Looking for ways to drum up extra revenue in the state of California, legislators are seeking to impose a new state sales tax on Amazon.com Internet sales. However the Internet giant says not so fast and if proposed laws are passed they will sever all ties with affiliate businesses in California.
Currently the Golden State has more than 10,000 Internet businesses that earn a living with Amazon.com.
“In no uncertain terms, Amazon has made it clear to me that the checks they send Californians will be cut off overnight if pending (sales tax) legislation aimed at regulating their operations becomes law,” said George Runner, former state senator and current State Board of Equalization member.
Runner posted a letter he received from Paul Misener, Amazon’s Vice President for Global Public Policy, in which Amazon leaders cite four pending tax bills—AB 153 (Skinner), AB 155 (Calderon), SB 234 (Hancock), SB 655 (Steinberg) as anti-business laws.
All these measures would require out-of-state online retailers, like Amazon, to collect sales tax on purchases made by Californians.
The assault on taxpayers would cost California much-needed revenue as well as thousands of jobs.
“If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon ‘Associates Program,’” Misener explained.
Don’t think Amazon will actually cut ties with California? Just ask the folks in North Carolina, Rhode Island and Colorado, who lost their livelihoods with Amazon.com. Misener says statewide terminations occurred in those states after lawmakers enacted similar laws.
Amazon points to U.S. Supreme Court’s ruling, Quill, that prohibited states from requiring sales tax collection by sellers lacking physical presence in the state and clearly Amazon falls under this high-court decision, according to Misener.
A Board of Equalization analysis illustrates the impact of the pending Assembly measures and cautions that 50 percent of projected revenues would vanish as a result of Amazon’s action.
According to the BOE analysis an “adverse impact on state employment,” would likely result in lower corporate and personal income tax revenues for the state.
Runner concluded that, “The Legislature needs to stop considering bills that would hurt jobs and instead start improving California’s dismal business climate so we can attract much-needed jobs to our state.”
The state stands to lose a substantial amount of revenue. According to the Sacramento Bee, “California affiliates last year paid $124 million in state income taxes, plus business, employment and property taxes. (And) that doesn't count the multiplier effect of affiliate dollars in local economies.”
Unlike the federal government who can print money or borrow trillions from China (they currently hold nearly $1.2 trillion of U.S. bonds), California is financially bankrupt. Driving businesses and taxpayers out of the state will only postpone the inevitable- draconian cuts and failure.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
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