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Could Facebook Driven Affiliates Do An Amazon On Amazon Itself?

Amazon Jeff Bezos

Amazon’s Supreme Court Request for Equal Weights & Measures:

The obvious downside of equal weights and measures in online retail is both profound and important. A dynamic tax system can serve as a powerful tool for leveling up the playing field… for what a smaller online retailers may lack in buying power and market reach of companies of the size of Walmart and Amazon they can make up for it through government leniency through a dynamic (situation fluency) tax system.

Amazon has changed retail and Amazon knows its size has now attracted the taxman and while they are officially supporting the tax they desire to stop new players from entering the market by exploiting the tax loophole that ironically built Amazon to what it is today.

Amazon officially supports the federal law called the Marketplace Fairness Act which requires that all online retailers collect tax and have agreed to pay it in states such as New Jersey and California but where Amazon does have a problem with the dynamics of the tax law. For the law is very liberal and volume driven as small online retailers would still be exempt of paying this tax in some states.

We all know that Jeff Bezos is one intelligent entrepreneur and his request for the use of equal weights and measures in our tax law through his Washington, D.C., attorney Ted Olson is both fair and reasonable but the question is if its good for America? Being on the other-side of the coin it does seem hypocritical for the role of government is to try and foster competition which sometimes means taxing the larger payers more than one would the little guy. The obvious downside of equal weights and measures in online retail is both profound and obvious for little payers who often lack the buying power and reach of companies like Wallmart and Amazon would still have at least one small tax advantage through this kind of situation fluency tax system.

From Amazon’s perspective it is clear that for one to secure long term dominance they need a uniform tax law that does not discriminate between the size of the online retailer as all would be taxed evenly. So while it was ok for Amazon to get big on this tax loophole they appear to fear a new wave of Facebook driven affiliates doing an Amazon on Amazon itself.

There is no doubt that Amazon is a great company and had served America well but at the same time it is now a significant player and it has now entered the nostrils of the one who is greater (competition watchdogs). The bottom line is clear and that is that a more dynamic and flexible tax system is more practical and can better serve the American consumer by reducing market entry obstacles for new businesses through its volume related tax law giving a rare advantage to smaller players. While Jeff Bezos is right from a purely legal standpoint – the truth is – that if a legalistic tax system is applied equally to all this could have serious ramifications and serve a major blow to competition itself. For in my opinion governments should encourage competition through a flexible tax system for when it comes to price it is competition that ultimately keeps us all honest.

peter-malaczynskiArticle by Peter Malaczynski:
Peter is the chief engineer at HAGOOLE Price Comparison in charge of analytics, statistics and strategic game theory. Follow Peter @HaggleSearch

*Blog post views are my own and not those of my employer



Before you buy HAGOOLE

Principal & Interest loans and Interest Only loans?

Principal & Interest loans and Interest Only loans?

Which one should you choose?

Some of the reasons why you would choose an Interest Only (I/O) loan instead of Principal & Interest.

Why would I choose an Interest Only loan instead of Principal & Interest?

There are actually several reasons why you would want to just pay the interest on your loan rather than paying it down, however different methods are more appropriate for different people and different scenarios. Here are a few of the most common rules regarding how to manage your loan:

Cash Flow & Flexibility

Most people have heard the saying, “cash is king”.

If you have any amount of debt, especially if it is substantial, you want to have the greatest amount of flexibility available to you. In this situation, being locked into constant high repayments can – in rare situations – be a massive burden to you.

Imagine if something went a little bit wrong and you found yourself in a bit of a tight situation for a month or two (let’s say due to sickness or an unexpected large expense) your loan is going to really bite, especially if a reasonable proportion of your loan repayments are going towards paying off the loan as well as looking after the interest. In this situation, if you were to have an interest only loan, you would be able to contact your bank, bring your monthly repayments back to just the interest while you are recovering and then put them back up to whatever you wanted them to once you feel that your cash flow can handle it.

It’s very easy to do, and it gives you the breathing space to manage your affairs a lot better than if you were locked into more restrictive credit contracts.

Interest Only Loan Tax Reason #1

You have multiple reasons for wanting an Interest Only loan when it comes to tax. The first is again down to flexibility and is founded in the very foundation of tax law. The ATO is more interested in what you do with the money that you claim as deductable than where that money is from. So if you have an investment property, the fact that the money was used to buy that property is more important than the fact that you may have used your home as security to buy it. If you only have your home and no other borrowings, this will come into play if you decide to rent your property out in the future.

