Wednesday, June 24, 2015

Amazon Vine and The Power to Tax is the Power to Destroy

For many years, I've been a happy member of Amazon Vine, taking frequent deliveries of random consumer items for review and then keeping them. I've reviewed 432 items over the years, and it has been sweet.

But, in today's eMail, came word that Amazon would now be reporting the "Fair Market Value" of my review items to the IRS so I could be taxed for the income. So instead of being free, items would now cost their value multiplied by my marginal tax rate. Since my marginal tax rate is 25%, it would be as if they were offering me a random assortment of stuff, most of which I have no particular need for 75% off. And, I can't sell the stuff, so there is no getting the money back.

Looking through a couple of pages of stuff I reviewed recently, I have to think that few are things I would have purchased for 75% off.

  • 6 Lightning cables (maybe I could have used 2)
  • Mattress. Like this mattress but at the time, I struggled to even justifying it for free, there's no way I would have taken it.
  • Kids bow and arrow set. Maybe.
  • Princess mechanical pencils. We've got plenty of pencils already.
  • Task chair. I didn't really want it when it was free. No way.
  • Skin cream. No.
  • Mango juice. No.
  • USB scanner. No, have too many already.
  • Children's book. Too young for my youngest. No.
  • Decoratable toy. Probably
  • Avenger's movie toy. Cheap looking junk. Nope.
  • Pencil sharpener. Already have some. No.
  • Expensive noise canceling headphones. On the one hand, I have headphones, on the other hand, very nice looking. Maybe.
  • Cheap headset. Nope.
  • Hammer. Probably.
  • Pack of children's scissors. Who needs an entire pack of scissors?
  • Mattress pad. Probably. 
  • Taco shells. Nope.
  • USB wall outlet. Too much trouble. Nope.
  • Air purifier. Already have fans in the house. 
Basically, I won't be able to justify the expense of much more than 1 item in 10 if I have to pay for it. 

And then there are books. Non-children's books take time to read. As an experienced iOS developer, my short term contract rate is around $110/hr. It might take literally thousands of dollars worth of my time to read a book. Even when they were free, I rarely reviewed real books. The fair market value for a book for me is a large negative number. I can't imagine ever reviewing a real book again for Amazon Vine.

I understand that somebody from the outside might see that I get a printer priced at $100 so I've made $100 worth of income. But that printer is worth much less than $100 to me, otherwise I would have gone out and bought one already. As it is, I have a bunch of perfectly good printers in the house waiting to be hauled to the electronics recycling center because they are out of ink. If Amazon were to offer me another free one, I might not take it. Now that the IRS will be charging me $25 for it, there is no way.  Fair market value has no meaning to me when I can't resell the item, and it's a random assortment of stuff that I'm not in the market for in the first place.

[Update: Well this has settled down and the situation is better than the initial reports. "Fair Market Value" ranges from 0% to over 100% of Amazon's price. Unfortunately you don't know it before you agree to the deal. Food, cosmetics and other disposables are generally 0%. And I guess you can now sell your items after 6 months. Sometimes I can't help myself, so yesterday I took in an expensive Android tablet with its 101% Fair Market Value, oops.

I've definitely scaled back my reviewing, and will not take items I perceive as low quality. Thus my average review rating has gone up and is now over 4. In the past, I'd have taken a try for something iffy and would give out my share of 2 and 3 star reviews.]