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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.'"
Come on, even Stallman and the FSF called off their Amazon boycott years ago after being satisfied that the accumulation of patents was for defensive purposes only.
"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.
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?
Because things get insanely hairy. For instance, what is the tax rate for an affiliate in California? There isn't a single rate for the state, it varies by location. Besides the state tax you've got county and/or city taxes plus the occasional special tax district. And no you can't go just by ZIP code, because we've got plenty of ZIP codes that span multiple tax jurisdictions with different tax rates. And the state doesn't provide Amazon with any way to get an authoritative (as in "If you charge the rate we give you, you can't be legally touched if it turns out it was the wrong rate.") answer to the question of what the tax rate is for a given affiliate address.
And that's just California taxes. What happens when the affiliate is in California, the buyer is in Texas where Amazon has a warehouse and thus a physical presence, and both states claim sales tax is due? Does Amazon charge taxes for both states on the same sale? Or if Amazon only charges taxes for one state, what happens when the other sues for failure to collect taxes due under it's laws?
The states want to have these taxes collected, but they don't want to answer the hard questions about the actual implementation: what are the rules for which jurisdiction applies, and how is the merchant told what rates apply to any given transaction? Until the states are willing to address those questions, IMO actions like California's are simply unfair.
It's the same problem with ebay, and the crack-down is inevitable. Let them compete on an equal footing with the locals, and each will win their fair market share based on price, product, and service.
Instead, local business is indirectly subsidizing Amazon by carrying a disproportionate share of the tax burden.
Because liberals realise that the things we take for granted have to be paid for by someone. They also realise that Amazon affiliates have a state-granted advantage over local brick and mortar businesses and has decided to remove that advantage. What is it with righties and their belief that they shouldn't have to pay anything towards the wonderful developed world lifestyle they enjoy?
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?
In Europe there are sales taxes in all countries and Amazon's local operations are able to work within the system. This is just a side effect of the US states not working together as one entity. It's very short termist and selfish on both sides.
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."
Do you even read what you're typing? At least try and get the facts correct. Free medical has not been that for a long time, with the exception of the unmarried troop on active duty using a military treatment facility. Troops have to pay for family dental for example and once you leave active duty you have to pay for your medical care too. Prescriptions outside the basics genrally have to be ordered by mail for a copay. Free food and housing are not that. There are allowances for these things, but they are based on a standard of living from 40 years ago as to what size place yu might need and never covers all the bills. Child care has never been free.
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.
What tax burden is Amazon imposing on the state? They're not using any land in the state, they're not using any services that they aren't already paying for (the postage pays for the gas taxes that pay for the road use by the delivery company's vehicles) The state wants money without doing anything in exchange for it.
Benford's Corollary to Clarke's Law: "Any technology distinguishable from magic is insufficiently advanced."
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 they weren't I had to pay a fairly significant percentage of my income for them. Everyone takes things like roads, street lighting and not being invaded by foreign armies for granted. Doesn't mean they magically pay for themselves.
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.
What tax burden is Amazon imposing on the state? They're not using any land in the state, they're not using any services that they aren't already paying for (the postage pays for the gas taxes that pay for the road use by the delivery company's vehicles) The state wants money without doing anything in exchange for it.
We're way past that.
Taxes are collected from those that make money to be given to those that do not.
You got it. They want it. You run away if you can. If you can't escape, tough. That's all you need to understand about taxation today.
How many of those 25k affiliates "forgot" to include their affiliate income?.......
So anyone who has a different opinion from yours is a law breaker?
Or is that what you do when you think you can get away with it?
Amazon's position has been tested all the way to the Supreme Court.
Amazon is in the right and CA is trying to do something the Constitution prohibits.
Nuff Said!
Why don't liberals seem to understand that imposing a tax has a net effect of reducing economic activity?
Because that's a falsehood repeated over and over by the right-wing. There is a mountain of historical data that shows a correlation between high tax rates and GDP growth. Just google "historical tax rates vs GDP growth" The results may surprise you. Increasing taxes on big business actually increases economic activity because you force people to reinvest in their business as opposed to just pocketing the money as income. Yes, unemployment is very high, but that hasn't stopped businesses from being profitable. If the economy is so bad, why are stock indexes back to prerecession levels? The Dow-Jones average is back to where it was at the beginning of 2007. NASDAQ has rebounded as well. S&P500 is back up.
When times are tough, the government does expect "everyone" to make due with less, they expect those can afford to, to make due with less.
Because it's not the government that provides us with that "wonderful developer world lifestyle". It's private enterprise like Amazon.
Presumably on a matter of principle you refuse to drive on public roads, send your kids to a public school, make use of Police or Fire services, will never claim any medicare benefits or in any way allow yourself to benefit from any of the publicly funded services that you so deride?
