and U.S.
Representative Alexandria Ocasio-Cortez -- for having considered the
governor's crony-capitalist $3 billion tax break, the company withdrew an offer
to plop a new facility in New York that might have generated $27 billion in
revenue.
“What happened is the greatest tragedy that I have seen
since I have been in government,” moaned a grievously wounded Cuomo.
Crony capitalist blood began to beat like a tom-tom in
former Governor Dannel Malloy’s veins, and it still swells in Governor Ned
Lamont’s heart. Both Malloy and Lamont are crony-capitalist governors; -- is
there any other kind in the high-taxed northeast? Wouldn’t it be grand to net
such a massive leviathan? Malloy moved on, Lamont is fishing still.
But salesman Willy is dangling at the end of an economic rope,
and he writes, somewhat desperately:
“If I sell something on Amazon, they take 15% as a referral
fee. This covers marketing, customer acquisition, and credit card fees. If
I use Amazon to warehouse and ship the item, they then charge a pick and pack
fee. That is also taxed. So if I do $1M a year in gross sales, Amazon
ends up taking about 33%."
Adding the cost of doing business with Amazon, Willy notes
“$330,000 in fees, with 6.35% sales tax is almost $21,000 a year. You should
understand that Amazon is half of e-commerce. Third party sellers [like
Willy] represent over half of their sales. Connecticut, through its tax
additions, just made it impossible for 25% of e-commerce to do business here.”
Along with his note to Connecticut Commentary, Willy
enclosed the “Dear Willy” letter he had received from god:
The "Dear Seller" letter Willy received read in part:
“Amazon is required to collect taxes on Selling on Amazon
fees in Connecticut, the District of Columbia, Hawaii, South Dakota or West
Virginia, based on each state’s tax rates. Selling on Amazon Fees include the
Referral Fee, Subscription Fee, Variable Closing Fee, Per-item Fee, Promotion
& Merchandising Fee, Refund Commission Fee, Checkout by Amazon, and
Sales Tax Collection Fee... If your business is located outside Connecticut,
the District of Columbia, Hawaii, South Dakota or West Virginia, we will not
collect sales tax on the Selling on Amazon fee you pay.
“Amazon is required to collect taxes on FBA Prep Services in
Arizona, Connecticut, Illinois or West Virginia, based on each state’s tax
rates. FBA inventory prep fees include the Labelling Fee, Polybagging Fee,
Bubblewrap Fee, Taping Fee, and Opaque Bagging Fee...
“You will be able to view the sales tax collected on your
fees in the transaction details page of your Payments reports.”
Willy is a Connecticut native with deep roots in the state.
He’s married with young childern. And the blade of crony capitalism has fallen
bloodily on Willy’s neck, because he is, in fact, an independent businessman
who is expected to shut up and pay. Crony capitalism is a complex arrangement
in which tax heavy states such as Connecticut and New York supply seed tax
money to super-leviathans like Amazon as inducements to locate in the states;
the companies then pass along to its customers and third party salesmen like
Willy the costs they incur from their location in a high tax state like Connecticut.
But the tax axe invariably falls on Willy’s neck. Large companies are tax
collectors, not tax payers. The real tax payers are those who consume the
products and services of companies like Amazon – and small businesses like
Willy’s from whom Amazon recovers the additional costs incurred by tax
increases.
It will not take long for Willy to realize “Sometimes...it's better for a man just to
walk away.” No one profits when Willy
walks. It would be well for legislators to remember the line in Willy’s letter.
Connecticut, along with a handfull of other states singled out in
Amazon’s “Dear Seller” letter, has “through its tax additions,” Willy writes, “just
made it impossible for 25% of e-commerce to do business here.”
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