Amazon Calls California’s Tax Non-Bluff

Amazon is calling out California on the state’s proposal — make that now law — to tax in-state online sales. Here is its letter to Amazon Associates saying that it will end its affiliate program if & when California signs the bill into law: [-]

Hello,

For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. 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.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

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. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

I dig Amazon’s bluster, and I would cheerfully see it win, but I understand California’s perspective. What is the point of a sales tax system that can be so easily end-run? In the limit, say most things get sold on-line — does that mean no sales tax income for California?

The current sales tax system predicated on retailer physical presence in-state is vestigial, and hopelessly broken. Hey, why stop at physical presence? Why not link it to the number of horses used for hauling? Goats owned? Serfs? it points to one of the many goofy consequences of the U.S. being trapped in the past, and not having a national value-added tax.

 

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  3. Irritated at Amazon’s Associates Program
  4. Amazon Unbox: Not Ready for Primetime
  5. Amazon Layoff Watch

Comments

  1. Meh. Spin. Yes, big box stores support the tax, but a lot of other people do, too.

    They "deeply regret" that they must take this action. If it hurts that much, don't do it.

    I wonder why they don't mention Zappos.com.

  2. Jason says:

    Interesting because Amazon has been charging sales tax in NY for a couple of years. Is there some difference between the NY affiliate program and that of California? Why didn't they take this stand in NY?

    • Mike says:

      They are actually trying to fight it in New York. Dunno why they don't do the same in CA, where they probably have more Affiliates (since CA has a larger population)

  3. Dave says:

    I hope we call their bluff, it will encourage other states to pass similar laws.

  4. @PA32R says:

    A value added tax?? Those are *shudder* regressive. Next you'll be advocating a *apopolectic* loser pays civil legal system.

  5. Read says:

    A value added tax?!?

    How very specious of you…

  6. Andy says:

    I'm sure big boxes are lobbying for such laws, but the only lobbying I've personally experienced is from local small businesses. It's easier to be sympathetic to the latter.

  7. Michael says:

    This is a conundrum for very small online retailers. My wife has an online business with about 20k in annual sales. If she had to track, by state, tax tables and reports, the business would no longer be cost effective. She'd shut it down rather than try and deal with the complexities of dealing with 50 different taxing agencies.

    If we could track retail sales, and report taxes to a single entity based on a single tax schedule, we could support collecting taxes on every retail sale – it's not the taxes themselves, it's the complexity in collecting them.

  8. BRM3 says:

    As a Santa Monica resident, I would happily pay a national VAT. Then again, I understand why people who don't pay 9% sales tax wouldn't be so keen on the idea. Not to worry, based on B. Obama's press conference yesterday a simplified and efficient tax code is on it's way! psyche!

    yes, psyche.

  9. Danny L says:

    The current system is a little insane, but I don't see how a national VAT solves the problem, unless you're advocating the dissolution of state governments. If you have a national VAT for internet sales, you'll just end up with states fighting over who's entitled to what share…

  10. Bob W says:

    Maybe it is government that is out of date. Maybe a bloated agent of mis-guided social engineering is 'trapped in the past' thinking. Please don't propose new taxes to prop it up.