If you have an investment loan that is receiving Principal & Interest repayments, your debt is obviously going down. The great thing about this is that if you need to get your hands on some money, you’ve been building up a buffer by paying down you debt.

The downside is that if you use any of that buffer to buy something that is not income generating (such as a car, holiday or renovation on your own home) then the interest that you have to pay on the money that pulled out is no longer tax deductable. Why is that? You’ve just borrowed money to buy something that is not income producing. Had you been paying Interest Only on your loans, you could direct all your spare money to an offset account. An offset account is a normal bank account that a bank may give you which is linked to your loan account, but is not part of your loan account.

Every dollar that you put in the offset account is a dollar that the bank will take off your debt when calculating how much interest you have to pay. As an example, if you owed $600,000 and have $200,000 in an offset account, the bank is only going to charge interest on $400,000, even though the loan balance is still actually $600,000. If you wanted to take out some of you savings and like before spend it on something that is not tax deductable (because it does not generate an income) then you’re not actually borrowing any money – you’re taking it out of your bank account.

You’ll be paying more interest since you’ll have less in your offset account, but because you didn’t actually borrow the money, the ATO will deem the nature of the debt to still be for investment and you’ll be able to claim the lot of it as a deduction.

Interest Only Loan Tax Reason #2

The other reason is a matter of efficiency and value. If you are claiming the loan as being deductible, then you can assume that the ATO is effectively subsidising the cost of you debt. Using some basic numbers: $100,000 loan @ 10% = $10,000 interest If the loan was for investment purposes, then the $10,000 interest is tax deductable. If you’re on a marginal tax rate of 40%, when you do your tax return you’ll be entitle to get back $4,000 from the ATO. Therefore, the net amount of interest is: $10,000 – $4,000 (tax return) = $6,000. As a result of this, we can work out our after tax net rate of interest: $6,000 (net interest) on a $100,000 debt = 6% after tax rate of interest.

Using this formula with today’s interest rates, if you’re paying your bank 6.5% interest on your loan, your after tax net rate of interest is actually 3.9%. That is pretty cheap money. Now ask yourself this – if someone lent you money at 3.9% – would you want to pay it back, or would you use what money you had to investment and aim for a higher net return?

Depending on the level of risk you feel comfortable with, the answer might be very clear now as to what is the best thing for you to be doing. A lot of people say you should pay Interest Only your loans because it keeps your tax deductions high. Tax deduction is another word for expense that the Tax Act allows you to claim as an offset to income.

You would want to pay Interest Only on your loan because – after tax – there may be more efficient things you could be doing with the money.

New Taxi Payment Competitor

Taxi Payment SystemAn Aussie Price Comparison Startup HAGOOLE™ Introducing Competition to the Taxi Industry
Summary: The first taxi payment solution that empowers the Taxi Driver to negotiate on the 10% EFTPOS service charge plus it lets consumers run a virtual taxi meter to make sure they are not being ripped off.

ChargeLess™ Taxi Cash Register is a practical and efficient application which details and calculates the TOTAL taxi fare, including all relevant charges associated with a particular fare, such as the many tolls and eftpos service fees. More importantly if you are a taxi driver or operator and combine this application with a standard business (eftpos terminal) it will make you thousands of dollars!!

Features:
- Easily calculate the total taxi fare, including all tolls, charges and the service fee
- Record values of tolls and charges for future use
- Be transparent before you customer by performing calculations in front of them
- Email or print a detailed Tax Invoice (receipt) generated by the app
- Enter the total taxi fare into your own independent third party eftpos terminal and pocket the majority of the service fee
- Win regular customers by giving them a discount on the service fee charged

See screenshots of Taxi Payment App Below:

Source: Taxi Payment System

Finance Industry Transformation

StartupsDigital communications have given birth to a new generation of finance companies (see article). Money-transfer agents such as Xoom have drastically cut the time and costs for migrant workers to send money home. Peer-to-peer lenders are matching savers and borrowers, slashing fees and delivering a better deal to both. New foreign-exchange firms are giving travellers access to the prices quoted on wholesale currency markets. Card companies such as Square and iZettle let anyone from yoga teachers to plumbers accept payments by credit card. Firms such as M-Pesa have given millions of people in developing countries access to mobile money.

Creating a financial-tech company is arduous. Whereas it takes less than a day to register a company in Britain, it takes months or years and can cost millions to get authorised as a bank. The number of new banks started over the past decade can almost be counted on one hand.

Source: Economist

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