If so, then fine, you're at least acting consistently with your claims, otherwise, not so fine. People always bemoan having to pay *their* money for public services for a bunch of lazy, no-good wasters, right up to the point that *they* suddenly need to make use of them.
First things first: You, and the person you replied to, are what is wrong with the world today. Highly polarized, closed-minded, hating opposing viewpoints with generalities, getting nothing done. Congratulations.
To the meat of your post...
First, what are these things "we" take for granted? Why are you completely closed to a benefit-cost analysis? Why are you completely closed to the idea that others may not take it for granted and/or may not want it at all?
Second - state granted advantage? That's a bold claim. That implies that the state actively gave Amazon and their affiliates an advantage, and is now revoking it. That is not the case; in reality, CA is passing a law that few other states have tried on a subject there is still no general consensus about in the country at large. Yes, taxing online purchasing is something that needs to be addressed and figured out. But the cause and effect chain here is so obvious that it's laughable that CA would do it. You'd think a state struggling to keep its doors open would worry more about, well, keeping its doors open than jumping on some could-be injustice that's going to destroy jobs and tax income
To your last baiting question: why do you (and notice I am talking to you, not generalizing you into a group of people I disagree with but that you may or may not actually be a part of) - why do you think that the "developed lifestyle we enjoy" requires constant tax increases? Your entire post seems to be defending tax increases a priori, with no regard as to whether or not everyone who pays in to these things wants them. Apparently, to you, as soon as anything gets passed, it is untouchable, must have been the right decision or a good program, and it should receive copious funding?
I vote based on politicians' actions, unless contrary to my preconceptions. Often wrong, never uncertain. #iamthe99%
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.
Because liberals realize without small things like state-financed universities, companies like Amazon would never exist in the first place.
When people call for government cutbacks, do they realizing they are cutting back future sources of research and highly skilled employees that have made Silicon Valley possible in the first place?
If your children ever found out how lame you are, they'd murder you in your sleep
So, if I go into a store and buy something, should they be required to ask where I live, then collect and remit the taxes for my state, county, and city?
Yes, Amazon provides some of that lifestyle. Of course Amazon sells it using the DARPA developed internet and ships it on public roads, often using the US Postal Service. They hire programmers who were educated in public schools and at public universities. When they're worried about competition, they sue their competitors in Federal Court, often over patents issued by the USPTO. Their facilities are protected from crime by publicly funded police and from foreign invaders by the US military. If one of their buildings catches fire, it will be put out by publicly funded fire fighters. That's a developed world lifestyle, and it's made possible by the continuous effort of a capable government.
There's no point in questioning authority if you aren't going to listen to the answers.
How is a CA resident's tax evasion Amazon's problem?
Answer: It's not. Amazon is responsible to the jurisdiction in which they reside. Other jurisdictions can get bent. Who says? The feds, that's who. It's not goddamned rocket science. Interstate commerce is reserved to the federal government to regulate due to inherent conflicts of interest if the states were to regulate it themselves. The State of California is wrong on this one, and they're going to take it in the pooper in federal court. Just like with the video game law. If they push it, they'll get their ass handed to them by SCOTUS.
Well, then shouldn't they be putting laws in place to catch the income tax cheats? Just like states like California to lazily throw legislation at an enforcement problem. This punishes the law-abiding instead of the criminal.
Gamingmuseum.com: Give your 3D accelerator a rest.
How about eliminate the sales tax entirely and just focus on the income tax then? Local businesses will then be able to compete better with the internet and revenue will still increase without targeting those who need to spend a greater % of their earnings to survive.
More nonsense. Are you letting your political ideology control your reasoning? (You have a hammer and everything you see is a nail.)
"Funny how Amazon "can't figure this out" with all their resources, but the local mom and pop nails it with few problems. "
Before I retired I wrote software for the Dept of Revenue, State of Nebraska. Taxes and their collection isn't a funny matter for anyone, and it is not surprising at all that Amazon "can't figure this out". My state is one of the smallest, population-wise. We have less than 2 million people living in 93 counties. But, at the time I retired 3 years ago, there existed in the state over 4,700 different taxing entities. Resident zip codes do not determine which taxing district a citizen resides in, even if they limited their shopping just to one location. Citizens can get their mail in one zip code but live in another. Strange as it may seem to you, many residents do not know which taxing district they live in and would not be able to supply that information to Amazon. Or, strange as it may seem to you, they frequently put the wrong information in forms they fill out, even if they fill in online digital forms that do not have to be scanned and fed to an OCR engine, which is yet another can of worms. So, even for a small state like Nebraska, tracking sales by over 4,700 taxing entities that are NOT distinguished by a zip code or address can be, and often is, a nightmare. But, don't feel bad. You not alone. A LOT of elected representatives have unrealistic expectations of what a computer program "should be" able to do.
