The Amazon Tax Returns to California

Assemblywoman Nancy Skinner is making another run at forcing major online retailers, including Amazon, to collect sales tax on California purchases.

Skinner, a Berkeley Democrat, said the bill could generate between $250 million and $500 million for the state. Proponents are hoping that a new governor and some major corporate firepower, including Amazon rival Barnes & Noble, will help the legislation succeed where it failed before.

Former Republican Gov. Arnold Schwarzenegger was adamant in his opposition the past two years, arguing that the bill would cost the jobs of “affiliates” in California who earn income by generating sales for Amazon and other companies. He vetoed previous legislation and blocked online tax proposals during budget talks.

Gov. Jerry Brown, a Democrat, has not yet stated a position on the bill. It is not part of his plan to bridge a $25.4 billion deficit.

Democrats say they can pass the bill with a majority vote because it changes the collection mechanism for a tax Californians are already supposed to pay.

Amazon and other online retailers for years have defended their no-tax policy by relying on a 1992 Supreme Court decision, Quill Corp. v. North Dakota, which determined that an out-of-state retailer without a substantial presence in a state does not have to collect sales taxes. Skinner’s bill seeks to force online retailers to collect tax so long as they maintain a presence in California through their affiliates.

Skinner contends that online businesses take away jobs from brick-and-mortar retailers in California. She says online purchases also deprive the state and local governments of tax revenues.

Oh really?

Among the most misguided of proposals coming out of the Democrat caucus is Assemblywoman Nancy Skinner’s Amazon tax legislation, reintroduced just yesterday, that would illegally require out-of-state businesses to collect California’s highest-in-the-nation sales tax. Make no mistake, this new tax, commonly referred to as the “Amazon tax,” is a guaranteed job killer that wouldn’t even make a dent in California’s budget deficit.

Perennial attempts to pass this job-killing tax on e-commerce have been rightfully rejected in California and elsewhere. Aside from failing to address the real problem – overspending – and adding to the state’s 12% unemployment rate, an unconstitutional Amazon tax wouldn’t do squat to close the state deficit, estimated at $26.4 billion over the next 18 months.

And, then, there are the California affiliates who sell amazon products – like me. Amazon will likely pull the ads right off my blog like they threaten to do in Illinois.

So, let’s see what will the Amazon Law do:

1. Raise no real revenue for the State of California – ask Rhode Island, North Carolina and Colorado about their ZERO tax revenue

2. Kill amazon affiliate jobs in California and take some $$$ from ol’ Flap

3. Involve California in a costly lawsuit regarding the constitutionality of charging online taxes to a company that does not have a physical presence in a state

As ATR has repeatedly explained to state legislators, Amazon taxes hurt small ad businesses and do nothing to fill state coffers. Rather, it has been demonstrated time and again that retailers will simply terminate contracts with advertisers in states that stupidly enact an Amazon tax to avoid creating a “nexus” and, therefore, being forced to collect this unconstitutional tax.

In 2009, 25,000 individuals and small businesses in California earned $1.6 billion from online advertising, paying $124 million in state income tax (plus employment tax, business tax, property tax, sales tax, etc). That is a revenue stream that will dry up if Skinner’s legislation passes.

It gets worse. Not only is the tax harmful to employers, the state of California could face a burdensome and costly lawsuit if Skinner’s legislation were to pass.

Thanks Barnes and Noble for trying to screw your competitors. I understand business is business but using California State Law to screw me, just cost you a customer. Here are some of the other miscreants who are helping the Berkeley Democrat pass this piece of excrement.