The Colorado legislature and governor recently imposed a new law saddling online retailers and their customers with severe tax liabilities and red tape. But the only way Colorado can try to tax an out-of-state company (such as Amazon) is if that company has a business presence in Colorado. As a consequence, Amazon cut off its Associates program for Colorado residents who advertise for Amazon online. The legislature was warned in advance that the tax policy could cost Colorado businesses and possibly end the Associates program.
Predictably, left-wing advocacy groups — and their lap-dog media — have decided to play the game of blame the victim, Amazon. They have utterly ignored the aspects of the law that compelled Amazon to take defensive action. Such tactics come straight out of the left’s playbook: blame business for the problems caused by political controls.
See the additional sections of this article:
* Denver Post Editorial
* Tax Law Is NOT About Equalizing Tax Standing
(Analysis of Final Bill)
* Amazon’s Letter to Associates
* Amazon’s Action Was Self-Defense, Not Vindictiveness
* Interstate Commerce and State Sales Taxes
* The Best Way to Equalize Taxes
* It’s Not Just Amazon
* Amazon Restored Hawaii Associates
* More On the Affiliate Amendment (Tim Hoover’s Biased Article)
* Mike Littwin’s Smear Job
* Westword’s Michael Roberts Interviews Fred Nicely
* Other Commentary of the Amazon Tax
See also my follow-up article, Tax Foundation Takes On Amazon Tax. Note that the author of the Tax Foundation’s report more finely distinguishes a “physical presence” from an “economic presence” than I do here.
March 12 Update: See my latest article, “The Amazon Tax and the Affiliates Amendment.”
As reviewed in my “Disclosures Unjustly Compelled by the FTC,” I have a longstanding relationship with Amazon. (In this case offering disclosures is appropriate despite the fact that the FTC requires them.) Not only have I been an Amazon customer, but I have been an Associate and have collected some pittance from the program (less than $100 total). My book, Values of Harry Potter, also sells at Amazon. But obviously I am not taking the stance herein for any direct financial gain (of which there is very little), but because I believe that Amazon and other online retailers are being unjustly targeted by an oppressive tax law.
I do not mean to imply above that all media coverage of the Amazon Tax has been irresponsible. Today’s Denver Post offers an excellent summary of the situation in an editorial:
The move by online retailer Amazon to drop its Colorado affiliates was a predictable result of the legislature’s recent efforts to revoke tax exemptions.
We were convinced from the outset that House Bill 1193 was problematic, particularly in light of U.S. Supreme Court decisions that are unfavorable to states seeking to compel out-of-state retailers to collect sales taxes.
The Amazon situation only reinforces our belief that the issue of online sales tax collection ought to be addressed at the federal level.
The Colorado law requires online retailers to tell their customers how much Colorado sales tax they owe when those customers buy items by clicking through marketing affiliates based in this state. Those retailers are supposed to pass that information along to the state so the government can ensure the taxes are paid. [March 12 Update: a reader pointed out that this paragraph from the Post contains an error; the law seeks to collect the tax from all Colorado customers who buy from Amazon, regardless of whether they buy through an Associate.]
It’s not surprising Amazon decided to just cut Colorado-based marketing affiliates rather than get involved in any aspect of sales tax collection. That’s what online retailers have done to thwart so-called “Amazon laws” in other states, such as Rhode Island and North Carolina.
The Post offers additional useful information on the matter (though I disagree with some of its conclusions). It is interesting that the paper’s editorial is more fair, objective, and informative than the paper’s “news” coverage elsewhere, a matter I’ll address below.
Notice that Amazon does NOT collect sales tax for either Rhode Island or North Carolina, which explains why Amazon dropped its Affiliates programs in those states, as it has done in Colorado.
Democratic legislators have disingenuously claimed that the tax law is merely about equalizing the tax standing between local retailers and online retailers. Such claims stray far from the truth.
A local retailer is located within a particular set of tax zones (state and county, and possibly city and various special districts). Within that location, the percentage of the tax is exactly the same for each purchase. The retailer calculates the percentage, tacks on the fee to the sale, and the customer pays it. Then the retailer pays the various taxes to the various taxing entities at the alloted times.
