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A NOTE ABOUT POP-UPS — There are 4 “pop-ups” (or “hover” boxes) used on this Web page for scholarly notes. Because “pop-ups” do not scroll with the Web page (thus giving the appearance of “hovering” over the page), they can be problematic on smaller screens.
   To compensate for possible display problems, all 4 hover notes for this Web page are available as a separate HTML page. Click/tap here to open this Web page in a second window.
And click/tap here to learn more about hover ad technology at Wikipedia.

NOTE: The following narrative, written in July 2011 after this website had just affiliated with Powells.com, no longer accurately describes present circumstances. This website’s participation in the Powell’s Books, Inc. Partner Program has also been terminated, effective 29 August 2012. Click/tap here to learn more.

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[ @issue #2 ]

A R G U M E N T S   A B O U T

California’s newly-mandated Internet sales tax, and the ongoing battle with online retailers such as Amazon.com over tax reform


As of 29 June 2011, Amazon.com terminated its contracts with all California residents participating in the Amazon Associates Program — a fee-for-referral program that rewards Amazon.com’s online marketing affiliates (including this website) for promoting Amazon.com’s stock.

Amazon took this extraordinary action in order to block the newly-mandated Internet sales tax collection provision in a California law, signed by governor Jerry Brown on 29 June 2011. According to Amazon,

It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by California-based marketing affiliates like you - even if those retailers have no physical presence in the state.

(e-mail from The Amazon Associates Team, 6/29/2011 at 12:23 pm)

At issue is the price advantage enjoyed by online, out-of-state retailers such as Amazon.com (headquartered in Seattle, Washington). For example, in much of Southern California (where our own affiliate website is headquartered), the new law would add from 7.75% (San Diego county) to 8.75% (Los Angeles county) to the cost of an Amazon.com book purchase.

By jettisoning its California-based affiliates, Amazon.com hopes to avoid having to collect California state sales tax for online purchases by California residents, and although Amazon.com will lose the value-added marketing services (and increased sales) provided by its California-based affiliates, the online retailing giant has decided that the trade-off is worth it.

Small online retailers who make a good income from their affiliation with Amazon.com probably have the most at stake in Amazon’s battle with the states (thus far: New York, North Carolina, Rhode Island, Arkansas, Illinois, Connecticut, and now California). Amazon’s warning that

Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue.

(e-mail from The Amazon Associates Team, 6/29/2011 at 12:23 pm)

and its promise to reinstate into the Amazon Associates Program any California-based affiliates who relocate to another state that doesn’t (yet) tax online retailers, have persuaded some Amazon Associates to leave California.

We, who have never been part of this select group of high-earning Amazon.com Associates, are not so persuaded. Despite potential problems for us with the new legislation, we find ourselves moved by the states’ arguments, and in particular, by California’s dire need for additional sources of revenue. Like the editorial staff at the Los Angeles Times, we too

want to live in a first-class state with the kind of services [we’ve] long been used to — great and affordable state universities, safe streets, magnificent parks, public schools that rival any in the nation, and a safety net for those who fall on hard times.

(“Private Money, Public Service” editorial, Los Angeles Times, 3 July 2011, p. A27)

It’s past time that we step up and pay the real price for what we want — as citizens, and as consumers.

From the outset, we have provided Amazon.com book links as a value-added service for website visitors: convenient pointers to vetted, relevant information which visitors might not otherwise seek out. The pursuit of kickbacks for marketing Amazon.com products has always been a secondary aim, with the predictable result that the pin money received from our affiliation with Amazon.com doesn’t come close to covering our costs for developing and maintaining the online referrals. As such, we have less to lose than most Amazon.com Associates in shifting allegiances and partnering now with a brick-and-mortar retailer, the independent bookstore Powell’s City of Books.

Because Amazon.com still dominates the world of online book reviews (due to the quantity of its user-generated content), we will now include links to Amazon.com’s review pages (when these exist) for a recommended book, juxtaposed with links to sales pages for that book at Powells.com. For example,

  Taxes Are a Woman’s Issue: Reframing the Debate (New York: Feminist Press at the City University of New York, 2006), by Mimi Abramovitz and Sandra Morgen, with the National Council for Research on Women

For more book reviews, click/tap here.

which is described by the publisher as follows:

Taxes determine the quality of our lives; they are responsible for the health of our environment, the safety of the roads we drive on, the condition of our public services, and the security of our homes and communities. For every woman who pays taxes and uses public services, and every man who cares about an effective and fair tax system, Taxes Are a Woman’s Issue dares to expose not only how tax policies shape the size of our bank accounts but also sculpt our government and the nation’s identity.
     Whether you are rich, poor, a corporation or an individual, taxes provide the resources we need to sustain the nation’s civil, social, and economic life, and help support the basic welfare of all individuals and families. They also mirror the fundamental inequities that people of different races, classes, and gender experience when they try to access the opportunities that taxes provide. So when probed by the lens of women’s diverse experiences, tax policy narrates some of the ruthless realities of our economy and our society.
     Authors Mimi Abramovitz and Sandra Morgen, writing for the National Council for Research on Women, convincingly dispel myths about the current welfare system and expose how the IRS-supported tax system was created in, and caters to, a time before women entered the work force. By honestly discussing the many ways the current tax system disadvantages women, Taxes Are a Woman’s Issue courageously teaches, as Linda Basch, the President of the Council, states, “about positive changes that will improve the lives of all women and therefore their families, their communities, and the nation as a whole.”

