Re: [Leica] A Chatterton Story [A tax footnote]

[Charles Babington <cbabing3@swbell.net>]

One of the earlier knocks on Don Chatterton complained of his policy of
not selling into Washington state and thereby avoiding that state's
sales tax.  As a tax lawyer I was reminded of some basic tax principles,
but it took me a few days to look them up to be sure I remembered them
right.

While Justice Oliver Wendell Holmes wrote in a 1927 judicial opinion
that "taxes are the price we pay for a a civilized society,", the
operating principle which almost all of us follow was summarized in 1934
by Judge Learned Hand (probably the wisest American judge who never made
it to the Supreme Court) as follows:  "Any one may so arrange his
affairs that his taxes shall be as low as possible;  he is not bound to
choose that pattern which will best pay the [tax collector];  there is
not even a patriotic duty to increase one's taxes."

How many of us pay our state's use tax on items we order by mail?  In
fact, for many of us, isn't the fact that mail order avoids our state's
sales tax one of the principal attractions of that form of commerce,
especially on high ticket stuff like Leica equipment?  On the other side
of the transaction, Mr. Chatterton apparently has chosen to give up such
profit as he could make selling to Washington residents in order to
avoid the cost and bother of dealing with sales tax collections, returns
and audits.  (Those of you who have been through a sales tax audit know
that the bother is often much more significant than the cost.)

I've never dealt with Mr. Chatterton, so I appreciate hearing about his
business practices from those who have first hand knowledge.  But I
don't think his tax practices are an appropriate subject of discussion
for this forum.