That is most certainly NOT what the Amazon Tax requires of online retailers. Here’s what the final version of Bill 1193 actually says:
“Each retailer that does not collect Colorado sales tax shall notify Colorado purchasers that sales or use tax is due on certain purchases made from the retailer and that the state of Colorado requires the purchaser to file a sales or use tax return.”
Failure to do so results in a $5 fee per infraction. Retailers must also submit an annual tax report to customers, stating that they owe the Colorado taxes. “The notification specified… shall be sent separately to all Colorado purchasers by first-class mail and shall not be included with any other shipments.”
Furthermore: “Each retailer that does not collect Colorado sales tax shall file an annual statement for each purchaser to the Department of Revenue on such forms as are provided or approved by the Department…”
The bill is also quite vicious in its enforcement: “If any retailer that does not collect Colorado sales tax refuses voluntarily to furnish any of the information specified in [another part of] this section when requested by the executive director of the Department of Revenue [etc.], the executive director, by subpoena issued under the executive director’s hand, may require the attendance of the retailer” at a government hearing. Moreover, the director is authorized by the bill “to apply to any judge of the district court of the State of Colorado to enforce such subpoena by an appropriate order…”
Obviously, this scenario is nothing like what local retailers must endure. Consider: if Amazon makes a $10 sale to somebody in Colorado, under the law Amazon is required to send out tax documents to the customer (via first-class mail) as well as to the state, and the customer is required to pay the sales tax. The postage and time required to comply with this bureaucracy — for both Amazon and customers — could easily overwhelm any profit that Amazon makes from the sale, and it would add considerably to the total purchasing price (including the value of time spent complying with the controls).
As Amazon recognized in its letter to Associates, the obvious intent of the bill is to make doing business in Colorado living hell unless retailers “voluntarily” collect the sales taxes directly.
In other words, the bill is a vicious combination of blackmail and threat of physical force.
Speaking of Amazon’s letter to Associates, following is the text as I received it on March 8:
Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.
We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.
We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.
The Amazon Associates Team
The story from the left — including advocacy groups, Democratic politicians, and various media posers — is that Amazon cut off the Associates program in Colorado merely out of vindictiveness, to “punish” Colorado for the tax law.
That left’s story is self-serving nonsense.
Amazon has a beef with the Colorado politicians who enacted the law, not with Associates. Amazon benefits from its Associates program, because that program generates sales for Amazon. The company would be foolish to cut off this source of revenue merely out of vindictiveness, as a way to “punish” those who weren’t even responsible for the tax law.
As pointed out above, the actual language of the law is severely punitive, and it imposes excessive costs on transactions. Amazon’s attempts to get out from under Colorado’s tax bureaucracy by shutting down the Associates program is, therefore, perfectly predictable and justifiable.
I was therefore surprised to read Joshua Sharf’s view that grants important premises of the left. Sharf writes:
Clearly, this proposed tax, whose enforcement would have fallen on the affiliates [in the original version of the bill], would have created a huge administrative nightmare for the thousands of small affiliates in the state, many of whom would have folded up. It was also predictable under those circumstances that companies like Amazon might have folded up and terminated their affiliate contracts. But a concerted lobbying effort, led by my friends Marc and Claudia Braunstein, who own ShopAtHome.com, a business based entirely on affiliate relationships, and by the PMA, forced the State Senate to amend the tax so that the responsibility for tracking and paying the tax falls on purchasers now, rather than sellers. In other states, Rhode Island and North Carolina, that change wasn’t made, and Amazon pulled out. But it was expected that this would save the affiliate relationships here in the state.
So here’s where both sides are wrong, and where it becomes clear that Amazon has made at least a tactical error here. Their action is clearly not an attempt to evade paying the sales tax. The administrative burden of that tax falls on buyers, not Amazon, and if Colorado attempts to force a company based in Washington State to disclose the purchases of their Colorado customers, it’s going to find itself needing a supplemental appropriation to the Attorney General’s office. In fact, the predictable failure to raise revenue, combined with the black hole of legal expenses, might actually allow this change in tax policy to qualify under TABOR.