(Publisher’s summary, 2006)

and

  The Darwin Economy: Liberty, Competition, and the Common Good (Princeton, NJ: Princeton University Press, 2011), by Robert H. Frank

For more book reviews, click/tap here. Paul Solman interviewed Frank about his book, The Darwin Economy, for the PBS NewsHour; click/tap here for a video podcast and transcript of Solman’s interview (originally aired 11/18/2011).

in which Frank advocates radically reforming “our highly dysfunctional tax system” and eliminating private-sector waste by abandoning the current progressive income tax in favor of a much more steeply progressive general consumption tax.

Prescriptive regulation is fortunately not the only way to alter wasteful consumption patterns. If the problem is that people spend too much on positional consumption and not enough on nonpositional consumption, the least intrusive way to right that imbalance is by altering the relevant prices. In a world of complete information and perfect government, we could simply set a different tax rate for every good in accordance with the extent to which context shapes its evaluation. The most positional goods would be taxed most heavily, the next-most positional goods would be taxed at slightly lower rates, and so on.
     But although researchers have begun to estimate the differences in the extent to which context influences demands for specific categories of goods, existing knowledge is far too fragmentary to support such an ambitious approach. Even if we knew much more about these magnitudes, it would be politically costly to establish a separate tax rate for every good. Lobbyists would inundate legislators with studies purporting to show why their particular client’s product or service was nonpositional and therefore entitled to tax-exempt status.
     In earlier work I have argued that a simpler, more promising, approach would be to abandon the current progressive income tax in favor of a much more steeply progressive general consumption tax. This approach rests on the observation that positional concerns are stronger for luxuries than necessities. There are obvious pitfalls in trying to identify specific goods as luxuries. But given that luxury is an inherently context-dependent phenomenon, it’s uncontroversial to say that the last dollars spent by those who spend most are most likely to be spent on luxuries. A steeply progressive consumption tax is thus a luxury tax that completely sidesteps the need to identify specific goods as luxuries.
     Implementing a progressive consumption tax would be straightforward. Taxpayers would report their incomes to the tax authorities just as they do now. They’d also report how much they had saved during the year, much as they do now for IRAs and other tax-exempt retirement accounts. People would then pay tax on their “taxable consumption,” which is just the difference between their income and their annual savings, less a standard deduction. Rates at the margin would rise with taxable consumption. If the tax were revenue-neutral, marginal rates at the top would be significantly higher than current marginal tax rates on income, to make up for the revenue lost by exempting savings. But if we want to repair crumbling infrastructure, round up loose nukes in the former Soviet Union, and bring the government budget into balance as the baby boomers retire, we’ll need additional tax revenue. That would require still higher top marginal rates.
     Proposals to generate additional income tax revenue by raising top marginal rates invariably summon concern about possible negative effects on the incentive to save and invest. Under a progressive consumption tax, by contrast, people’s incentives would be to save and invest more, even if top marginal tax rates on consumption were extremely high.
     If the direct effect of the tax were to induce top spenders to save more, it would also affect the spending of others indirectly. Each individual’s spending, after all, constitutes part of the frame of reference that influences what others spend. And given the importance of context, the indirect effects of a progressive consumption tax promise to be considerably larger than the direct effects.

(Frank, The Darwin Economy 76–77)

Frank’s goal for tax reform — building “a successful libertarian welfare state” — is more ambitious than Amazon.com’s, beginning with a public conversation that focuses

... on fundamental questions that transcend the details of any particular tax. How should property rights be designed? What’s the optimal balance between private and public goods, and what sorts of institutional arrangements might best promote that balance? How should we pay for public goods? What sorts of duties, if any, do we have toward society’s poorest members? What sorts of institutions would best promote environmental sustainability? And so on.

(Frank, The Darwin Economy 168)

Updates

Opening quotation mark  Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011.… We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.  Closing quotation mark

— e-mail from The Amazon Associates Team, 6/29/2011 at 9:40 pm

Opening quotation mark  As you may have heard, California Governor Jerry Brown has signed legislation repealing the law that had forced us to terminate our California Associates. We are pleased to invite all California Associates whose accounts were closed due to the prior legislation to re-enroll in the Associates Program.  Closing quotation mark

— e-mail from The Amazon Associates Team, 10/5/2011 at 8:16 am

With the 9/9/2011 approval by California state legislators of the “Amazon tax compromise” negotiated with Governor Jerry Brown, Amazon.com welcomed its California affiliates back into the fold.

Their self-serving account of events has not persuaded us to re-enroll.

