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Jun 30, 2011

Amazon fires affiliates as California passes Idiotic Law

Internet IconAmazon has fired all of its California affiliates over a new idiotic California sales tax law. Ars Technica has the story:
Amazon to shut down California affiliates over new sales tax law

Having gone through this in Colorado let me try to explain the facts.

All Amazon affiliates in the state PAY INCOME TAXES. That's right, they are already getting tax revenue from the program. Or should I say WERE getting tax revenue. California just wiped out millions of dollars in income taxes overnight by passing this law. Now they will get zero dollars in income tax and zero dollars in sales tax. For about $1000 annually you can setup a business in Wyoming or Nevada which has no income tax or silly Amazon tax. The large bloggers and web sites will go out of state and they will continue pretty much unaffected. But they will pay $0 in California taxes. Reducing tax revenue even further in a state that needs the money desperately.

In addition, this law really hurts the small bloggers who are just starting out and making a a couple hundred dollars a year. A few hundred dollars may not mean much rich elites on the Net. I have seen their posts in Colorado. However, a few hundred dollars means a lot to struggling families in a bad economy.

Amazon is stupid for not fighting these laws. They have the money and the lawyers to take the states to court and win. This is settled law. Mail order businesses have existed in the US for many decades and they never had to collect sales taxes. Several Supreme course cases support this position. And essentially, Amazon is nothing more than a mail order business without the paper catalog. However, they choose to instead fire their associates and let them fight it out in court on their own. Thus taking years to get a resolution.

The stupidity of the whole thing is staggering. And yet, state after state continues to shoot themselves in the foot.

In Colorado, the state House passed a repeal of our stupid Amazon law almost unanimously. However, the Democrat control Senate refused to have a hearing on the law this year. Hopefully it will get repealed next year.

And that is about as political as I will ever get on this blog. :)
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