But precisely because of that, the action makes no sense to the affiliates. Without warning, thousands of Amazon’s sales partners found their incomes eliminated, despite their efforts. This looks an awful lot like friendly fire. These are business partners that the company has alienated and insulted. These are your allies, Amazon. …
Now maybe Amazon is trying to get their affiliates to put pressure on the state to repeal the damn thing altogether, and Greg Brophy, chief among the Senators Who Get It, is already talking about that. But maybe Amazon is really ticked off at its affiliates. After all, they only lobbied to shift the administrative burden, and onto their customers, at that, rather than to stop the tax altogether. This is, at least, poor customer relations. It’s also possible that Amazon sees it as cowardly, since the affiliates were counting on Amazon to foot the legal bill to fight this thing. Never mind that Amazon could have passed some of this cost along to its Colorado affiliates in the form of reduced referral fees. But regardless of what Amazon thinks it’s trying to accomplish here, it’s awful PR.
But Sharf ignores critical elements of the bill, and he resorts to Making Stuff Up about Amazon’s alleged motives. His criticisms are therefore completely unwarranted.
True, the bill was amended to remove language about “affiliates.” But that amendment did not address the fundamental problem with the bill: the severe compliance costs loaded onto firms with a Colorado presence. The fact that some Associates (who certainly did not speak for me!) helped to amend the bill so that it screwed Amazon even harder without directly screwing Associates is irrelevant to the fundamental problem with the bill.
Amazon’s action was not about being vindictive. It was not about “punishing” Colorado or Associates. It was justifiable self-defense in response to an unjust law.
Why didn’t the Colorado legislature simply declare that all sales to Colorado residents are subject to state sales taxes? The problem with such an approach is that we live in a federalist system, in which each state remains largely autonomous, subject to federal controls.
One of the major reasons the U.S. Constitution included the “commerce clause” was to prevent protectionist taxes among the states and to spur trade within the nation. Article I, Section 8 therefore grants to the U.S. Congress the power “to regulate Commerce… among the several States.”
Colorado simply has no authority to tax businesses in other states. (Amazon is located in Washington.) The only plausible way that Colorado can tax an out-of-state business is if that business has a “physical presence” in Colorado. And that is what the dispute over Associates is all about (though one wouldn’t know it from reading dishonest reports from the left).
(Colorado does, however, retain the authority to force residents to pay a “use tax” on goods bought from out of state. Such consumer-paid taxes are extremely onerous and rarely followed; they should be repealed.)
Amazon is currently collecting sales tax on goods shipped to New York:
Effective June 1, 2008, Amazon.com LLC will begin collecting sales tax on items shipped to destinations within the State of New York as New York has enacted a new law requiring out-of-state sellers to collect and remit sales tax based on advertising. Amazon has filed a lawsuit challenging the constitutionality of this provision. However, as required by the law, we must still begin collecting New York sales tax beginning on that date.
Wikipedia offers a couple of useful links for background on this. Saul Hansell wrote for the May 1, 2008, New York Times:
The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon has hundreds of thousands of affiliates—from big publishers to tiny blogs — that feature links to its products. It says thousands of those have given an address in New York State, although it does not verify the addresses.
The state law says that if even one of those affiliates is in New York, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate. This is an extension of an existing rule that companies that employ independent agents or representatives to solicit business must collect sales taxes for the state.
I knew the left was drumming up a campaign against Amazon when I saw an article from the New York Times from December 26, 2009, titled, “Sorry, Shoppers, but Why Can’t Amazon Collect More Tax?” The attempt by Colorado Democrats to join the bandwagon therefore came as little surprise. (I am surprised, however, by how self-destructive Colorado Democrats are behaving, having engaged in an all-out war on business in the middle of an economic crunch. The Amazon Tax is only one of several destructive tax laws passed by Colorado Democrats.)