Nebraska's constitution requires a balanced budget and the legislature is forbidden to spend more than the tax revenues take in, so there isn't a any negative income or sales tax calculations using convoluted rules to benefit those who are more equal than others, like CA, Tx, NY, MA and other heavily indebted states have. To require Amazon to keep track of the taxing districts and policies of 50 states and the territories of the USA and do their tax collections would put a burden on Amazon that could, and probably would, drive it out of business. Add to that the legal costs that would most definitely arise because some political or selfish-interest groups would see Amazon as a Golden Goose that they could pluck in a political favorable court district, and you have the last nail in Amazon's coffin.
YOU are a responsible citizen, or should be. What's wrong with YOU keeping track of how much YOU buy at Amazon, and when tax time comes around YOU compute what sales tax YOU owe on YOUR purchases through Amazon, and submitting that tax to YOUR state when YOU pay your state income tax? That's how it is done in Nebraska, and that's how I did it six months ago, and I do my taxes on line.
Running with Linux for over 20 years!
Normally I don't comment people's sigs, but yours is instructive here. The phrase "question authority" doesn't mean "question authority at a town hall meeting", it means, "question the legitimacy of authority to control you and take your stuff". Similarly, you believe that there are a whole host of things that high income countries have because they're provided by the government. But we're talking about a state sales tax, and you're talking about a list of services that Amazon doesn't get from the state of California:
* Roads used by the U.S. Postal Service to deliver things are paid by gas taxes paid by USPS out of the postage it collects.
* The programmers' education was primarily to their benefit, not Amazons. They're not slaves. And to the extent those programmers got in state tuition, they or their families were taxpayers in that state.
* Federal courts are not administered by the state of California.
* Amazon doesn't need California police since they're not in California.
* California doesn't protect Amazon from (absurdly hypothetical) foreign invaders.
* Since Amazon's warehouses are not in California, so California's firefighters will not be the ones to protect them.
The California government is trying to shake down Amazon. Amazon is right to resist.
Space game using normal deck of cards: http://BattleCards.org
I don't live in California or care about this, but I do know people that do, and I can fully understand from a retailer's point of view why it is impossible to collect sales tax correctly for all 50 states.
1) exemptions - some states give an exemption up to $XXX/year tax free - how does Amazon know if/when such an exemption is hit and when to start collecting tax? Collecting tax before the exemption is hit gives the government a free loan using your money and probably isn't legal.
2) already taxed - nearly all states have a tax on online purchases already, called Use Tax. California already has this (in fact, they already have mandatory use tax registration to provide tax info to the state for in-state sellers earning over $100000/yr) Start enforcing your existing laws already.
3) 50 states, 50 different tax codes, and then subdivide that for special taxes by county (for instance, I pay something like 1.15% extra tax for stadiums in my county). It boils down to a ridiculous amount of data you need to keep on each person and each area. If I had to collect that much info about a person, I'd sell it to marketers to compensate for the amount of work and expense involved, and I'm generally not a dick like that.
4) Use tax schedules (and is for out-of-state sales, it would probably apply to sales tax schedules) vary by state - some require collecting monthly, others quarterly, and others yearly (often due on April 15). This is a tremendous amount of bookkeeping, as I mentioned in point 3.
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
As a general rule, I find that conservatives and libertarians tend to cultivate unrealistic views of people they disagree with so it's easier to dismiss their ideas without addressing them.
Sorry, spending by the legislature is not CA's problem. Actually, there are many interrelated problems, many of which are a result of Prop 13.
1. Property taxes, which are a generally stable source of income are limited to the point of insignificance. This was sold as a way to protect grandma, but the real beneficiaries are big corps like chevron who are still sitting on the same land they were when it passed. Because property taxes cannot be touched, we have to rely on income and sales taxes, which are inherently unstable and obviously tank when you need them most.
2. Ballot box budgeting, has tied the hands of our legislature for quite some time. We keep passing laws specifying where and how much money must be spent, but without any regard to where the money comes from or to whether there is, in fact, any money to spend.
3. Prop 13 also raised the bar on tax increases to the point where it is virtually impossible to raise taxes at all. It used to be, if the budget stayed within 5% of the previous year's budget, it could be passed with a majority vote. If the budget grew or shrank too much, a super majority was needed. This seems quite logical and effective to me.
4. We pass stupid laws that dramatically increase our prison population without considering the financial impact of housing them.
There are many reasons why CA is in the shape that it is in. Raising taxes and cutting spending are only stop gap measures for what is really needed. The only way CA is going to get out of the shape it's in is to hold a Constitutional Convention. We need to gut and rewrite it in such a way as to be fair, effective and quite a bit more strict as to how it is modified.
