California taxes internet sales

Posted by: Sequel

Tagged in: Untagged 

Amazon cuts out all California affiliated websites. Hundreds (Thousands?) of jobs lost and no taxes will be collected.

Democratic brilliance at it's finest. It's for the little people! It's for the children! Or maybe it's democratic crony capitalism for the campaign contributions from big box retailers who figure they can take the competition down a peg or two.

Leftist destruction of the economy continues apace..

UPDATE 7/1/11:

From KYTX news

Similar legislation has been proposed in numerous other states, only to be rejected because those elected officials recognized these proposals do not generate any additional sales tax revenue and, in fact, harm small businesses. When out-of state retailers stopped advertising on in-state websites, the states collect no new sales tax, and in fact lose income tax revenue. ABX1 28 is just more of the same; it will simply not address the budget deficit because out-of-state retailers are terminating their advertising relationships with 25,000 California website owners as well.

These California web-based companies earn income from ads placed on their websites. In 2010 they paid $151 million in state income taxes. The result of ABX1 28 will mean these small businesses will go out of business or move out-of-state to preserve their incomes. As a result, California's current deficit and economic outlook will get worse.  

"I hope the education community in California is ready for those trigger cuts, because in January not only will income tax revenue from these small businesses be lower, the illusory 'sales tax' will not have been collected, putting California in a more precarious economic situation," Madigan concluded.

It's worse financially, and more corrupt than I first thought. They knew in advance the result, yet did this anyway. Why? Why harm your citizens and the state coffers for no benefit? Would I be going too far out on a limb to suggest that there were bribes or at least very large campaign contributions involved?

Daily Pundit who is out $5,000.00 a year in Amazon adds/referrals calls them leftists, greedheads, and wreckers of California.





Comments (12)add comment
Barthélemy Barbancourt
25,000 businesses were closed
written by Barthélemy Barbancourt , June 30, 2011

That is a great way to raise revenue.

Fucking Morons!

written by TomC , July 01, 2011

Taxes are punishment to be avoided in every reasonable way. Democrats always think of taxes in zero-sum terms. But real world economics shows that people adapt to the tax environment. Lower taxes, and more is produced and tax revenues will often go up as a result. Raise taxes and adjustments will be made to thwart them, either through methodology or costs will limit production.

When Democrats look at taxes they see 500 people earning $500000 and make calculations and tax revenues based on those number. In this case 25000 businesses, in a state that is desparate for revenue, are closed.

F***ing Morons!

Billy Crims
written by Billy , July 01, 2011

Just Wow.

Amazon pulls a hissy fit because California dares start taxing them like they do everyone else. In your bizarre twisted worry the multinational company doing the whining is at fault.

What color is the sky in the Anti-Strib world? Or it too clouded over for any of you to know?

Barthélemy Barbancourt
written by Barthélemy Barbancourt , July 01, 2011

The United States consists of more than 55000 jurisdictions. A jurisdiction is the taxation authority that imposes the tax.

Now, if Amazon allows CA to impose taxes, they must ensure that the taxes collected are correct for all 55,000 jurisdictions and they have to ensure that their affiliates collect the correct tax and report it back to these 55,000 jurisdictions. This is a recipe for disaster.

Taxing the internet will only move more businesses off-shore and beyond the greedy fingers of moronic politicians.

Billy Crims
written by Billy , July 01, 2011

Got it. Businesses are greedy and faultless. Anything they do to avoid tax is a-ok. Stars and Stripes forever! (or until we decide to move offshore).

Politicians are moronic, greedy, sniveling little bastards who can't wait to get their hands on someone else's money so they can build roads, schools, and other evil socialist plots to deny us our freedoms.