Randall Stross, author of the biased but still informative NYT article, writes:
Today, Amazon collects sales tax in only five states, which gives it a continuing advantage over companies who do collect them in all or most states. Competitors aren’t the only ones hurt by Amazon’s stance on sales taxes: it also means the loss of considerable revenue to states and localities that badly need it. …
In addition to its home in Washington State, Amazon has facilities in North Dakota, Kentucky and Kansas, and collects sales taxes in these states. The company also collects sales tax in New York, but not cheerfully: Amazon has gone to court to overturn a law passed last year that compels it to collect from New York residents.
The Denver Post’s editorial fairly describes the problems of out-of-state taxation, from a perspective of wanting to remedy the matter through federal legislation:
If and when federal lawmakers take on the issue, it will not be as simple as merely requiring online retailers to collect state sales taxes.
Sales taxes are levied based on where a customer lives and can vary within a state. Online retailers would be compelled to keep track of some 8,000 sales tax rates, according to a recently completed report by the Tax Foundation.
The report also cited the efforts of several dozen states, which have come together to create the Streamlined Sales Tax Project.
If project members could agree on a simplified sales tax structure for online retailers, such a development could undercut the main defense that online retailers have in fighting sales tax collection — that it’s too complex a task.
If Colorado legislators must insist on charging sales tax on out-of-state purchases, they should drop the onerous consumer-paid use tax, repeal the horribly unjust Amazon Tax, and band with other states to lobby for a federal fix along the lines of what the Post describes.
Of course there is a far easier way to equalize the tax burdens for Colorado retailers: repeal all sales taxes.
Obviously the legislature wouldn’t even consider doing that.
However, by arguing that the sales tax hurts local sellers, Colorado Democrats (and their Republican cohorts) implicitly grant that such taxes hurt business. The “solution,” according to these legislators, is to hurt the business of others also, so as to equalize the pain that these politicians inflict. (The Amazon Tax hurts online retailers dramatically more than the sales tax hurts local retailers, so that tax is actually protectionist in nature.)
As onerous as the sales tax is to collect by retailers operating out of a fixed location, it is exponentially more difficult to collect by mail order companies trying to do businesses within Colorado. The reason is the large number of overlapping tax districts are practically impossible to follow for a small business. (That is why I no longer make any direct sales in Colorado.) In such cases, the effort to collect the tax overwhelms any potential benefit from doing business in Colorado. It is therefore a nuisance tax that reduces the amount of business in the state.
If the legislature wanted to pursue a ballot measure to totally do away with the sales tax in this state, I would be all for it, even if the income tax were increased in a revenue-neutral way. (My preference, of course, would be to simply eliminate the sales tax and reduce state spending proportionally.) But that approach would actually work, so of course it’s not even on the table.
5280 helpfully provided the link to an article by Greg Avery for the Denver Business Journal. Avery writes:
Tuesday, high-end gadget and gift seller Hammacher Schlemmer & Company Inc. started cutting off its Colorado-based online affiliates, said Marc Braunstein, founder and president of ShopAtHome.com, a Greenwood Village-based online discounter that’s also one of the state’s largest affiliate sales websites.
New York City-based Hammacher Schlemmer’s departure isn’t the earthquake in the industry that Amazon.com’s is, but it raises the specter that other large online retailers will drop affiliates in coming days.
A reader pointed me to two articles about an Amazon Tax in Hawaii. The result was that, after Hawaii dropped the unjust taxation, Amazon restored its Associates program there.
Geoffrey Fowler writes for the July 1, 2009, Wall Street Journal:
Amazon.com Inc. has informed its marketing affiliates in Hawaii that it is ending its business with them to avoid collecting sales tax in the state.
Lawmakers in Hawaii, following in the footsteps of North Carolina and Rhode Island, have passed legislation that would require companies to collect sales tax if they have marketing affiliates in the state. Affiliate marketers run blogs or Web sites and get a sales commission by featuring links to outside e-commerce sites.
