CA Assaults Amazon Affiliates

Investors Business Daily published a good editorial July 1 supportive of Amazon in the wake of California’s passage of its so-called “Amazon Tax.” See also my backgrounder focusing on Colorado’s version of the tax. (And of course see my Disclosures Unjustly Compelled by the FTC.)

I sent the following notes to the paper:

Dear IBD,

Thank you for your July 1 editorial against California’s so-called “Amazon Tax.” I offer two corrections.

First, your list of states attempting to impose the tax omits Colorado, my home state, where the legislature has also driven Amazon and other companies to drop their affiliates (including me).

Second, you incorrectly state that, if online retailers do not pay the sales taxes, that leaves “consumers free to buy without paying them.” Not so. According to “California Use Tax Information,” “Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state.”

I imagine that the typical Californian, like the typical Coloradan, has never heard of the “use tax,” meaning that huge portions of the states’ populations are in violation of the tax law — a significant problem. [See also my article on Colorado’s use tax.]

In-state companies that must collect the tax have a legitimate beef. But an alternative to expanding the tax to out-of-state companies is to repeal all sales and use taxes, even if offset by increases in other taxes.