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Amazon Drops California Associates to Avoid Sales Tax 623

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.'"
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Amazon Drops California Associates to Avoid Sales Tax

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  • by Anonymous Coward on Thursday June 30, 2011 @08:24AM (#36621176)

    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?

  • Because then they'd have to collect state and muni taxes, and their price advantage would either become much less, or go negative.

    "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.

  • by Oxford_Comma_Lover ( 1679530 ) on Thursday June 30, 2011 @08:28AM (#36621202)

    > '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.

  • 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.
  • by SmallFurryCreature ( 593017 ) on Thursday June 30, 2011 @08:35AM (#36621286) Journal

    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.

  • And maybe the reason that those local stores closed down was from unfair competition - companies like Amazon that didn't have to charge sales taxes. The local store provided local jobs, and paid taxes that supported your schools and your police and your fire protection and your clinics. Amazon doesn't.

    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?

  • How many of those 25k affiliates "forgot" to include their affiliate income? How many others were so insubstantial that no income tax was owing?

    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.

  • by cyber-vandal ( 148830 ) on Thursday June 30, 2011 @08:42AM (#36621340) Homepage

    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?

  • Re:Tax Distraction (Score:4, Insightful)

    by mc6809e ( 214243 ) on Thursday June 30, 2011 @08:44AM (#36621356)

    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.

  • All a game (Score:4, Insightful)

    by inthealpine ( 1337881 ) on Thursday June 30, 2011 @08:45AM (#36621370)
    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.
  • by xkuehn ( 2202854 ) on Thursday June 30, 2011 @08:45AM (#36621374)

    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?
  • by Loiosh-de-Taltos ( 247549 ) on Thursday June 30, 2011 @08:48AM (#36621404)

    The Supreme Court already made their stance on the exact Affiliate issue known: []

    "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."

  • This thread was a logical progression.

    Yes, you save money with big corporations at the expense of small business. This is the trend and it takes money out of your pocket and your community. In the long run it costs you more, when the competition is gone, the price will go up.

  • That there shall not be tariffs on commerce between states is a cornerstone of our nation.

    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 Anonymous Coward on Thursday June 30, 2011 @09:06AM (#36621564)

    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.

  • Pretty weak cornerstone to base a nation on.

    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.

    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.

    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.

    Just as important, it's not interstate commerce when you have a business presence in-state. The affiliates ARE that presence

    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.

  • You're welcome. However, I think that the REAL story here, and the one everyone is missing, is that in reality, Amazon is just looking for any excuse to dump their affiliates without having to take the bad publicity. After all, unlike back in the '90s, Amazon now has a big enough market presence that they don't need to cough up a commission to an affiliate to get the sales.

    In reality the headline should be "Amazon dumps affiliates to lowers costs, increase profitability, state takes blame.", because that's what just happened, and they'll do it at every opportunity while pretending to bemoan the whole thing.

    Will Bezos now patent the "invention and method for cutting out affiliates"?

  • by cyber-vandal ( 148830 ) on Thursday June 30, 2011 @09:11AM (#36621604) Homepage

    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.

  • Re:Tax Distraction (Score:4, Insightful)

    by radl33t ( 900691 ) on Thursday June 30, 2011 @09:20AM (#36621702)
    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.
  • by geoffrobinson ( 109879 ) on Thursday June 30, 2011 @09:23AM (#36621724) Homepage

    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.

  • by bdsesq ( 515351 ) on Thursday June 30, 2011 @09:28AM (#36621778)

    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!

  • by chemicaldave ( 1776600 ) on Thursday June 30, 2011 @09:31AM (#36621826)

    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.

  • by Spad ( 470073 ) <> on Thursday June 30, 2011 @09:39AM (#36621922) Homepage

    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.

  • by Shivetya ( 243324 ) on Thursday June 30, 2011 @09:44AM (#36621980) Homepage Journal

    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.

  • by Kirth ( 183 ) on Thursday June 30, 2011 @09:50AM (#36622036) Homepage

    Because you misnamed them "Liberals". There's nothing "liberal" in "more taxation". It's actually more of a socialist idea.

  • by TarPitt ( 217247 ) on Thursday June 30, 2011 @09:52AM (#36622052)

    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?

  • by Eponymous Coward ( 6097 ) on Thursday June 30, 2011 @09:56AM (#36622098)

    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?

  • by rgmoore ( 133276 ) <> on Thursday June 30, 2011 @09:58AM (#36622116) Homepage

    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.

  • by Anonymous Coward on Thursday June 30, 2011 @10:00AM (#36622154)

    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.

  • by operagost ( 62405 ) on Thursday June 30, 2011 @10:01AM (#36622166) Homepage Journal

    How many of those 25k affiliates "forgot" to include their affiliate income?

    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.

  • Answer: All (Score:4, Insightful)

    by SuperKendall ( 25149 ) on Thursday June 30, 2011 @10:37AM (#36622644)

    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...

  • by Sponge Bath ( 413667 ) on Thursday June 30, 2011 @10:48AM (#36622794)
    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.
  • by scamper_22 ( 1073470 ) on Thursday June 30, 2011 @11:24AM (#36623204)

    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.

  • by Kelbear ( 870538 ) on Thursday June 30, 2011 @12:37PM (#36624076)

    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.

  • by JoshHeitzman ( 1122379 ) on Thursday June 30, 2011 @01:12PM (#36624500) Homepage
    The government of the State of California does not provide all those things you mentioned, and you seem to be forgetting that Amazon pays corporate income taxes to the federal government and various taxes to various other states.

If you want to put yourself on the map, publish your own map.