Contrast Amazon’s spin on the matter in their 10/5/2011 e-mail to terminated California Associates with that offered by independent observers in the mainstream media (see my collection of links to news stories and analyses in the next section). The following is from Michael Hiltzik’s 23 October 2011 column for the Los Angeles Times:

     The [September 2011] deal pushes off Amazon’s duty to collect California sales tax until next September [September 2012], unless Congress passes a bill simplifying sales taxes nationwide first. (Don’t hold your breath.) That means the loss of one year’s revenue, which has been estimated at $200 million.
     In return, Amazon has dropped the referendum [asking California voters to repeal the new state law] and made an informal commitment to open two distribution centers, or warehouses, and create about 10,000 jobs in the state.
     [...] In other words, the compromise gained Amazon little more than three additional months free of collecting, while removing the threat that the law would be overturned.
     And what of that promise of warehouses and jobs? Although new jobs and construction aren’t to be sneezed at in today’s crummy economy, these will likely be low-wage positions.
     Moreover, to maintain its reputation for speed and efficiency Amazon eventually would need expanded distribution facilities in California, its largest domestic market, no matter what.

(Michael Hiltzik, “Putting Amazon in Its Place,” column, Los Angeles Times, 23 October 2011, pp. B1 and B7)

Hiltzik contends that “the sales tax exemption enjoyed by Amazon and other online retailers is an artifact of an earlier age,” and I agree.

So we choose instead to continue our new associate’s partnership with Powell’s City of Books, in a quixotic quest to support indie bookstores and unionized labor.

Related coverage concerning Amazon.com’s “Notice of Contract Termination Due to Potential New California Law”

As to be expected, Southern California newspapers are covering Amazon.com’s battle against California’s new Internet sales tax, and I have posted links to media reports on the subject here (in reverse chronological order, with the most recent entries at the top of the list).

I will continue to post new links to interesting media coverage of the issue, as the law plays out in real life, the legislature (state and federal), and the courts, and we are better able to judge outcomes.

Regardless of whether or not Amazon.com succeeds at getting more sweeping federal legislation enacted (they seek a “streamlined sales tax” in order to surmount the diversity in local tax rates and policies), it will take time to ascertain whether the state of California benefits as expected from the new law … or if Amazon.com’s initial prediction that the new legislation will lead “to job and income losses, and little, if any, new tax revenue” for the state was correct.

  “Cities, Don’t Sell Out to Amazon,” retitled “Memo to Civic Leaders: Don’t Sell Out Your Cities for Amazon’s New Headquarters” for online posting, by Michael Hiltzik (Los Angeles Times, 17 September 2017, pp. C1 and C9)

Business columnist Michael Hiltzik is critical of the corporate welfare deal (“tax credits/exemptions, relocation grants, workforce grants, utility incentives/grants, permitting, and fee reductions,” including “special incentive legislation”) Amazon seeks with its recent 8-page RFP “asking localities for presentations explaining why they’re the right place for what it calls HQ2” — a $5-billion, 8-million sq. ft., second corporate headquarters complex, to be located somewhere in North America.
   Hiltzik opposes any more public handouts for Amazon, which promises to bring 50,000 jobs at more than $100,000 each to the community where its big new corporate headquarters is sited, resulting in “a frenzy of civic preening. Mayors and regional pooh-bahs from coast to coast have announced their great interest in bringing the immense company to their burgs, as have real estate firms such as Irvine Co.” (M. Hiltzik, C1)
   “In its headquarters competition,” Amazon is “employing the same technique it has employed in siting its dozens of distribution facilities and data centers — playing states and localities against each other for maximum public handouts. This technique has garnered more than $1.1 billion for Amazon, by the reckoning of subsidy-tracker Good Jobs First. Bidding for HQ2 could set a record.  ¶  That would be exactly the wrong outcome, from the standpoint of public welfare. Rather than be offered bribes to move its headquarters into a community, Amazon should be made to pay for the privilege.” (M. Hiltzik, C9)
   In reality, “It’s a fair bet that political leaders will respond with lavish tax incentives and other public grants to win the prize.” Amazon’s “RFP requires communities to submit their responses by Oct. 19 [2017], with construction to start in 2019.” (M. Hiltzik, C9)

  “Can Online Shopping Absorb Traditional Retail Workers?,” a PBS NewsHour report by Paul Solman (part of his “Making Sen$e” series, first aired 17 August 2017)

SUMMARY: “The growth of e-commerce continues to wreak havoc on traditional retail and its workforce, with 5,300 store closings announced in the first half of 2017 and 64,000 job cuts expected. What will become of the 16 million Americans who work in the retail industry as current trends toward online shopping continue? Economics correspondent Paul Solman reports.” (n. pag.)
   “MICHAEL MANDEL [chief economic strategist at the Progressive Policy Institute]: Since 2007, we have seen about 400,000 jobs created in the e-commerce sector.... We have had a small decline in brick-and-mortar retail. We have had a large increase in e-commerce jobs. A lot of them are jobs in fulfillment centers.... On average, pay in fulfillment centers is about 30 percent higher than pay in brick-and-mortar retail in the same area. Not only that. Retail jobs tend to be part-time, maybe not paying benefits.  ¶  The fulfillment centers have a lot of full-time jobs, have the benefits. They seem to be better jobs, as far as I can figure out.... The rise of the fulfillment center jobs is having the effect of reducing inequality, because what you’re doing is you’re talking about raising the wages for people with a high school education by 30 percent. That’s significant.” (n. pag.)

