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.

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.
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.

Filed Under: affiliates, california, taxes
Companies: amazon

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  1. identicon
    Difster, 30 Jun 2011 @ 12:36am

    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.

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