diberry - 3:24 pm on Oct 10, 2011 (gmt 0)
Why do people keep saying "Amazon didn't want to pay their fair share?" It's not a tax ON Amazon. Read and understand the following:
Residents of CA and most states are required to pay sales tax to their state (called a "use tax") for goods bought out of state. They're supposed to do this voluntarily, but since few people know that and the sales aren't reported to your state (except on things like cars), few people do it.
States are wanting Amazon to collect taxes for them - and every other little business online - as a way to work around how residents get out of their lawful duty to pay that tax. In other words, "Amazon, please be our cop! In exchange you get, well... nothing. Just shut up and do what we tell you."
You see, in 1992, the Senate ruled that ONLY IF a company gets benefits from operating in a state should they have to collect sales tax for that state. Meaning: if you have a shop in CA, so CA cops and fire depts and other services are there for you, and CA residents are flocking to you, then for those "benefits", you must collect sales tax for CA. That's only fair.
But online changes everything, because now a company like Amazon can get the benefit of customers from California without operating physically in CA - so they do NOT have the benefit of CA tax-funded services, the way Wal-Mart does. I think everyone's in agreement that we need to redefine how businesses "operate" in states, but the way the states are going about it is PATENTLY UNCONSTITUTIONAL. Believe me, the last thing you want, particularly if you're not in CA, is precedent for the state of California telling you how to run your business. Sacramento couldn't manage a household of four on an income of 7 figures without declaring bankruptcy.
So Amazon is seeking a federal solution - if Congress imposes some kind of online sales tax, then the states get what they want in a CONSTITUTIONAL way, and only CONGRESS is telling online businesses how to run themselves. That's a much more business-friendly solution for everybody. Shame on the states and the big box coalition for ever trying to go about it any other way. I think you'll find their real aim was never a "level playing field", but to kill a lot of affiliate links that were positioning Amazon at the top of the SE's. I've been over this six ways from Sunday, and that is the ONLY benefit I can come up with from all this for Wal-Mart and Pals.
Amazon's cutting off of affiliates was the only way for them to pressure California and thereby make Congress see that this needs to be addressed already (and California was the only state big enough to make it a federal issue). Congress has been talking about this for a decade or more, but not getting anything done.
It inconvenienced me, too, but I was happy to get back into the Amazon affiliate program, because it converts better than any others on several products I deal with. I'm kind of glad I was shut out for a quarter, though, because I did discover some great replacements for Amazon. Considering they or any other business can shut their affiliate program completely down anytime they want, it's always good to have other baskets ready to hold your eggs.
But I still have to support Amazon taking a stand against flagrantly unconstitutional attempts to bully them into doing service to states that do no service for them.