Tuesday, March 3, 2009

The Legislature Goes After Amazon.com
by William Petrocelli

by William Petrocelli

The California Legislature has a chance to get serious about collecting sales taxes from Amazon.com. Assemblywoman Nancy Skinner (D-Berkeley) has introduced a bill that is virtually identical to the law in New York, requiring online sellers with affiliates in the state to collect sales taxes if they do more than $10,000 worth of business in the state. A court has upheld the constitutionality of the N.Y. statute. Skinner's bill (A.B. 178) would probably result in the collection of over $50 million per year in sales taxes from Amazon alone (and provide some much-needed fairness for local merchants). We urge you to write the Legislature and the Governor in support of the bill.

Assembly Bill 178 introduced by Assemblywoman Skinner directs the Board of Equalization to enforce the California Sales Tax law against Amazon.com and any other companies doing business in the same manner. In fact, the BOE probably already has this power, but this bill will make it hard for that agency to continue to twiddle its thumbs. Amazon apologists have already started a campaign of misstatements, so we thought we'd rebut a few of them:

Misstatement #1: AB 178 would impose "a tax on the Internet."
Wrong--This bill simply makes sales over the internet subject to the same taxes as sales over the counter. If a company has affiliates in the state soliciting sales, it would be required to collect the sales tax whether the actual sale was consummated by internet, telephone, or carrier pigeon.

Misstatement #2: AB 178 would result in "a loss of jobs."
Nonsense--Amazon apologists have already started using this line, but it's a complete fabrication. Amazon associates in California can continue to solicit sales, if they want to (but, frankly, we don't know why, given the miniscule fees most of them get). This bill does not affect them at all. It simply means that sales tax would have to be added to each California sale.

Misstatement #3: AB 178 would "restrict the growth of internet commerce."
Self-serving twaddle--In the early days of online sales, we had to listen to testimony claiming that online commerce was a fledgling industry that needed to be nurtured. That might have made sense when Amazon.com and others were like timid young canaries--now that they function like a flock of raptors, they should abide by the same rules as the rest of us.

Misstatement #4: AB 178 "is unconstitutional."
Wrong--the last U.S. Supreme Court decision on this subject was 17 years ago, and was decided before online commerce was invented. AB 178 is identical to a New York law that was recently upheld by a New York court.

Misstatement #5: AB 178 would "put an unfair burden on all internet sellers."
Not true--Smaller internet sellers would not be affected. The bill only applies to large internet sellers that have in-state representatives pushing their sales (Amazon has about 200,000 of them), and it would not apply to any online seller with less than $10,000 in business in the state.

Misstatement #6: AB 178 imposes "an unfair administrative burden."
A real laugher!--Amazon's apologists say it would be unfair to make them compute different sales taxes for each state or locality around the country. Oh yeah? This is the same company that practically invented data-mining. Every piece of customer data is sliced and diced to give Amazon maximum information about its customers ("Customers who purchased The Red Badge of Courage also enjoyed Little Red Riding Hood"). They could figure the sales tax in a heartbeat.

Where to Write:
Assemblyman Jared Huffman
3501 Civic Center Drive, Room 412
San Rafael, CA 94903 (415-479-4920)

Senator Mark Leno
455 Golden Gate Avenue, Suite 14800
San Francisco, CA 94102 (415-557-1300)

Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814 (916-445-2841)

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