California Gov. Brown Signs Job-Killing Internet Tax into Law

Stop eTaxes ^ | 2011-07-01 | Kaitlyn Ewing

[92nina]

...While written with the purpose of raising taxes, this legislation will prove to be extremely counterproductive for the state’s economy. Amazon.com, one of the online retailers which would be affected by the Internet tax, has already started to cut ties with its in-state advertising affiliates, which are small businesses dependent upon these contracts. More than 25,000 affiliates will be affected by the California law’s passage.

One such affiliate, Ken Rockwell from San Diego, has already stated his intentions to move his photography business out of the state as a result of the Internet tax. Of this, Rockwell stated “Will it be Las Vegas or Scottsdale or Ensenada? It’s a question of where, not if.” Thus, Governor Brown is driving much-needed jobs out of a state which is already suffering from an 11.7% unemployment rate.

This pattern has been witnessed in other states that have already implemented the Internet tax, such as Rhode Island and North Carolina. In these states, there has been no extra revenue generated. In fact, their respective economies have only worsened. Online retailers made the practical decision to move their business out of the state to avoid being subject to the tax, taking jobs and investment with them...

[92nina]

On Wednesday, California Governor Jerry Brown signed into law ABX1 28, legislation which will impose a sales tax on purchases made from out-of-state online retailers. The law extends a business’s nexus standard to include in-state advertising affiliates, subsidiaries, and in virtually any other way the Board of Equalization decides. By signing this legislation, Governor Brown has effectively decreased in-state investment and driven jobs out of an already ailing state.

Take this article and others I found to the fight to the Libs on their own turf; put the Left on the defensive at at Digg and at Reddit and in Stumbleupon and Delicious

[BigFinn]

You JUST can’t fix ‘stupid’.

[Cheetahcat]

He just needs more Brown Turd Polish!

[RockinRight]

Bye, California.

It was nice while it lasted.

[rockinqsranch]

There is only one person in this World Jerry Brown does any good for, and that is Jerry Brown. Anybody else is incidental.

[Hodar]

25,000 Amazon affiliate websites just got ‘fired’.

If every website hired an average of 5 people, then 250,000 just joined the unemployment ranks. Now, let’s consider the support companies (custodial, IT Support, food service, tax accountants, property managment) and that number is likely closer to 300,000.

Smooth move, Ex-Lax

[jetson]

The word IDIOT is too kind to describe MOONBEAM.

[clamper1797]

The word IDIOT is too kind to describe MOONBEAM.

And the morons that voted for him

[winner3000]

They have already driven all manufacturing out of CA. This law will do the same to online retailing. I can’t wait for Hollywood and Silicon Valley to start moving their jobs. There wouldn’t be anything left that’s revenue producing.

[EternalVigilance]

Killing the goose that laid the Golden State eggs.

[FightforFreedomCA]

GRR!!!! Rat B@st@rd! This really chaps my hide...

[CIB-173RDABN]

The Democrats live in their own world with their own reality.

They figure if they just had a little more money they can fix things.

As my tag says, California does not have a (lack of) money problem, it has a spending problem. Raising taxes will (in fact can not) fix the financial mess the Democrats have created.

When taxes get to be a burden, the tax payer finds a way around them. Some legal some illegal. This is not rocket science, it can be proven after a certain point taxes increases simply translates into less money coming in.

I wonder how bad it will get before it collapses?

[camerongood210]

In other news...

[grateful]

This is unconstitutional.

These people aren't employees who get benefits, healthcare, etc. They're self-employed people running their own small businesses that are paid to advertise their clients' products. Not much different than hiring Madison Avenue to get the word out, but on a more personal and word of mouth level. That does NOT constitute a nexus.

Overstock and many other internet companies who have no presence in the state other than these advertisers have followed Amazon's lead and "terminated" their contracts with them.

Not a great move, California.

[grateful]

I’ll also state the obvious. The “revenue” this was projected to bring in will actually be a loss due to companies terminating affiliates and said affiliates moving out of state for friendlier climates. We’re already seeing this in New York and Illinois.

[Nonsense Unlimited]

Okay, so we have Amazon dropping alliliates in IL, NY, CA and soon CT (since they just passed a similar law).
Did I miss any?