Thankfully, this story had a happy ending, as the Amazon blog reports:
Earlier this month, Governor Linda Lingle vetoed the unconstitutional tax collection scheme passed by the Hawaii legislature in HB 1405. Because the effective date of that bill preceded both her veto and the legislature’s veto override session, we had little choice but to end our advertising relationships with all Hawaii-based participants in the Amazon Associates Program. Now that the override session is over, and the legislature did not override Governor Lingle’s veto of HB 1405, we would like to invite all Hawaii Associates whose accounts were closed due to the pending legislation to re-enroll in the Associates Program.
Unfortunately, our governor, Bill Ritter, decided instead to screw Amazon as well as the company’s Associates and customers. But it is not too late for the Colorado legislature to return to sanity, repeal the Amazon Tax here, and allow Amazon to restore the Associates program.
As mentioned above, the bill was amended to remove language about affiliates. However, while various parties pretend that this amendment made the bill workable for Amazon, the facts are otherwise. Amazon never promised to keep the Associates program intact with an amended bill. That was always wishful thinking on the part of certain legislators and Associates.
The amendment removed the incentive of Associates to leave Amazon — because Associates would no longer have to process the burdensome tax paperwork themselves — but the amendment certainly did NOT remove the incentive of Amazon to leave its Associates.
It is in this light that I review Tim Hoover’s remarkably incompetent and biased article on the matter, written as a “news” story for the Denver Post.
Most importantly, Hoover never discusses the critical importance of interstate commerce and the relevance of a business’s “physical presence” in the state. Hoover does use that last phrase, but only nine paragraphs into his piece, and in a way that fails to explain the significance of it.
Rather than explain why Amazon cut off its Colorado Associates, Hoover follows the vicious attacks of the left and pretends that the decision was arbitrary and without cause.
Hoover repeats the smears of the left:
Democrats, though, said Amazon’s action was purely a public-relations tactic, punishing affiliates even though the final version of the bill removed the in-state marketers as means of collecting the sales tax.
“They (Amazon) absolutely killed the affiliates just to show that they can,” said Sen. Michael Johnston, D-Denver.
Meanwhile, one liberal group called for a boycott of Amazon until the retailer renews its relationships with affiliates.
Amazon “chose to make an example of our state and unfairly punish their own business associates for political gain,” the group ProgressNow Colorado said in a release.
Never mind the fact that the claims of Senator Michael Johnston and ProgressNow are bald-faced lies. Apparently Hoover sees it as his job merely to repeat slander, not correct it.
Later in his article, Hoover makes believe that Amazon had no reason for its move:
Amazon spokeswoman Mary Osako on Tuesday would not explain why the retailer had ended relationships with sellers in Colorado and instead repeated phrases from a letter the company sent to affiliates over the weekend.
“Although the legislation and regulations do not require online retailers to collect sales tax, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to ‘voluntarily’ collect Colorado sales tax,” she said in an e-mail that quoted directly from the statement to affiliates.
In the bill’s original form, the tax would have been collected through the in-state affiliates, as other states are attempting, but Johnston and other lawmakers helped re-engineer the bill to take affiliates out of the equation after threats from Amazon that it would dump them.
When the bill was changed, Democrats, in-state affiliates and even Republicans cheered.
Brophy wrote on his Twitter account at the time that affiliates were “no longer collateral damage in war on Amazon” and said, “Affiliates win!”
On Tuesday, though, Brophy said he was wrong. “I thought that (the new version of the bill) settled the question, but it didn’t.”
Amazon has said that it will only renew its relationships with affiliates if the law is repealed or significantly altered.
Granted that Amazon could have been more explicit in stating its reasoning for its decision, the relevance of interstate commerce and the “physical presence” of a business is obvious to anyone who conducts even a cursory investigation into the matter. As I’ve reviewed, the amendment regarding affiliates in no way resolved the problems that the law creates for Amazon. For Hoover to ignore these critical facts manifests his journalistic irresponsibility.
Mike Littwin’s article on the Amazon tax surpasses mere journalistic irresponsibility. It is a vicious smear job.
It is possible that somebody other than Littwin selected the title for his article: “Amazon’s use of human shields evil.” So my comments in this paragraph are directed at the party who did select it. A “human shield” means an innocent party that violent terrorists hide behind to prevent enemies from firing on the terrorists. To compare Amazon to violent terrorists is appalling and extremely unjust.
