How to Hurt Small Businesses with the Amazon Tax

By Timothy R Butler | Posted at 3:49 PM

Because it is unconstitutional to tax companies without a physical presence in a state, various states have been passing laws that absurdly count having affiliates such as myself in a state as having a “physical presence” in that state. It doesn't work out well:

Board of Equalization Member George Runner blasted Brown for signing the law. “Even as Governor Jerry Brown lifted his pen to sign this legislation, thousands of affiliates across California were losing their jobs. The so-called 'Amazon tax' is truly a lose-lose proposition for California. Not only won't we see the promised revenues, we'll actually lose income tax revenue as affiliates move to other states.”

Given that affiliate programs are essentially advertising programs, the legislation's concept is fundamentally flawed. Moreover, since the major online retailers terminate affiliates in a given state when that state passes this sort of crazy law, the laws do not produce revenue for the state, they only eliminate revenue for the affiliates.

This is helpful how?


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2 comments posted so far.

Re: How to Hurt Small Businesses with the Amazon Tax

So, next time I get taxed on Amazon… I assume you will be issuing me a personal refund? :D

Posted by Dan Duckworth - Jul 01, 2011 | 1:32 PM- Location:

Re: How to Hurt Small Businesses with the Amazon Tax

Anonymous: indeed.

Danny: Hmm… I’m not quite sure that is going to help my situation. You are taxing my brain! ;)

My big fear is what happens if this sort of law ends up being applied more broadly. I can’t imagine having to try to keep track of taxes for my clients in various different states as opposed to just Missouri. Yikes!

Posted by Timothy Butler - Jul 02, 2011 | 7:11 AM- Location: Blah.

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