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Amazon Drops California Associates to Avoid Sales Tax
PCM2 writes "Residents of California who participate in the Amazon Associates Program received an email warning them that the program will be terminated as soon as a new California law goes into effect. The law, which CA governor Jerry Brown signed, would require online retailers to collect sales tax on purchases. According to Amazon's statement, '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.'"
Good one, Governor Moonbeam! You just killed the revenue stream of roughly 25k Amazon affiliates. So instead of just being content with the revenue collected from the income tax of those affiliates, you decide to double-dip and tax not only the income earned by the affiliate but the transaction as well. Instead of allowing you to double-dip, Amazon pulls the plug on their affiliate program in CA and your projected $200+M tax revenue increase goes up in smoke. CA is a turd circling the drain. They might as well give up and become part of Mexico already.
I just want to know why it is that when times are tough everyone except the government is expected to make due with less. Why don't politicians have to share in the hardship? Why don't liberals seem to understand that imposing a tax has a net effect of reducing economic activity? Why would you want to reduce economic activity when we're still in the midst of the worst recession in 2 generations?
"Gee, I can buy it for $50 at the store today, or $50 on Amazon and have it Monday, but I'll get free shipping ..." - most people will just buy it locally.
> 'We oppose this bill because it is unconstitutional and counterproductive.'
Is your point how ridiculous the statement is?
If Amazon really believed it was unconstitutional, they would keep their associates and fight it in court. Even mid-priced lawyers would win if it were that simple and obvious, so the transaction cost of the lawsuit shouldn't preclude them from doing so. They figure there's a decent chance that it is not unconstitutional, which is why they are pulling out. (i.e. the downside risk of being ordered to pay sales tax.)
Also, if B&N is smart, they'll snap up a whole lot of business in Cali today.
-- IANAL, this isn't legal advice, and definitely isn't legal advice for you. Also, Squee!
Because of the closing of many neighbourhood book and CD shops, and the shrinking selection at those locations that remain open, you often can't "buy it at the store today" and online is the only way to go anyway.
This has nothing to do with the tax then does it? If you can't buy it at X then how much tax Y charges doesn't really matter anymore.
Also, might the unfair tax advantage of amazon have made it impossible for the local shops to compete? So if Amazon did NOT have its unfair tax advantage, you would still have a choice. But no, you saved a penny or two and now you got no choice.
Free market, I see you do work, I just don't like your results.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Keep in mind that you're still supposed to pay the equivalent "use tax", so any savings were a lot less, unless you're a tax cheat. The vast majority of people, given the opportunity, proved to be tax cheats, which was no surprise.
All California is doing is saying "if you want to compete, compete on an even footing, and don't enable tax cheats." Is it a cash grab? Look around - state governments everywhere need the cash. Which is better - that Amazon be forced to compete fairly, or that you pay for a state bail-out?
Yeah that 20-25% in defense spending is really out of control compared to the >50% (and growing) in entitlement spending, watch out!
The only difference between military spending and entitlement spending is that you have to blow things up to get your free medical, free food, free housing, and free childcare.
This is all a game between companies and the government (state and federal). CA has no money because they are stupid and elect individuals who spend it faster than it can be earned. The idea CA has is to tap revenue from outside the state, which is of course illegal since CA is not our central government.
The federal government is playing the same games since they are out of money (which is funny when you think that they are the ones with a printing press), but that's why you see Obama saying bad things about ATMs and Jets my guess being that ATMs and jets don't pay taxes.
All of this comes down to one thing, spending. Assuming you are not checking your bank account to see if your SS check was direct deposited into your checking account, the US will be at 200% GDP vs debt in our lifetime. That means that if every single American got a second full time job and paid all money from both jobs to the government then we could pay for our spending. As it stand now if we took all the money, 100%, from the top earners in the US FOREVER we still would never pay our debt off at the rate our spending is increasing.
Spending. Spending. Spending. Until we realize spending is the problem, the problems will continue.
"In God We Trust, All Others Pay Cash"
Even if you are in the right, going to court is not easy and cheap.
You're also not guaranteed to win.
Competition between out-of-state retailers and local business is not some new thing that arose with the internet. The Sears catalogue did the same thing in the 19th century and local businesses still survived. That there shall not be tariffs on commerce between states is a cornerstone of our nation. Do you want to junk it?
The Supreme Court already made their stance on the exact Affiliate issue known: http://en.wikipedia.org/wiki/Quill_Corp._v._North_Dakota
"Quill Corp. v. North Dakota, 504 U.S. 298 (1992) is a Supreme Court ruling concerning use tax. Quill Corporation is an office supply retailer. Quill had no physical presence in North Dakota (neither a sales force, nor a retail outlet), however it did have a licensed computer software program that some of its North Dakota customers used to check Quill's current inventories and place orders directly. North Dakota attempted to impose a use tax on Quill, which was struck down by the Supreme Court."