Littwin begins by declaring that Amazon is evil. Why? Because “Amazon has dropped the big one on the innocent affiliates, who have done absolutely nothing wrong except get caught in the crossfire.” It is true that the Associates (including me) are innocent and that they have gotten caught in the crossfire. But the critical point that Littwin ignores is that this fire is coming entirely from Colorado politicians. Amazon too is an innocent victim.
Next Littwin claims: “No one seems sure exactly why Amazon fired its Colorado affiliates…” However, just a few paragraphs later Littwin himself points out the reason: “states can’t force companies that are not physically in the state to collect sales tax. Amazon is somewhere in the wind, staying high above sales-tax rules.” Did Littwin really fail to notice that that is the reason “why Amazon fired its Colorado affiliates?”
Then Littwin repeats the by-now standard slander that Amazon cut off its Associates out of sheer vindictiveness, without any real reasons.
Littwin does make a good point that, because stores like Barnes and Noble, Wal-Mart, and Target definitely have a “physical presence” in the state, they pay sales tax. It does seem unfair to screw some retailers harder than others with taxes. However, as discussed above, this tax bill is hardly a fair way to solve the problem. Littwin ignores Amazon’s statement in its letter: “As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly.”
At least Littwin grants: “And the reaction was not unexpected. Amazon had fired its affiliates in Rhode Island and North Carolina.”
However, then Littwin then adds that Amazon “threatened to do the same in Colorado, which is why the legislators passed a law that wasn’t based on affiliates.” The law is in fact “based on affiliates” in the sense that the Associates program is what plausibly gives Colorado tax jurisdiction over Amazon. Again, the amendment pertaining to affiliates was absolutely meaningless in terms of alleviating the compliance problems for Amazon. But Littwin can’t be bothered with such pesky facts; he’s on a crusade to demonize a business.
Michael Roberts of Westword, who sometimes leans left in his economic commentary, conducted better research on the Amaon Tax than theDenver Post’s news side did. Roberts called up “Fred Nicely, tax counsel for the Washington, D.C.-based Counsel on State Taxation (COST).” Here’s what Nicely had to say to Roberts:
It [the Amazon Tax] definitely costs money. You have to go through and provide required notices. And, rather offensively, the Department of Revenue is able to get this information electronically, but the sellers are required to provide the information to the purchasers via the cost of first-class mail.
And there’s another side of the equation — a problem that’s twofold. The states can impose huge penalties for a failure to collect the tax. But if you incorrectly charge tax for something that’s not taxable, you open yourself up to class-action lawsuits from purchasers. So you can be hit both ways. …
The hope is that legislators in Colorado will potentially do what Rhode Island is exploring, which is repealing its legislation. They may have to potentially make some changes to the state’s constitution. But with other states, they should definitely be looking at complying with the Streamlined Sales and Use Tax Agreement. Those are steps Colorado should take.
Roberts reports that Nicely supports “a nationwide agreement that levels the playing field for companies interested in operating across state lines,” such as promoted by the Streamlined Sales Tax Governing Board. Roberts isn’t sure such an effort can be successful, but at least he fairly reviewed it.
Nice reporting, Westword. I hope you inspire the Denver Post to return to real journalism.
I’ve covered the basic issues above. However, it might be useful to collect, summarize, and where appropriate criticize other commentary on the matter.
The single-term, economically illiterate governor Bill Ritter issued an evasive media release that effectively illustrates why he dropped out of the governor’s race.
Ritter does make one important concession in stating, “the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.” Ritter thereby grants what so many leftists in this state have tried so hard to evade: Amazon dropped the Associates program because that was the only way Amazon could extricate itself from Colorado’s onerous and business-killing tax bureaucracy. The only unfairness is the unjust tax law perpetrated by Bill Ritter and the Democratic legislature.
