Governor Moonbeam (a.k.a. Jerry Brown) and his Democrat cohorts were salivating over the prospect of getting their paws on boatloads of tax revenue from Internet retailers such as Amazon.com.
Before the ink was even dry on the bill Brown signed into law the other day requiring Internet retailers (especially ones based out of California) to collect sales taxes, Amazon.com pulled out of California.
According to Investors.com:
California Gov. Jerry Brown thought he'd found a honey pot of revenues by taxing Amazon's Internet sales. He obviously didn't realize whom he was picking a fight with.
As Brown was signing the law, which aims to tax out-of-state Internet sales, online retailing giant Amazon was sending letters to thousands of California website owners terminating its affiliate marketing program so as to avoid paying that tax.
As a result, the law that Brown thinks will raise $200 million a year and that local retailers claim will bring fairness to the retailing world will do neither.
The Amazons of the world can simply drop their affiliate programs to avoid having to collect state sales taxes, leaving consumers free to buy without paying them.
The only people hurt by this ham-fisted money grab are the affiliates — mainly small businesses that help Amazon and other Web retailers sell their products for a small commission. The Orange County Register reports these affiliates' revenues could fall by as much as 30%.
The article goes on to state that California and other states thought they found a way to skirt a Supreme Court decision:
There's a bigger issue at stake here, though. Ever since the catalog was invented, states have tried to force out-of-state retailers to pay their sales taxes. The matter went all the way to the Supreme Court, which in 1992 ruled that doing so violated the interstate commerce clause.
Now states think they've found a way around this restriction by vastly expanding the definition of "presence" in a state to include online marketing affiliates. New York pioneered this "Amazon tax," followed by Rhode Island, North Carolina, Illinois, Arkansas, Connecticut and now California. In every case except New York — which the online retailer is suing — Amazon dropped its affiliate program rather than play along.
In other words, if you have a website that contains Amazon.com ads and you are located in California, the affiliate program with Amazon would pay you for every hit on an Amazon ad that someone perusing your website makes. Now that is gone. This will also affect other companies who have similar programs. There goes that revenue website owners received! Also, there goes that income California website owners pay the state when filing their state income tax returns! I doubt Governor Moonbeam and the Democrat legislature thought of that!
Looks like the Supreme Court will have to take this matter up again.
Nice old guy that Governor Moonbeam is, isn't he?
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