  “San Diego Seeks Tax Reform Tied to Online Purchases,” retitled “Online Sales Surge Prompts San Diego to Lobby for Reform of Tax Allocations” for online posting, by David Garrick (San Diego Union-Tribune, 5 February 2017, pp. B1 and B7)

Claiming that the current system in California for distributing sales tax revenue generated by online purchases is “antiquated and unfair,” San Diego City Councilman Chris Cate “sent Gov. Jerry Brown a letter last week urging him to have the state Board of Equalization conduct a pilot study in San Diego to track all online sales to the address of the buyer so sales tax can be doled out appropriately.  ¶  Cate also asked the governor to consider eliminating the ‘county pool’ system.” (Garrick, B7)
   Michael Coleman, a policy advisor for the League of California Cities and California Society of Municipal Finance Officers, “said such a change could get stymied by politics, because some cities would lose millions in revenue.... A bill on a similar topic introduced last year in the Assembly died shortly after the Board of Equalization released a report analyzing which cities would gain and lose.” (Garrick, B7)
   “A spokeswoman for the Board of Equalization, which could eliminate county pools without state legislation mandating such a move, said a change is unlikely based on administrative hurdles and an ongoing update of the board’s technology.  ¶  Cate said he’s not convinced it would be hard to make the change. He said the administrative hurdles would be ‘minimal at best’ in his letter to the governor.” (Garrick, B7)

  “Super-Drones and Blimp Warehouses: Amazon’s Sci-Fi Dreams for Drone Delivery,” by The Seattle Times (posted to the Seattle Times website on 29 December 2016)

With 3 illustrations. “In a patent filing dated Thursday, the e-commerce giant says it wants to build a super-drone, made up of smaller, uniform drones stuck together in various configurations.”
   “Drones are important to Amazon because their widespread use would allow the company to bring down its last-mile delivery costs from a few dollars to a few cents for each package.”

  “High cost of free shipping: Amazon drivers say delivery demands push them to the limit,” retitled “Amazon Drivers Say They Are Pushed to the Limit as Holiday Deliveries Reach a Frenzy” for online posting, by Natalie Kitroeff (Los Angeles Times, 18 December 2016, pp. C1 and C9)

“In an echo of complaints by Uber drivers and other contract workers, delivery drivers in interviews with The Times and in court documents say Amazon is working them past a reasonable point, and often avoids paying them overtime or giving legally required meal breaks.” (N. Kitroeff, C1)
   “Drivers in Arizona settled in October with Amazon, which did not admit fault. Cases against the company in California, Illinois and Washington are still being adjudicated.” (N. Kitroeff, C1 and C9)

  “Rock ’em stock ’em: The number of warehouses in the state is rising, spurred by online shopping, but more of the work is going to robots,” retitled “Warehouses Promised Lots of Jobs, but Robot Workforce Slows Hiring” for online posting, by Natalie Kitroeff (Los Angeles Times, 4 December 2016, pp. C1 and C8)

  “Amazon’s Already Large Distribution Empire Keeps Expanding,” by The Associated Press (posted to the New York Times website on 28 July 2016)

“On Thursday, Amazon reported second quarter net income of $857 million, or $1.78 per share, substantially beating analyst expectations of $1.11 per share. Revenue rose 31 percent to $30.4 billion, also beating analyst expectations of $29.55 billion.” (n. pag.)
   “[D]istribution spending remains a priority. Amazon’s parcel volume was an estimated 1 billion packages in 2015 — the same number that FedEx delivered three years earlier for hundreds of thousands of customers, according to Satish Jindel, president of shipping consultant ShipMatrix. With volume growing yearly in the high teens or 20-plus percent, Amazon ‘cannot rely upon third parties entirely to handle that large volume,’ he said.” (n. pag.)

  “Exclusive: Amazon Expanding Deliveries by Its ‘On-Demand’ Drivers,” by Mari Saito for Reuters (posted to the Reuters website on 18 February 2016)

“Amazon.com Inc (AMZN.O) is quietly inviting drivers for its new ‘on-demand’ delivery service to handle its standard packages, as the online retailer known for low prices and razor-thin profit margins looks to speed up delivery times and tamp down its growing multi-billion dollar logistics bill.  ¶  The move, which has not been announced publicly, is the latest sign that the world’s biggest e-commerce company wants to control more of its own deliveries. Media reports have said the company plans to lease its own fleet of jets, and CEO Jeff Bezos eventually wants to use drones to get packages to customers.” (M. Saito, n. pag.)

