Monday, February 14, 2011

Tax issues, Egypt and Jobs

A couple of interesting tax stories that have hit my desk over the past week. States are looking for every source of revenue that they can find and that is forcing them to get a little more aggressive when interpreting their tax code.

The best example of this comes from the great state of NY where we are now looking to tax people that don't live in NY but work in NY and own a vacation home in NY. If this tax ruling holds it could be a devastating to wealthy suburbs like the Hamptons or the midtown pied-a-terre market.

"A New York court ruled last month that all income earned by a New Canaan, Conn., couple is subject to New York state taxes because they own a summer home on Long Island they used only a few times a year. They have been hit with an additional tax bill of $1.06 million.

Tax experts and real estate brokers say this ruling could boost the tax bill for thousands of business executives who own New York City apartments they use only occasionally. It could also hurt sales in the Hamptons and New York's other vacation-home communities.

"People will think twice about spending any summer time in New York," says Robert Willens, a New York-based tax consultant. "The amount of tax they could be subjected to is likely to outweigh the benefit."

"We imagine this decision will have a chilling effect on New Your tourism and real estate values among other second and third order effects."

The confusion around this case could really hamper real estate sales in fringe vacation markets like the Catskills, Finger Lakes and even the 1000 Islands.

Amazon takes their ball and goes home said Thursday that it would shutter its Irving distribution facility on April 12 and cancel plans to hire as many as 1,000 additional workers because of its dispute with Texas over sales tax owed.

Texas wants $269 million from Seattle-based Amazon in past due sales tax, sending the bill to the company last October.

"We regret losing any business in the state of Texas," said Alan Spelce, spokesman for the state's comptroller's office. "But our position hasn't changed; if you have a physical business presence in the state of Texas, you owe sales tax."

Finally a thought on the democratic revolution in Egypt:

I love the way this has been characterized as a peaceful transition. You can search the web for some of the videos but there was a disturbing level of mob violence in Cairo over the past week. Also, for all of the talk of democracy, let's make sure that we don't lose sight of the fact that this was a military coup. Egypt may eventually transform itself into a strong Middle Eastern democracy (however, those tend to not work out really well), but right now it is a military leadership that is armed to the teeth with the best of US military technology.

I'm reminded of the Gen. Petraeus mantra that it's not reality on the ground that matters but what people in Washington DC perceive as reality (if you have a free 15 minutes today you should read the Rolling Stone article on Gen. Petraeus, it's an interesting read re: our strategy in Afghanistan).

Finally, I'm working with a new start-up that is need of a talented local sales ad sales rep. Anyone that's looking for an exciting opportunity with a start-up in NNY that has a background in media sales (TV, Radio, Newspaper) shoot me a message and I'll make the connection.



Anonymous said...

how's does one go about emailing you?

The Artful Blogger said...

Sorry - didn't realize my email contact info wasn't on the homepage.

Easiest contact point is blantier2 at gmail . com


Anonymous said...

Reg. Amazon Sales Tax / Texas

Borders bookstore to file for bankruptcy.
Jobs at stake: 19,000

Amazon to close Irving,TX distribution center.
Jobs lost: 119

Does anyone connect the dots ?

Borders, like bookstores everywhere, have been facing the sales tax headwind as a competitive handicap for years vs. Amazon.

Anonymous said...

Like girlie man Schwarzenegger, Rick Perry, gov. of the "Don't Mess" state is kowtowing to the bullying tactics of Amazon.

The proper venue where this should be addressed is Washington, but in the present political climate anything labeled "Tax" will be regarded as Toxic for the political careers of our elected officials. Even if Washington were to resurrect the “Sales Tax Fairness and Simplification Act,” H.R. 3396 which died on the vine in the last congress, it only gives the force of law to states which enacted the “Streamlined Sales Tax Agreement” which 24 states have so far passed. But Texas hasn’t yet. So, state legislators should focus on this step first.

Big box retail and their commercial real-estate landlords must regard the present competitive handicap from online competitors as an existential threat and crank up their lobbying efforts.

An outfit called Alliance for Main Street Fairness ( has been formed recently to lobby to end the present online sales tax loophole.

As a tactic to bring the issue to a speedier resolution, I suggestions the following:
For the major brick & mortar retailers who also have online operations, if they reorganize their online efforts copying the Amazon playbook of "Entity Isolation" to dodge the "Nexus" issue so they too can dodge the responsibility of collecting sales tax, the states will then face the specter of revenues drying up in a major way and this tactic will raise the political profile and urgency of this issue.

This joke illustrates the pathetic lack of urgency by the states & the brick & mortar victims:

A dog is lying on the porch whining softly.
A passerby asks the owner what is wrong with the dog.
"thar’s a nail stickin’ up outta da porch tha’ he’s laying on.”
"Why doesn't he move?"
“Donno. I reckon it don’ hurt bad enough.”