You may have noticed that I had an Amazon.com advertisement on the right side of my website. Governor Brown has signed into law a bill that taxes sales of items bought on the internet from Amazon. Because of the new law, my Amazon ad is no longer there, because 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 even if those retailers have no physical presence in the state.
I was part of what Amazon.com calls Amazon Associates which allowed me to place their ad on my website. Whenever anyone clicked on my ad and bought something I received a small percentage of the sale.
As of June 29, 2011, Amazon has cancelled all affiliations with any Amazon Associates in California. I don’t think this bill is going to help, since the attitude of Amazon is: “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.”
The aforementioned “other states” include New York, Illinois, Rhode Island, and North Carolina, most of which have seen their own Amazon affiliate programs killed for exactly the same reason. (Edit: New York managed to keep its Amazon affiliate program, presumably because it’s such a huge market.) And, as noted by The Tax Foundation, there are a handful of others—Arizona, Hawaii, Louisiana, Massachusetts, Minnesota, Mississippi, Missouri, New Mexico, Tennessee, Texas, and Vermont—that are considering passing similar “Amazon Tax” measures.
Not that the measures are necessarily helping much in terms of states collecting more tax revenue—Rhode Island General Treasurer Frank T. Caprio was recently quoted, saying, “The affiliate tax has hurt Rhode Island businesses and stifled their growth, as they’ve been shut out of some of the world’s largest marketplaces, and should be repealed immediately.” FatWallet, which itself acts as a giant affiliate to Amazon and Overstock, ended up moving from Illinois to Wisconsin over the Illinois “Amazon Tax.”
So we’ll have to see how this works out. What do you think.
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John J. O’Dell Realtor® GRI