Unhatchable chickens

The California Assembly thinks it’s found a new revenue stream:

The state of California could collect more than $1 billion a year by taxing Amazon and other online retailers if a bill approved by the Assembly becomes law.

Assemblyman Charles Calderon, a Democrat from Whittier, says his legislation doesn’t impose a new sales tax, but extends one that California should already have been enforcing.

According to Bill Quick, the take is being overestimated by more than $1 billion a year:

If this becomes law, it will net California exactly zero. As I have repeated elsewhere, California has no power to force an out of state company to collect sales taxes for it. No state does. These morons are hanging their hats on the notion that because Amazon pays a commission to web publishers who carry their ads, they then somehow have a “presence” in the state that permits California to force them to collect.

Even this is a murky notion — but Amazon has traditionally dealt with assaults like this by simply ceasing to pay commissions to web publishers who are residents of the state in question.

Such as, for instance, Bill Quick.

Mr Calderon should probably stick to topics he comprehends, such as looking at state officials with lust in his heart.





7 comments

  1. Jeff Brokaw »

    2 June 2011 · 11:01 am

    Illinois passed a law exactly like this recently, and Amazon quickly cut off their relationships with the in-state affiliates. Within days. Just like Bill Quick says up above!

    This is one thing about taxation that some of these revenue-grabbing political geniuses refuse to understand: the targets of their arrows can simply pick up and move somewhere else that is less predatory.

    The revenue stream of a private business is not guaranteed in perpetuity. Taxing bodies, whether local, state, or Federal, can’t just assume that anytime they need cash, they can treat that revenue like an ATM machine. It just doesn’t work that way.

  2. fillyjonk »

    2 June 2011 · 11:23 am

    I presume California has already discovered the “let’s imagine what the sales tax people are saving on internet purchases would be, and charge them that as part of their income tax” like Oklahoma does?

    But yeah…Amazon and other companies with “affiliates” will just cut ties rather than being shaken down.

  3. CGHill »

    2 June 2011 · 11:34 am

    In fact, Oklahoma was a little ahead of the curve: the use tax was first enacted way back in 1937. The current guesstimate-on-511 came about because, yes, they couldn’t figure out a way to enforce it online.

  4. McGehee »

    2 June 2011 · 12:15 pm

    I believe Colorado pulled this too. IIRC, Jeff Goldstein had to give up his Amazon tipjar-analog as a result.

  5. McGehee »

    2 June 2011 · 12:16 pm

    Oops. Knew I should have copy-and-pasted that URL instead of typing it.

  6. Baby M »

    2 June 2011 · 4:43 pm

    Amazon is very, very, very careful about not having a “presence” in states that are looking to tax it. If an Amazon employee goes on vacation to a “hostile” state, he is forbidden to log in to his work computers or work e-mail system, or even post comments to an Amazon blog, so there can be no claim he was doing anything on company time within that state. I think they even go so far as to disable login credentials.

    As an Amazon shareholder, I am grateful to the Amazon legal department for protecting the value of my investment so ruthlessly.

  7. Dan B »

    3 June 2011 · 8:55 am

    > The current guesstimate-on-511 came about because, yes, they couldn’t figure out a way to enforce it online.

    Oklahoma Tax Commission probably wasted more money on buying and running those stupid “elephant in the room” commercials than they collected in use-taxes. I doubt they made enough to even pay for the Oklahoma-specific voice-over. But I’m sure the OKC & Tulsa media like getting a government handout for running it.

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