When the Assembly Revenue and Taxation Committee holds its informational hearing on California’s "use tax gap" this afternoon, I’m hopeful legislators will take time to consider the negative impact their efforts to regulate out-of-state online retailers could have on the livelihoods of 25,000 California-based affiliate businesses.
I recently received a letter from Paul Misener, Amazon’s Vice President for Global Public Policy, in which he cites four specific bills—AB 153 (Skinner), AB 155 (Calderon), SB 234 (Hancock), SB 655 (Steinberg). These measures all aim at requiring out-of-state online retailers like Amazon to collect sales tax on purchases made by Californians.
In no uncertain terms, Misener makes it clear that the checks Amazon sends Californians will be cut off overnight if any of these pending measures aimed at regulating Internet retailers becomes law.
In his letter Misener writes: “If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon ‘Associates Program.’”
Misener notes that similar statewide terminations have already occurred in North Carolina, Rhode Island and Colorado after those states enacted similar laws.
Misener explains that these participants—also known as affiliates—“place Amazon advertisements on their websites, and then are compensated by Amazon for purchases made by visitors whom they refer to Amazon’s website.”
A revised Board of Equalization analysis of Assemblywoman Skinner’s proposal cautions that 50% of projected revenues would vanish as a result of Amazon’s action. Revenues would be “further diminished” if other firms also terminated their affiliate programs.
The BOE analysis also warns of an “adverse impact on state employment,” resulting in lower corporate and personal income tax revenues for the state.
This is an imminent threat to California jobs. Lawmakers would do well to pay attention.