  “E-Commerce: Convenience Built on a Mountain of Cardboard,” by Matt Richtel (posted to The New York Times website on 16 February 2016)

SUMMARY: “Over all, the $350 billion e-commerce industry has doubled in the last five years, with Amazon setting the pace. Its Prime membership service has grown to more than 50 million subscribers, by one estimate. (And its new faster service, Prime Now, can ‘get customers pretty much anything in minutes,’ its website says).” (M. Richtel, n. pag.)
   “The environmental cost can include the additional cardboard — 35.4 million tons of containerboard were produced in 2014 in the United States, with e-commerce companies among the fastest-growing users — and the emissions from increasingly personalized freight services.” (M. Richtel, n. pag.)
   “There are possible trade-offs, for example. As people shop more online, they might use their cars less. And delivery services have immense incentive to find the most efficient routes, keeping their fuel costs and emissions down. For its part, Amazon said that delivering to consumers straight from huge warehouses cuts down the need to distribute to thousands of stores.  ¶  So far, though, shoppers appear to be ordering online while still driving to brick-and-mortar stores at least as much as in the past, according to Dr. Sperling and other academics. One recent study explored the environmental effect of Internet shopping in Newark, Del., and found that a rise in e-commerce in recent years by local residents corresponded to more trucks on the road and an increase in greenhouse emissions.” (M. Richtel, n. pag.)
   “Amazon is aware of the cardboard issue. Since 2009, it has received 33 million comments, ratings and photographs about its packaging as part of its ‘packaging feedback program.’ Amazon said it used that feedback to make sure that cardboard box size was consistent with the size of the product. It also works with manufacturers to send some products without additional cardboard packaging, said Craig Berman, a company spokesman.  ¶  Though recycling can make consumers think they are helping the environment, the process has its own costs, including the emissions from shipping it to recycling centers, which use a lot of energy and water. Don Fullerton, a professor of finance and an expert in economics and the environment at the University of Illinois, said one possible solution would be to make the retailers responsible for taking back the boxes. That would create incentives for them to come up with solutions for less packaging.” (M. Richtel, n. pag.)

  “Congress Gives Final OK to Banning Local Internet Taxes,” by Alan Fram of the Associated Press (posted to The Boston Globe website on 12 February 2016)

SUMMARY: “Until now, states that imposed Internet access taxes have been allowed to continue. Under the approved bill, those states would have to phase out their taxes by the summer of 2020.  ¶  Seven states — Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin — have been collecting a combined $563 million yearly from Internet access taxes, according to information gathered by the nonpartisan Congressional Research Service.” (A. Fram, n. pag.)
   “For years, the drive in Congress to permanently bar taxes on Internet service has languished alongside another effort to empower states to require online retailers to collect state and local sales taxes for online purchases. Supporters of enhancing the collection of online sales taxes say without that, brick-and-mortar stores face a competitive disadvantage.  ¶  In hopes of gaining leverage, senators backing the collection of online state sales taxes have long linked the two efforts.” (A. Fram, n. pag.)

  “Congress a Step Away from Permanently Barring State, Local Governments from Taxing Internet,” by Alan Fram of the Associated Press (posted to the US News & World Report website on 11 February 2016)

  “Amazon Eyes New Chapter with Local Bookstore: Venture in San Diego aimed at retail world foreign to online giant” retitled “Amazon Hiring for Bookstore in San Diego: E-commerce Giant Eyes Expansion of Brick-and-Mortar Business” for online posting, by Jennifer Van Grove and Lori Weisberg (San Diego Union-Tribune, 7 February 2016, pp. A1 and A9)

  “Shipping Rivalry in S.D. Is in High Gear: Amazon tries to best Google with faster delivery service” retitled “Amazon, Google Step Up Shipping Rivalry in San Diego” for online posting, by Jennifer Van Grove (San Diego Union-Tribune, 20 November 2015, pp. C1 and C4)

  “Amazon Challenges Etsy with Strictly Handmade Marketplace,” by Hiroko Tabuchi (posted to the New York Times website on 8 October 2015)

  “Does Amazon Story Necessitate Response from Customers?” retitled “Boycott Amazon? It’s Not an Easy Choice” for online posting, by David Lazarus, business columnist for the Los Angeles Times (rpt. in the San Diego Union-Tribune, 23 August 2015, p. C4)

  “Praise for the printed page: Will Amazon leave French bookstores in peril?,” a PBS NewsHour Weekend signature segment, first aired 21 February 2015

SUMMARY: “In France, even though the price of books was fixed years ago to prevent price differentiation, some worry the country’s thousands of bookstores may now be in jeopardy as more customers flock to online retailers, such as Amazon. The online giant has come under fire by French booksellers who believe the way Amazon sells books is threatening their business and even undermining French culture. NewsHour’s Megan Thompson reports.”

  “Closing the book on the Amazon and Hachette feud,” a PBS NewsHour analysis of the issues, first aired 13 November 2014

SUMMARY: “The seven-month stand-off between Amazon and Hachette over the pricing and profits of ebooks has ended with a new agreement beginning in early 2015. Jeffrey Brown speaks with Jeffrey Trachtenberg of The Wall Street Journal about how the disagreement hurt both the retailer and authors, and whether the conflict could return.”

