Amazon tax already a failure
Proponents of the so-called "Amazon tax" claim it will "create fairness" by "leveling the playing field" between California's brick-and-mortar retailers and out-of-state online sellers. They claim it will generate $200 million in new revenues for the state. But evidence shows this measure will actually cause California to lose, not gain, millions of dollars.
Amazon.com and other out-of-state online retailers have already terminated their California-based affiliate programs and are taking other steps to ensure that they have no legal connection to California that would force them to collect sales tax here. These out-of-state retailers continue to sell into California without collecting sales tax.
Meanwhile, the true victims of the "Amazon tax" are California job creators who will suffer an unavoidable loss of income if they continue to do business in this state. As many as 25,000 California affiliates, who pay an estimated $124 million in state income taxes, are impacted. Small businesses that currently benefit from affiliate referrals will also suffer lost revenue.
Another surprising victim of this new law is eBay, a homegrown California success story and major private sector employer.
Ironically, the "Amazon tax" will actually disadvantage eBay and drive online sellers away from that company toward other platforms, like Amazon.
As sellers living outside California discover that continued sales on eBay trigger new, unwelcome relationships with California's tax auditors, they will take their business elsewhere. And I can't blame them.
The so-called "Amazon Tax" is already a failure. After having terminated their advertising relationships with thousands of California-based Internet affiliate businesses, leading out-of-state online sellers continue to sell into California without collecting sales tax.
So far, all of the following online sellers have terminated their affiliate programs: 6pm.com, Amazon.com, Audible.com, B&H Photo & Electronics Corp., Backcountry, Barware.com, Beach Trading Co., BeautyBar.com, BedBathStore, Benchmark Brands Inc., CSN Stores, Diapers.com, Drugstore.com, Endless.com, Fabric.com, Gaiam, GiftBaskets.com, Hayneedle, Higher Power Inc., Lacrosse.com, Muscle and Strength, MyHabit.com, Northern Tool, Overton's, Overstock.com, PC Connection, Potpourri Group, Quidsi, ShindigZ.com, Shoebuy, Inc., Shopbop, SmallParts.com, Soap.com, The Tire Rack, Thinkgeek.com, Total Gym, Wine Enthusiast, Woot.com, Zappos.com.
Each affiliate program termination represents lost jobs and lost income for California - losses that could have been avoided with a little common sense. These losses will grow even larger as affiliate businesses pack their bags and move to more business-friendly states.
Unless California's leaders want to make California the nation's unemployment leader, they need to radically transform their priorities. They need to stop making California offensive to business, and instead start wooing private sector jobs by extending a welcome mat to entrepreneurs and businesses of all kinds.
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Former state senator George Runner is a member of the State Board of Equalization.