Did I mention that WI is open for business?
Almost 100° here today too. Who needs CA.

[MNDude]

Well, they should make a law that people can’t leave the state, or quit working and hiring! \sarc

[cizinec]

The states, including Texas, have long argued (unsuccessfully) that affiliate nexus should apply for sales tax purposes.

This isn’t even affiliate nexus. I guess their theory is that these companies are acting as agents of the sellers. Since we have hundreds of years of caselaw and tradition around agency relationships, they can’t think this is going to fly.

[Bob]

The law extends a business’s nexus standard to include in-state advertising affiliates...

Beyond that, the only 'in-state' aspect of my Amazon affiliate status was that I live here (at least for now) and developed the website code here. The actual advertising on my sites is hosted on servers located outside of the state, in Utah.

[Bob]

25,000 Amazon affiliate websites just got ‘fired’.

If every website hired an average of 5 people, then 250,000 just joined the unemployment ranks. Now, let’s consider the support companies (custodial, IT Support, food service, tax accountants, property managment) and that number is likely closer to 300,000.

I'm quite sure that many, if not most, of California's Amazon affiliates are in a situation very similar to mine. I have a few dozen websites that, until this week, contained Amazon affiliate links. I'm a one-man operation and the links brought in a relatively small but fairly steady amount of money. While it's true that I won't be paying taxes on that money I'm no longer getting (net loss to the state), I won't be laying off anyone, not even myself. (Amazon made it very easy for small businesses to become affiliates and I'm sure that their affiliate base reflected that.)

That said, there undoubtedly are a relatively few companies who would fall into the situation you've described. That, though, would be the exception rather than the rule.

[Hoodat]

Well, they should make a law that people can’t leave the state,

I think they once tried something like that in East Germany.

[Hodar]

Sorry to hear about this, Bob.

I was thinking the Affiliates were the ‘New and Used’ dealers; some of which are faily sizeable companies - or so I thought.

Still, Amazon is capitalistic in nature; it doesn’t matter where you are located, you can ship from anywhere to anywhere. When California is in the budget shortfall they are in; a wise man would do what he could to STIMULATE the economy, not slow economic growth by instituting additional dis-incentives (ie. taxes).

[AnotherUnixGeek]

I’ll also state the obvious. The “revenue” this was projected to bring in will actually be a loss due to companies terminating affiliates and said affiliates moving out of state for friendlier climates.

And there's the original issue of the sales tax on consumers - Democrats see numbers under the caption "Lost Revenue" and assume they can magically tax it all into their cauldron of handouts for public employee unions. But people will simply stop buying from Amazon and start buying from out-of-state web sites which have no presence in California at all (Amazon has development offices in the Bay Area for the Kindle, among other things).

High taxes are tolerable when the economy is roaring along - but the economy is horrible and many people are struggling to make ends meet. Even though California Amazon buyers are supposed to report and pay taxes on their purchases, buying from Amazon has become a way for millions of people to save money, and if that avenue of savings is cut off, they'll just look for another.

This is what over-taxation and bad tax laws lead to - a society in which attempts to evade taxes become commonplace and disrespect for the law grows.

[Bob]

I was thinking the Affiliates were the ‘New and Used’ dealers; some of which are faily sizeable companies - or so I thought.

Since I really don't have any solid stats to back up my gut feel on this, I could easily be way off in my view of Amazon affiliates. Because Amazon did make it very easy to join their affiliate program, I know a lot of people like me who jumped in to make a little money on-the-side. While it wasn't a lot of money per-person, with as many affiliates as Amazon had, the combined loss of state income tax revenue could be significant.

Still, Amazon is capitalistic in nature; it doesn’t matter where you are located, you can ship from anywhere to anywhere. When California is in the budget shortfall they are in; a wise man would do what he could to STIMULATE the economy, not slow economic growth by instituting additional dis-incentives (ie. taxes).

Liberal "thought": Need more money? Simple, raise taxes. When the tax revenue decreases, wonder why that happened. While it happens every time it's tried, they still keep trying it.

[tflabo]

[funfan]

Boeing

[TexasRepublic]

I predict that sooner or later, state and Federal interference with business will extend to the agricultural sector, causing food shortages, higher prices and ultimately starvation. This is the final outcome anywhere Communism is tried.