  “Authors take aim at Amazon over fight with publisher Hachette,” a PBS NewsHour analysis of the issues, first aired 29 September 2014

SUMMARY: “Philip Roth, Salman Rushdie, Ursula Le Guin and many other notable authors have joined a public fight against Amazon for wielding its commercial power against publisher Hachette in a dispute over the price of e-books. Jeffrey Brown discusses the writers’ concerns with novelist Roxana Robinson, president of the Author’s Guild.”

  “Amazon’s ruthless practices are crushing Main Street — and threatening the vitality of our communities,” by Jim Hightower (The Hightower Lowdown, vol. 16, no. 9, September 2014, pp. 1–4)

This is Part 2 of Hightower’s 2-part newsletter feature on Amazon.com, Inc.: “The Amazon.com story, part 2: The tax-dodging predator.”

  “Like Walmart, only with supercomputers and drones: At Amazon.com ‘cheap’ comes at a very hefty price,” by Jim Hightower (The Hightower Lowdown, vol. 16, no. 8, August 2014, pp. 1–4)

This is Part 1 of Hightower’s 2-part newsletter feature on Amazon.com, Inc.: “It’s time to pay attention to what Jeff Bezos and his online retail colussus are doing.”

  “Amazon Unbound: When will the Justice Department take action?” by Steve Wasserman (The Nation, vol. 299, nos. 5 and 6, 4–11 August 2014)

N O T E

On 2 December 2013, SCOTUS declined to hear a case on whether online retailers must collect state sales tax. As reported by the PBS NewsHour: “The U.S. Supreme Court declined today to decide whether big online retailers have to collect state sales taxes. The justices turned away appeals from Amazon and Overstock.com after they lost a case in New York State. In the absence of a national ruling, more states may try to tax sales on the Internet.” (PBS NewsHour, News Wrap for 12/2/2013 program)

  “Amazon Book Backlash Benefits Debut Author: Retailer-publisher dispute thrusts writer into spotlight,” by John Wilkens, retitled “‘California’ Author Grateful for Lucky Break: Edan Lepucki used talent, ‘Colbert Bump’ to hit best-seller list” for online posting (The San Diego Union-Tribune, 8 August 2014, pp. B1–B2)

  “Amazon Starts $9.99-a-Month Service for Unlimited E-Books,” by Jing Cao of Bloomberg News (posted to the Bloomberg News website on 18 July 2014)

  “Amazon CEO Unveils Smartphone to Take on Apple, Samsung,” by Adam Satariano of Bloomberg News (posted to the Bloomberg News website on 18 June 2014)

  “At Book Expo, publishers and authors confront changing industry,” a PBS NewsHour report, first aired 6 June 2014

SUMMARY: “The online revolution has disrupted the traditional bookselling business over time. From the publishing industry’s annual trade show, Jeffrey Brown reports on how authors and publishers are adapting to new platforms, small startups are pushing their titles and independent bookstores have learned to survive.”
   From here you can link to Jeffrey Brown’s interview with bestselling author James Patterson (“Digital revolution threatens American literature, says best-selling author James Patterson”), who announced earlier this year that “he would donate $1 million of his own money to independent booksellers around the country, an effort to help them directly and to raise awareness for their struggle to stay afloat.”
   “... Patterson is very worried about the present and future of books in America, as the publishing world continues to grapple with the tectonic shifts brought about by the advent of ebooks and their major distributor, Amazon.”
   “... Patterson’s publisher, Little, Brown & Co., is owned by Hachette, which is currently undergoing tense contract negotiations with Amazon. As the negotiations drag on, some Hachette titles are being delayed, while upcoming titles have had their pre-order buttons removed.”

  “University presses under fire: Incrementalists and Futurists battle over the mission of the university press,” by Scott Sherman (The Nation, 26 May 2014, vol. 298, no. 21, pp. 19–24)

  “Hachette says Amazon is delaying delivery of some books,” by David Streitfeldmay (posted to The New York Times website, 8 May 2014)

“For at least a decade, Amazon has not been shy about throwing its weight around with publishers, demanding bigger discounts and more time to pay its bills. When a publisher balked, it would withdraw the house’s titles from its recommendation algorithms.”
   “Publishers say the bookseller, whose shares have tumbled 25 percent this year as investors itch for profits, is determined to squeeze as much margin out of its suppliers as possible.”

  “Web media pioneers move on to the next frontier: Print,” by Matt Pearce (Los Angeles Times, 15 December 2013, pp. E1 and E13)

E-publishers have discovered that “there’s still a lot of money to be made in print while they’re searching for where money can be made online” (Pearce, E13).
   “[I]n some cases, the turn to print reflects a reaction to the very things that have made digital publishing so appealing: Where the Web is open-ended and interactive, print is closed and more authoritative, like a street that goes only one way. The Web is timelier, but paper lasts longer than browser tabs.” (Pearce, E13)

  “U-T Econometer: Is There an Economic Benefit to Charging Local Sales Taxes on All Internet Transactions?” retitled “Should Shoppers Pay Internet Sales Tax?” for online posting (U-T San Diego [formerly San Diego Union-Tribune], 5 May 2013, p. C4)

A U-T San Diego running feature (in the Business section), wherein a panel of experts is polled each week on issues impacting the local economy, and the experts give brief explanations for their votes. This week’s panel’s answer: Yes = 6; No = 2.

