Axed by Amazon
By now, if you live in California, you’ve heard about this affiliate tax that caused Amazon to discontinue its affiliate program with 25,000 people. About 25% of those people made a full-time living off of Amazon’s affiliate program. Those are 6,250 people who are now going to be looking for unemployment, jobs, or move out of state.
Now, California may lose out on $124 million in taxes, which they generated in 2009 state taxes from affiliates. Governor Brown’s intent in signing the affiliate tax into law was to generate $317 million a year in taxes. Since Amazon discontinue it’s affiliate program with 25,000 people and 6,250 of those people earned a full-time income from Amazon’s affiliate program, California will lose out on $79,250,000, which is almost 64% of that $124 million.
Not to mention, the Constitution does not allow states to assert taxing authority outside of their borders, if the retailer does not maintain a physical presence in that state, which Amazon, Overstock, and other similar companies do not.
Sites like Amazon are like parking lots where swap meets are held. In other words, when you buy a product from “Joe’s Products” through Amazon, Amazon is just the conduit through which it is being sold. In the case of a swap meet, if the state wants tax revenue on the product, it doesn’t go to the parking lot owner, it goes to the individual retailers. Not only does California not have a right to tax Amazon, Overstock, and other similar companies, because they are out of state, but they are taxing the wrong entity. They are taxing the parking lot owner, rather than the retailer.
That’s just my opinion. Do you have any thoughts? I’d love to know.
Stay social my friends!
Erick
