Amazon Prepares For Showdown In California After Budget Includes Amazon Tax
from the how-will-this-help-california dept
Over the past couple of years, a variety of states have tried to implement "Amazon taxes," whereby they change the definition of what counts as "presence" in a state to include if a company has any affiliates. Frankly, this is ridiculous. An affiliate is really nothing more than an advertiser, and it defies common sense to claim that an advertiser counts as a direct employee of a company. Amazon has been fighting these efforts in a variety of states, but it's about to take on a big fight. Apparently, the new California budget includes a version of this Amazon Tax, and the company wasted little time sending out an email to all California Amazon associates (such as us) to let us know that it would be "terminating" the contract unless California changed its mind.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.As we've noted before, this is an incredibly short-sighted move by the state. They think it will bring in tax revenue, when all it actually does is kill off affiliates and drives that money elsewhere, to other states. For a state that should be friendly to the internet, considering the whole "Silicon Valley" thing, you'd think the local politicians would know better.
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.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: affiliates, california, taxes
Companies: amazon
Reader Comments
Subscribe: RSS
View by: Time | Thread
We'll get to where we're heading faster
[ link to this | view in chronology ]
Re: We'll get to where we're heading faster
That is a problem US politicians just never seem to get. Money is mobile, you can build a factory anywhere, and if you are an internet based company it's a data center anywhere and some tax law tricks.
[ link to this | view in chronology ]
Amazon doesn't even like to pay sales taxes in states where it has actual physical distribution centers, which store and ship retail-purchased products, like it has in Nevada and Texas. (It uses a system of subsidiaries to try to avoid liability.)
Last year, the Texas comptroller decided Amazon owed almost $300 million in back taxes based on its in-state distribution center, kicking off a battle there with many twists and turns:
• GOP comptroller demands back-tax payment
• Amazon declares intent to leave state
• GOP governor announces opposition to GOP comptroller's decision
• Amazon's hometown newspaper, the Seattle Times, editorializes that Amazon should stop trying to dodge sales taxes in Texas and elsewhere
• Texas's GOP legislature passes bill (like the California one) establishing additional Amazon liability based on the affiliate logic – supporting and going beyond the Comptroller
• GOP governor with rumored presidential ambitions vetoes bill
• Texas GOP legislature starts working on ways to pass measure over veto
• Amazon offers Texas legislature 5000 – no, two weeks later, make that 6000! – new distribution jobs in state if they pass a multi-year Amazon-specific sales-tax exemption.
Since Texas has no income tax, they can't make up that exemption on the employees' income taxes – the sales tax is the state's main source of revenue. So far, the legislature has rejected Amazon's offer.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
be fair
It is time to allow states to charge sales tax to help balance their books. Be fair to everyone.
[ link to this | view in chronology ]
Re: be fair
[ link to this | view in chronology ]
Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: Re: be fair
[ link to this | view in chronology ]
Re: be fair
[ link to this | view in chronology ]
Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: Re: be fair
[ link to this | view in chronology ]
Re: be fair
Here's another question: why is that people who use the word "fair" when talking about taxes always want to raise them?
[ link to this | view in chronology ]
Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: Re: be fair
[ link to this | view in chronology ]
Re: Re: be fair
[ link to this | view in chronology ]
Re: be fair
[ link to this | view in chronology ]
Re: be fair
[ link to this | view in chronology ]
Re: be fair
[ link to this | view in chronology ]
Re: Re: be fair
Why? Because tax money in the state goes to pay for the police, fire, roads, etc. that the brick and mortar businesses utilize. Out of state retailers derive no benefit from the taxes that are supposed to fund services to those in the state. THAT is why it makes a difference.
--------------
But don't those who are RESPONSIBLE for paying the sales tax gain benefit from ALL of those?
Sales Tax is the responsibility of the consumer to pay, Amazon isn't arguing to prevent to consumer from paying, they are arguing to not have to COLLECT the taxes. BIG difference, the state already has the ability and the right to go after the consumer because the consumer is supposed to report and pay these taxes.
"brick and mortar" companies don't pay anything, they simply collect and forward these moneys to the state.
[ link to this | view in chronology ]
Re: be fair
[ link to this | view in chronology ]
Re: Re: be fair
It's like Homeland Security and the MPAA in reverse.
[ link to this | view in chronology ]
RE:Be Fair
[ link to this | view in chronology ]
Can only boot so many affiliates...
[ link to this | view in chronology ]
Re: Can only boot so many affiliates...
[ link to this | view in chronology ]
Re: Re: Can only boot so many affiliates...
[ link to this | view in chronology ]
When the rich and the corporations are actually paying their fair share, we'll go along with paying ours. Especially since the low end got their taxes raised but as usual the other end didn't happen...again.
[ link to this | view in chronology ]
Obvious
If laws like these pass, what happens to all the small business that also send packages across state lines. Do they get a pass? Amazon is being targeted because of their size and the fact that it can't collect the tax from it's own residents.
[ link to this | view in chronology ]
Do It Like Australia
The GST may not be perfect, but it is a huge improvement over states trying to impose their own taxes, which is plainly not working for the USA, or anybody else. Tax is a necessary evil, which should be collected as fairly and efficiently as it reasonably can be. Americans, stop wasting your money on useless infighting. Try a GST, you won't love it, just the same as we don't, but it works reasonably well.
[ link to this | view in chronology ]
Re: Do It Like Australia
Here in MI our economy is so depressed the newest fad is "fees." There's even one city that levied a substantial "stormwater runoff fee" and used EPA regs as the dictating authority to do it. And yes, our tax structure is slowly killing us.
[ link to this | view in chronology ]
Re: Do It Like Australia
[ link to this | view in chronology ]
Re: Do It Like Australia
[ link to this | view in chronology ]
If all goes well, the CA Gov will be forced to withdraw and rewrite, rename and re-vote in a fashion that isn't worded to imply this only applies to Amazon.
[ link to this | view in chronology ]
A better tax
[ link to this | view in chronology ]
[ link to this | view in chronology ]
I wonder...
Isn't it the citizens responsibility to pay taxes legally owned to their state? Here in FL we can buy anything we want online tax free but its our *legal responsibility* to report our purchases of untaxed goods past a certain ($500?) limit. Just because you're too lazy to do this doesn't mean that everyone else has to suffer.
[ link to this | view in chronology ]
Dang...
[ link to this | view in chronology ]
You're forgetting one thing....
Are you kidding? Hollywood is also in California, hence why the internet is hated there by local politicians!
[ link to this | view in chronology ]
Maybe it's just my Midwestern bumpkin view of California, but I thought most of the politicians out there were really unemployed actors doing the political thing as a part time gig. Ronnie, Arnie, Sonny, Clint, etc....
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Amazing
You have to wonder what goes through the heads of these guys in Sacramento. Literally as the law is being signed, Amazon completely nullified it by cutting loose 25,000 California affiliates. So they have this new law, which won’t collect a dime of revenue from Amazon, but they’ve now put 25,000 *more* people out of work, many of whom will now presumably either leave the state and take their businesses with them or go on the government dole and start draining even more government resources.
I swear to god, these people couldn’t do a better job of tanking this state’s economy if that was their actual goal.
[ link to this | view in chronology ]
Re: Amazing
The ban would've killed the airsoft industry and result in the loss of countless tax revenue for the state. I swear, California lawmakers are just a bunch of idiots who do nothing but kneejerk reaction at everything.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
VAT
[ link to this | view in chronology ]