Amazon is Going Galt — ironically enough, right here in Colorado. Here’s the email I got this morning:
Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
AdvertisementThere is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.
We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.
Best Regards,
The Amazon Associates Team
Now I never remembered to do anything as an Amazon Associate, so I won’t be losing any income. But plenty of people will — and the state coffers will get a tiny bit smaller, instead of a tiny bit larger.
That’s government in action, kids.
I’d be curious to know what makes Colorado’s law special. Here in New York, I pay taxes on most (but not all) Amazon purchases.
It looks like the law defines Amazon’s affiliate program as doing business in the state and therefor requires Amazon to collect sales tax from Coloradans. Basically it forced Amazon to choose between Colorado affiliates and Colorado customers.
So Coloradans are going to lose ad revenue and the state is going to get nothing. BRILLIANT!
State and local governments throughout the United States prefer not making hard financial decisions. Messing with Amazon.com is much easier than severely cutting their respective budgets. This nickel and dime stuff nonsense will not be enough. They will ultimately have to fire government workers. In other words, it is going to get real nasty. Long term relationships with relatives and friends will be jeopardized.
Related Tax Foundation article via InstaPundit.
Citing significant budget shortfalls and the inability to collect sales taxes on many Internet-based transactions, a number of states are considering the adoption of “Amazon taxes.” Such laws, nicknamed after their most visible target, require retailers that have contracts with “affiliates”—independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business—to collect the state’s sales tax.
Contrary to the claims of supporters, Amazon taxes do not provide easy revenue. In fact, the nation’s first few Amazon taxes have not produced any revenue at all, and there is some evidence of lost revenue. For instance, Rhode Island has seen no additional sales tax revenue from its Amazon tax, and because Amazon reacted by discontinuing its affiliate program, Rhode Islanders are earning less income and paying less income tax.
Amazon taxes also do not “level the playing field” between brick-and-mortar and online businesses; the laws actually mandate disparate burdens on online businesses. Litigation over the constitutionality of Amazon taxes is ongoing, with scholars on the left and right disputing their wisdom and legality.
Enacting an Amazon tax law also sends a signal of hostility to businesses engaged in interstate commerce, runs the serious risk of retaliation from other states and from affected businesses, and undermines efforts to improve the uniformity of state sales taxes.
Tim Maguire @ 1:
I am not a tax expert, but as I understand it, Amazon is required to collect sales tax only in those states where it has a physical presence. So, they collect in Washington state, where they have a large warehouse and their headquarters (unless they’ve moved recently). However, living as I do in a state where Amazon doesn’t have a physical presence, I don’t pay tax on Amazon purchases. (I did for the 10+ years I lived in Washington, tho.)
Therefore, I can only assume that Amazon has some sort of physical presence (probably someone sitting in an office somewhere, or a warehouse) in New York state, but not in Colorado.
My wife and I do business through Amazon. I hope the government of Nevada doesn’t pull this crap too or we’re out of business.
You know, thinking about it I think that life would be better if legislators were required to learn a low-level programming language. I took one semester of C++ and the biggest thing I learned from it was to stop expecting the computer to do what I wanted it to do and figure out what I was telling it to do, a skill that would keep idiocies like this from happening.
6. M@rk: Oh, Mark, pay your fair share so your poor state bureaucrats could get a decent raise. Is it too much to ask for you to give a little for the public good?
So.. have the order sent to your friends who live in a different state.. may not save much with shipping twice, but you’re still sticking it to big brother.
Glad I live in Texas.. I don’t think this would go over too well..
Ritter, the worst governor in Colorado history.
Support Cory Voorhis:
http://www.corylegaldefense.com/info/corys_story.html
That’s government in action, kids.
Damn Straight:
The exceptional government of America,
where the People are Sovereign, not
the State, or the states.
Gov. Perry of Texas is referencing
the Tenth Amendment in his campaign
ads; The voters are liking it.