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Businesses Government The Almighty Buck

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 Todd Knarr ( 15451 ) on Thursday June 30, 2011 @08:38AM (#36621302) Homepage

    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.

  • by Anonymous Coward on Thursday June 30, 2011 @08:48AM (#36621402)

    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.

  • by Chaos Incarnate ( 772793 ) on Thursday June 30, 2011 @09:02AM (#36621520) Homepage
    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.
  • by mc6809e ( 214243 ) on Thursday June 30, 2011 @09:28AM (#36621774)

    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.

  • by zraider ( 759486 ) on Thursday June 30, 2011 @09:33AM (#36621840) Homepage
    Because it's not the government that provides us with that "wonderful developer world lifestyle". It's private enterprise like Amazon.
  • by Calos ( 2281322 ) on Thursday June 30, 2011 @09:40AM (#36621928)

    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?

  • by Anonymous Coward on Thursday June 30, 2011 @09:58AM (#36622120)

    GDP (wrongfully, IMO) includes government expenditures. Of course higher taxation leads to more government expenditures which can increase GDP. The problem is, the stuff the government spends money on is *necessarily* valued less than stuff the private sector spends money on. Would you rather have $$$ of GDP spent on a factory employing people and producing a good, or on holes in the middle of nowhere or bridges to nowhere?

    _Economics in One Lesson_ is a great read for non-economists that gets the point across. Even if there is a bridge to somewhere, that has some amount of usefulness, most people tend to not see what was lost due to building it because it's usually spread out. You will marvel at the bridge and not notice the 100 small business around the country not started because their capital was diverted to the bridge. The 100 small businesses will sink or swim depending on the value they provide, hence they tend to produce things of value. Government expenditures can be applied anywhere regardless of their relative value.

  • by C0R1D4N ( 970153 ) on Thursday June 30, 2011 @10:19AM (#36622394)
    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.

The IBM purchase of ROLM gives new meaning to the term "twisted pair". -- Howard Anderson, "Yankee Group"