  “Congress Seeks to Eliminate Perk of Online Shopping by Requiring Sales Tax,” a PBS NewsHour analysis of the issues, first aired 29 April 2013

  More on passage of California’s Proposition 39: “Prop. 39 OK Seen as Welcome News for Local Clean-Energy Businesses,” by Morgan Lee (U-T San Diego [formerly San Diego Union-Tribune], 9 November 2012; online edn. retitled “Election Results: What It Means for Energy in CA: Implications for Wind Farms, Electric Cars, Research”)

  “Change to Business Tax Calculation Approved,” by California voters in 11/6/2012 election, as reported at the KPBS website, by Steven Herbert, City News Service (Wednesday morning, 7 November 2012).
Passage of Proposition 39 means that “Multistate businesses will be required to calculate their California income tax liability based on the percentage of their sales in the state.” As summarized in the California Voter Information Pamphlet:

Proposition 39   TAX TREATMENT FOR MULTISTATE BUSINESSES. CLEAN ENERGY EFFICIENCY FUNDING. INITIATIVE STATUTE.
Requires multistate businesses to pay income taxes based on percentage of their sales in California. Dedicates revenues for five years to clean/efficient energy projects. Fiscal Impact: Increased state revenues of $1 billion annually, with half of the revenues over the next five years spent on energy efficiency projects. Of the remaining revenues, a significant portion likely would be spent on schools.

More details about Prop. 39 (Elimination of multistate business tax break) — including the full text of the initiative, the California Attorney General’s official summary and analysis, plus data and graphs “tracking the money” spent in support and in opposition to the measure, with related news stories — are available at the Los Angeles Times website.

  “Holiday Shopping Wars,” by Shan Li (Los Angeles Times, 28 October 2012)

  “Walmart to Stop Selling Kindles,” by the Associated Press (U-T San Diego [formerly San Diego Union-Tribune], 21 September 2012)

  “The Amazon Effect” — “Amazon got big fast, hastening the shift to digital publishing. But how big is too big?” — by Steve Wasserman (The Nation, vol. 294, no. 25, 18 June 2012)

  “Germany, by the Book” — “Fixed-price laws curtail the power of chains and help to sustain a vibrant literary culture.” — by Michael Naumann (The Nation, vol. 294, no. 25, 18 June 2012)

  “Search Gets Lost” — “Amazon now has customers doing the chores it used to do for them.” — by Anthony Grafton (The Nation, vol. 294, no. 25, 18 June 2012)

  “Amazon Set to Keep Share of State Sales Tax,” by Marc Lifsher (Los Angeles Times, 20 May 2012)

  “A Venerable Bookstore Fights Back: Marcus Books, a San Francisco Institution, Gains Attention as It Challenges Amazon,” by Lee Romney (Los Angeles Times, 1 January 2012)

  “Info-Age Shoplifting,” an Al’s Emporium Column, by Al Lewis (reprinted on p. C5 of the U-T San Diego [formerly San Diego Union-Tribune], 18 December 2011)

  “Editorial: Level the Retail Playing Field,” by The Editors (Los Angeles Times, 11 December 2011)

  “California Leads Way in Putting Amazon in Its Place,” by Michael Hiltzik (Los Angeles Times, 23 October 2011)

  “Amazon to Alter the Way It Does Business in California,” by Marc Lifsher and Andrea Chang (Los Angeles Times, 23 September 2011)

  “Calif. Governor Signs Compromise on Internet Taxes,” by Marcus Wohlsen (U-T San Diego [formerly San Diego Union-Tribune], 23 September 2011)

  “Amazon Tax Bill in CA Could Encourage Passage in More States,” Steve Chiotakis of Marketplace Morning Report interviews Kerry Rice (Marketplace public radio segment, 23 September 2011)

  “How Amazon’s California Tax Romp Will Impact Us All,” by Robert W. Wood (Forbes, 12 September 2011)

  “Editorial: The Amazon.com Compromise,” by The Editors (Los Angeles Times, 10 September 2011)

  “Amazon Deal with Legislature a ‘Classic Compromise,’” by Marc Lifsher (Los Angeles Times, 10 September 2011)

  “Calif[ornia] Lawmakers Approve Amazon Tax Compromise,” by Adam Weintraub (U-T San Diego [formerly San Diego Union-Tribune], 9 September 2011)

  “California Senate OKs Web Sales Tax Compromise,” by Adam Weintraub (U-T San Diego [formerly San Diego Union-Tribune], 9 September 2011)

  “Amazon Cuts Deal on California Sales Taxes,” by Anthony York and Marc Lifsher (Los Angeles Times, 8 September 2011)