Oh, and my job involves dealing with tax issues in multiple states and multiple jurisdictions. It's not hard to do. There's software (here in the 21st Century we have computers) tools that take care of it. It can be a pain, but it's not difficult. 55,000 Jurisdictions? Sounds pretty easy.

written by Sequel , July 01, 2011

Amazon and didn't whine, or throw any hissy fits. They just fired all California staff and affiliates.
Thousands of jobs gone from the golden state. In the bizarre world of Anti-Strib that's called democrat greed overcoming common sense. The donkeys were told by the internet giants that they would close up shop rather than collect California's taxes. That's why the Governator vetoed this moronic bill. Moonbeam was all in though. Way to go democrats.

written by TomC , July 01, 2011


True, businesses are greedy ahd should do whatever is legal to avoid taxes. It is their reason for existing and their purpose--to make money.

True, politicians are moronic, greedy, sniveling people who's primary purpose is to stay in office. As such they will build roads and schools, but will also "buy" whatever votes they can by giving that money away in the form of food, shelter, healthcare, transportation, and other human needs and wants.

Jonny Texas
written by Jonny Texas , July 01, 2011

"Oh, and my job involves dealing with tax issues in multiple states and multiple jurisdictions. It's not hard to do. There's software (here in the 21st Century we have computers) tools that take care of it. It can be a pain, but it's not difficult. 55,000 Jurisdictions? Sounds pretty easy"

I am sure it is, if you have the information to do so. The problem is that the wording of the law is for third party affiliate advertisers.

collecting a tax based on item and delivery location is relatively easy as you pointed out. But when you add other variables like:

Were they sent to the page by a third party advertiser?

Where is the third pary advertiser located?

Do they have ANY physical presence in California?

Do they have any subsidiaries located in California with a physical presence?

All of those questions would need to be asked about every single third party advertiser. Since they are third party they have NO control over their action.

depending on how the law was written:
Are we (Amazon) responsible for penalties if information is out of date or fraudulent?

Even if we believe we are is it possible that we could incur legal costs to defend ourselves against a legal challenge from some prosecutor with an axe to grind?

They looked at those legitimate questions and decided that a minor advertising scheme (third party affiliates) is not worth the cost.

The truth is that you are allowed to make decisions that are the best for your company (Boeing not withstanding).

Billy Crims
written by Billy , July 01, 2011

Believe it or not, I agree with you that this tax is bad law. Amazon clearly intends to fight it in court and will, most likely, prevail.

However, blaming California for Amazon's decision to through their affiliates under the busy is silliness beyond the usual clap trap here (and that's saying a lot).

Jonny Texas
written by Jonny Texas , July 01, 2011


You agree that the law is bad.

You think that it will be stuck down by the courts.

You don't disagree that Amazon has made a rational decision.


How did California not screw up on this one making the state hostile to Amazon?

written by Sequel , July 01, 2011

AMAZON: If you pass this law we will fire thousands and you will not only receive no new revenue but will lose the income taxes of the fired workers.
DEMOCRATS We don't care. Tax tax tax YEEEAAAARRRGGGHH!!

Sure Billy, why blame California democrats when there is a business to take shots at?

Barthélemy Barbancourt
Yeah, this one isn't that hard
written by Barthélemy Barbancourt , July 01, 2011

Large internet businesses told California that passing a law would result in a loss of jobs. California passed the law and Amazon made good on their promise.

Small mom and pop internet shops will either ignore the law, or evade the taxes. The state of CA will not see any new revenue from this law, but they will see a drop in economic activity and lower tax receipts.

This makes sense?

Let's be perfectly clear about what we are talking about; CA is taking on businesses that are incredibly mobile. They only need servers and internet access, which can be had from Texas, Canada and the Cayman Islands. By imposing these taxes, they drive revenue out of the state and out of the country.

If this isn't the very definition of stupid, I don't know what is.

As for being anti-competitive, shipping is usually at least $6, so unless your purchase is over $75, local is cheaper.

Finally, you are right Amazon corporate can buy some expensive software to deal with this, but smaller companies cant'. This is why the affliates had to go.

Currently 1.5 million people make some sort of income from eBay. This tax will effectively exclude about 1.49 million from complying with the law. Soon you'll see notes saying "No shipping to CA"

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