I suppose you really believe nothing would get done without state financed universities.
History says others. Thomas Edison worked part time as a clerk to fund his research. Henry Ford worked his way up from machinist to create Ford.
Things would get done without state financed things.
However, let's not argue that point. Whenever you get into these discussions with liberals they talk about the small things the government does that anyone, but the most libertarian minded person would say is a role of government (infrastructure, legal, defence, basic research).
Yet, how much of your tax dollars are actually used productively in these areas? Emphasis on the world productively here.
For every dollar of real law enforcement, there is probably 3 spend on unproductive things like the war on drugs and frivolous traffic schemes and other frivolous regulations.
For every dollar spent on actual national defense, 10 is spent on unneeded wars, big equipment, world policing.
For every dollar spent on university R&D, 10 is spent on inflated public sector salaries, pensions, frivolous degrees, pumping people through the university system who really have no place being there. ... ... ...
We could do everything we *need* government to do with 10% tax rate.
Of course Amazon sells it using the DARPA developed internet ...very little of which was financed through the use of California sales taxes.
ships it on public roads ...for which it pays the shipping companies, who, in turn, use the money Amazon gives them to pay fuel and vehicle taxes.
often using the US Postal Service ...which is a private company (with a government granted monopoly) financed by postage.
hire programmers who were educated in public schools and at public universities ...who receive higher incomes and, therefore, pay more income taxes. The money to pay the income taxes comes from Amazon.
sue their competitors in Federal Court ...for which Amazon pays their own lawyers. The money to support Federal Courts, themselves, I think comes from federal income taxes, which Amazon pays. But perhaps you meant California State Court. You actually have some point with this one. On the other hand, Amazon pays taxes to support Washing State Court, and Amazon's competitors, possibly including competitors in California, can sue Amazon in Washington.
over patents issued by the USPTO ...for which Amazon pays federal income taxes.
Their facilities are protected from crime by publicly funded police ...for which Amazon pays Washington state and local income taxes, property taxes, sales taxes, and a variety of others.
and from foreign invaders by the US military ...for which they pay federal income taxes.
If one of their buildings catches fire, it will be put out by publicly funded fire fighters ...for which Amazon pays Washington state and local income taxes, property taxes, sales taxes, and a variety of others.
That's a developed world lifestyle, and it's made possible by the continuous effort of a capable government.
Perhaps so, but why should Amazon pay California sales taxes?
~Loyal
I aim to misbehave.
Government provides them with an orderly society in which to conduct business.
They don't need to fund a private security army to ensure collections and protect goods in transit amidst anarchy. We have police and a legal system rather than mad max lawlessness.
They also get to hire from a market of educated employees rather than taking in savages from the fields and teaching them letters and numbers.
There are numerous links running back and forth between the private and public sectors that feedback upon each other.
After reading a few comments, most of the people here don't understand this law very well. What California did is redefine what being located in California means to:
If California were more creative, they should have tried defining a nexus as anyone who uses a shipping service with warehouses and vehicle depots in the state of California. Fedex or UPS could not have pulled out as easily under this condition.
So, Amazon fired the California contractors. Now they aren't located in California any more. Stupid law gets equally mind numbing response. Amazon pulls out, and their affiliates, some of which are very large web publishers, will have to forgo participating in Amazon's affiliate program or will have to move out of California to protect their income from their Amazon affiliate programs.
What California did is try to make an end run on the US Constitution and a recent supreme court decision that said requiring out of state merchants to pay sales tax was an attempt to regulate intrastate commerce, a power that is exclusively delegated to the Federal Governement. The basic reason for this is to prevent trade wars between the states over tariffs, duties and exclusionary laws. Fortunately, California has inadvertently aimed it's cannon at it's own foot and fired a round of grapeshot: By attempting to regulate Amazon, California affiliates now will have to leave the state to continue doing business.
A lot of people seem to think somehow Amazon was ducking an obligation to pay sales tax. This is simply wrong. The buyer pays sales tax. The seller only acts as an agent in collecting it (in most states, the seller actually gets to keep a cut of the sales tax). The only way for Amazon to duck sales tax is to not pay sales tax on their taxable purchases.
Some people think that affiliates are not reporting their taxes. Some less intelligent affiliates my not report their income, but most will because Amazon reports your Affiliate income to the IRS, so if you fail to report your affiliate income, you are likely to get into trouble.
A few people see the mail order sales tax issue as one of being fair to local merchants. As it sits, mail order merchants in California can sell to every other state and protectorate without having to collect sales tax on those sales, just like an Indiana retailer doesn't have to collect sales tax for a sale shipped to California. It's actually pretty fair to everyone except huge companies that do have actual locations in every state.
-- $G