  “Amazon Sales Tax Deal Averts Ballot Fight,” by Marc Lifsher and Andrea Chang (Los Angeles Times, 8 September 2011)

  “Lawmakers Seek Stronger Internet Sales Tax Law,” by Adam Weintraub (U-T San Diego [formerly San Diego Union-Tribune], 6 September 2011)

  “Amazon’s Jobs Power Play,” by Jennifer Collins (Marketplace public radio segment, 1 September 2011)

  “California Advocacy Groups Urge Boycott of Amazon,” by Marc Lifsher (Los Angeles Times, 16 August 2011)

  “Amazon Takes the Low Road,” by Michael Hiltzik (Los Angeles Times, 17 July 2011)

  “Amazon Sales Tax Battle Centers on Jobs,” by Andrea Chang and Marc Lifsher (Los Angeles Times, 12 July 2011)

  “Amazon Aims to Have Voters Decide on Sales-Tax Law,” by Andrea Chang and Marc Lifsher (Los Angeles Times, 12 July 2011)

  “Amazon Takes Its Tax Battle to the Ballot,” by Jennifer Collins (Marketplace public radio segment, 12 July 2011)

  “Amazon Wants Voters to Decide on Tax Collection,” by Rachel Metz (U-T San Diego [formerly San Diego Union-Tribune], 11 July 2011)

  “Amazon, California Play Waiting Game in Sales Tax Fight,” by Andrea Chang and Marc Lifsher (Los Angeles Times, 2 July 2011)

  “UPDATE 2-Amazon Won’t Collect California Taxes on Friday,” by Reuters (Los Angeles Times, 30 June 2011)

  “Amazon Protests California Web-Sales Tax Plan,” by Reuters (Los Angeles Times, 30 June 2011)

  “California Tells Online Retailers to Start Collecting Sales Taxes from Customers,” by Marc Lifsher (Los Angeles Times, 30 June 2011)

  “Amazon Cuts Off California Affiliates [update],” by Rachel Metz (U-T San Diego [formerly San Diego Union-Tribune], 30 June 2011)

  “Amazon Cuts Off California Affiliates,” by Penni Crabtree (U-T San Diego [formerly San Diego Union-Tribune], 29 June 2011)

  Op-Ed Dialog on Taxing E-Commerce — CON position: “Taxing E-Commerce: Measure Would Drive away Innovation,” by Dan Squiller (U-T San Diego [formerly San Diego Union-Tribune], 15 August 2010)

  Op-Ed Dialog on Taxing E-Commerce — PRO position: “Taxing E-Commerce: Let’s Start with Obeying the Law,” by Denise Ducheny (U-T San Diego [formerly San Diego Union-Tribune], 15 August 2010)

  “States Seek Sales Tax on Online Purchases: Web-Only Companies Balk at Attempt by Governments,” by Rachel Metz (U-T San Diego [formerly San Diego Union-Tribune], 13 January 2009)

Please let me know if I’ve missed a good analysis that you think should be added to the above list of links. (Print editions of news & opinion should be freely available online, so that everyone, everywhere, has access.)


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“eliminating private-sector waste” — Frank contends that “there’s actually considerably more waste in the private sector than in the public sector, and not just because the private sector is so much larger.” (Frank, The Darwin Economy 59) And even though the “search for ways to eliminate private waste is still in its infancy,” there is some good news: “private waste is actually much easier to eliminate than public waste. The positional consumption beast, it turns out, can be starved by relatively simple, unintrusive changes in incentives.” (Frank, The Darwin Economy 63)

“In earlier work” — “Robert H. Frank, Luxury Fever, New York: Free Press, 1999; and Robert H. Frank, Falling Behind. Other authors have also discussed tax remedies for positional externalities. See, for example, Michael Boskin and Eytan Sheshinski, ‘Optimal Redistributive Taxation When Individual Welfare Depends on Relative Income,’ Quarterly Journal of Economics 92(4), 1978: 589–601; Yew Kwang Ng, ‘Diamonds Are a Government’s Best Friend: Burden-Free Taxes on Goods Valued for Their Values,’ American Economic Review 77(1), 1987: 186–191; Norman Ireland, ‘On Limiting the Market for Status Signals,’ Journal of Public Economics 53, 1994: 91–110; and Richard Layard, Happiness: Lessons from a New Science, London: Penguin, 2005.” (Frank, The Darwin Economy 222–223n7)

“Implementing a progressive consumption tax would be straightforward.” — “For a detailed discussion, see Laurence Seidman, The USA Tax: A Progressive Consumption Tax, Cambridge, MA: MIT Press, 1997.” (Frank, The Darwin Economy 223n8)

“the difference between their income and their annual savings, less a standard deduction” — “Loan repayments would be added to the savings total, thereby reducing potential tax liability. New borrowing would be subtracted from savings, increasing the potential tax. For homeowners annual housing consumption would be counted as the implicit rental value of their houses.” (Frank, The Darwin Economy 223n9)