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Amazon Threatens to Cut California Affiliate Ties

4 Mar, 2011 By: Chris Tribbey

Amazon.com again is threatening to cut ties with more than 10,000 California-based participants in its Associates Program, should the state adopt any number of proposed bills that would collect sales taxes from the online retail giant.

Paul Misener, Amazon’s VP for global public policy, wrote in a letter to the state’s Board of Equalization that adoption of new sales tax laws would violate state and federal laws and actually would cost the state money.

“Amazon respectfully opposes the new tax collection schemes proposed … because they are either facially unconstitutional or would construct Trojan horses for functionally identical unconstitutional regulation,” Misener wrote. “Similar legislation in other states has, counterproductively, led to job and income losses and little, if any, new tax revenue.”

The proposals in the state Assembly would require sales taxes to be collected from sellers based on the seller having a physical presence in the state, even if they just do business advertising on in-state websites. As it has in North Carolina, Rhode Island and Colorado when those states passed similar laws, Amazon said it would end its advertising relationship with California associates, who place Amazon advertisements on their websites and then are paid by Amazon for purchases made by visitors referred to Amazon.com.

Misener noted that the proposed laws go against the U.S. Supreme Court’s decision that prohibits states from requiring sales tax collection by sellers that lack a physical presence in the state.

“These bills would provide no new tax revenue collected by Amazon or others who sever their relationships with California-based advertisers, and any revenue estimates should take this into account,” he wrote.

Board of Equalization member state Sen. George Runner said in a statement that the state should rethink the legislation, warning that they could hurt job growth.

“In no uncertain terms, Amazon has made it clear to me that the checks they send Californians will be cut off overnight if pending legislation aimed at regulating their operations becomes law,” he said. “The Legislature needs to stop considering bills that would hurt jobs and instead start improving California’s dismal business climate so we can attract much-needed jobs to our state.”

Amazon had threatened to cancel its California affiliates program after a similar tax measure passed in 2009, but then-Gov. Arnold Schwarzenegger vetoed the bill.

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