Pretty weak cornerstone to base a nation on. Also, the tax is not on interstate commerce - the goods are free to travel through the state without accruing tax liability. It's only when they find their way into the hands of an end user that they are liable to the sales tax, or the equivalent state use tax. If you can show that sales taxes, levied by the state against the local individual, as opposed to being levied by the state against the vendor, are unconstitutional, you'd have a point.
Just as important, it's not interstate commerce when you have a business presence in-state. The affiliates ARE that presence - affiliates are, after all, affiliated with Amazon, that's why they're called affiliates, duh!!! They're paid by Amazon, not some 3rd party. They're no different than having a commission sales rep working the state, because that's what they are, commission sales reps.
Considering that the "local mom&pop" only has to worry about the one rate that they are responsible for, it's not surprising they can keep track of it.
Apples and orchards.
By the taping of my glasses, something geeky this way passes
I just want to know why it is that when times are tough everyone except the government is expected to make due with less. Why don't politicians have to share in the hardship?
If you think that social security is too large, say that you think that the poor should make due with less. If you think that military spending is too large, say that you think we should bring the troops home. If you think that we spend too much on public infrastructure, say that the government should spend less money building roads, etc... All of those are valid views. However, realize that in none of those cases it isn't the government whose life is affected as government isn't any single entity separate from the people, neither does the government have feelings or a soul.
There is no such thing as attacking "government spending" even though certain people would like to make government appear as a faceless opponent that takes money away from the hard working people and burns it. When you say that government should do with less, you should specify which of the services that the government provides for people should be cut. When you speak about government as it would be a separate entity with goals, motivations, feelings, ability to make sacrifices, etc. I get the same feeling I get when I hear a paranoid person talking about "them". It doesn't make any sense as there isn't such a creature called "government" any more than there is "them". There is just a list of services that the democratic society has decided to provide to the people, the employees needed to provide them and the taxes that have democratically been set in order to provide those services. That being the case, attack the services, not the government.
I'd recommend reading the debates around the writing of the Constitution (Signet Classics has published many of the relevant texts). Free commerce between states is vital for keeping the nation unified.
Use taxes are a fairly recent innovation that seeks to get around the longstanding tradition of no taxes on out-of-state purchases. They are a perversion of the law.
I don't dispute that. But usually when the question of Amazon and taxes comes up, some on Slashdot post as if, regardless of presence, Amazon is doing wrong. They are doing nothing different from the long, accepted mail order tradition.
no, let's start with texas and then sweep through the south. It does not negate his point: Munitions are valuable good and they are created here with our scarce resources and end up as heaping piles of rubble over there. There is a massive opportunity cost of not using these resources for building ourselves up rather than tearing someone down. Creative destruction abroad is wasteful compared to domestic investment, unless your playing some Machiavellian game whereupon foreign aggression is actually indirectly benefiting the economy. In any event, any such plan would rely on pure conjecture and a healthy dose of negligence with regard to history.
As a general rule, I find that conservatives and libertarians tend to think about consequences to tax policy, regulation, etc. If I take away money from person X, he'll have less money to save and spend. How will that impact the economy? If I put a regulation on the company, how will they respond to the increased cost? Will it outweigh the benefit of the regulation?
Liberals don't tend to think like this as much as far as I can tell from their reasoning.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
quit blaming Amazon and their "unfair" tax liability.
Did Amazon kill Blockbuster? No, technology did and a better competitor did. Same thing with local CD and book shops. Most locals don't go out of business with mail order companies, even those the size of Amazon. They go out of business because of other local competitors, their location became a hindrance, or their customers moved. Even companies like Wal-Mart didn't kill mom and pops, most mom and pops were killed by the first gen big box stores and more importantly they were killed by cars. Yeah, the widespread use of cars allowed people to not be trapped by local stores. Same goes for any other technology, now I can download my book. How is the local store supposed to compete with that? A kiosk can do it
What is amazing is you rant against Amazon and then notice the "use tax" side of the issue, which is, if your customers are not honest somehow its your fault. As in - Amazon is at fault for buyers through their website not adhering to the law.
No what California is saying, screw the law about interstate taxation and rulings related to it, we plan to intimidate companies into paying the tax - which isn't really what is going on here ... What is really going on is...
We are dumb asses who promised our supporters to the point we cannot pay up and damn if we don't need new tax revenue, would you please become the bogeyman and take the blame for collecting taxes our residents would never support if we did it directly.
Needless to say, this is all based on the typical bogus math politicians use which always underestimate costs and overestimate revenues gained.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
How many of those 25k affiliates "forgot" to include their affiliate income?
Substantially less than the new number of affiliates, 0, which will no longer have affiliate income to tax, nor will be spending affiliate generated income in California.
That's right, even if eery single affiliate were not reporting taxes, California STILL would have been better off with that affiliate income entering the state.
How many people getting by on affiliate income will be forced to leave the state or go on state assistance now I wonder? I'll bet THAT answer is > 0...
"There is more worth loving than we have strength to love." - Brian Jay Stanley