ColoradoSenateNews.com, a Republican site, issued a good release describing the Democratic hostility toward business:
Yesterday, [State Representative Jack] Pommer once again lead the anti-business attack when Amazon announced its decision to cut ties with Colorado affiliates. Later in the day, Ritter, Senate Majority Leader John Morse, D-Coloardo Springs, and Sen. Rollie Heath, D-Boulder, piled on the insults, calling Amazon’s decision “selfish” and “unjustified”.
Over at Mount Virtus, Ben DeGrow argues along similar lines as I argue here and comments on a variety of links.
In an early post for the Denver Post, Jessica Fender described aspects of the case. Fender precedes Hoover in fixating on the irrelevant amendment about affiliates while ignoring the much bigger issue of a business’s “physical presence” in the state.
Fender does usefully quote Pommer as calling Amazon’s action “flat out blackmail.” In other words, Pommer believes that Amazon declining to submit to the legislature’s blackmail is itself an instance of blackmail. What a vicious little troll.
T. L. James of People’s Press Collective reviews State Senator John Morse’s rant against Amazon. However, James wrongly characterizes Amazon’s move as “symbolic.” For reasons explained above, Amazon’s action was legal self-defense with very practical implications for the company.
Over at the Huffington Post, Carol Hedges laughably claims that “firing the Colorado affiliates in no way changes Amazon’s obligation under Colorado law.” She disproves her own statement by pointing out, “However, if an Internet retailer does not have a physical presence in the state, it is are not compelled to collect tax.” So which is it, Hedges? Hedges then proceeds with the typical leftist libel that Amazon “needlessly fired all of its Colorado affiliates, apparently out of spite.” What hogwash. The fact that Hedges is a “Senior Policy Analyst” with the Colorado Fiscal Policy Institute offers a pretty good indication of the value of that organization.
March 11 Update: Following in Hedges footsteps, Dave Taylor adds his nonsense to the Huffington Post. Taylor claims, “as Carol points out in the earlier Post article, Amazon firing all of us Associates doesn’t change anything about their tax liability in the state. The only way they can affect that is to simply stop selling product to everyone in Colorado.” Taylor’s statement is an outright fabrication. It has absolutely no grounding in the facts. If the Huffington Post cared anything about quality control, it wouldn’t publish such obvious distortions.
Tomasic begins by pretending that Amazon’s action is some sort of grand mystery, then he reviews the leftist smears of Amazon. He does quote aWall Street Journal article that inexplicably confuses the amendment pertaining to affiliates with anything that matters. However, citing the same Wall Street Journal article, Tomasic then proceeds to explain exactly why Amazon cut off its Associates:
The similar North Carolina and Rhode Island laws passed last year held that Amazon’s in-state affiliated sites amounted to “a physical nexus” or presence in the states and so required the company to pay state taxes. Amazon disagreed, arguing that links at affiliate sites amount merely to promotion or advertising not a physical presence or some kind of local franchise representation. Amazon lost the battle and so pulled its affiliate business in those states.
So what exactly is the mystery here, Tomasic? He claims that “Colorado’s law makes no mention of the ‘affiliate-nexus’ argument,” but Amazon’s “physical presence” in the state is the entire legal premise on which the law is based.
But then I have never seen Tomasic attempt to serve as anything other than a Democratic lap dog.
Nat Torkington whines that he got “fired for something outside [his] control,” forgetting that the vindictive Colorado legislation was also outside of Amazon’s control. Justice demands a clear identification of the victim — Amazon — and the perpetrators of the injustice — the Colorado politicians who passed the unjust law.
Chuck Plunkett of the Denver Post points out, “There were plenty of signals that repealing a tax exemption for online retailers would face legal challenges and possibly just such a move as Amazon launched today.” Plunkett also wonders why Denver Mayor John Hickenlooper, who is running for governor in Ritter’s place, declined to take a position against the tax measure.
The far-left ProgressNow (more aptly called Regress Now) has called for a boycott of Amazon. Regress Now’s commentary utterly ignores the destructive, protectionist nature of the tax bill.
With the socialist left demonizing Amazon and calling for a boycott, now is an excellent time to do some business with Amazon, in the name of justice.