(Image Source: CalWatchdog)
BYJESSICA FLY
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A new sales tax bill in California is ruffling the feathers of online retailers. Companies like Amazon and Overstock.com will be subject to the state sales tax for the first time and the retailers aren’t happy about it.
“Amazon saying we will terminate contracts with all California residents that are participants in the Amazon Associates Program.”
Amazon sent out emails to its affiliates on Thursday letting them know about the impending cuts.
But KTTV reports -- what’s bad for affiliates could be good for the state.
“The upside to that is that the state stands to gain an additional $317 million per year in new revenue. On the downside, thousands of Internet marketing affiliates could eventually leave the state because Amazon and other online retailers, like Overstock.com have said they will stop paying referral commissions to California marketers.”
A blogger for the Washington Post takes no pity on Amazon. He says -- it may be business but cheating the state out of its sales tax makes Amazon the bad guy.
“Amazon is a business, and so you can’t fault it for playing hardball in an effort to retain a competitive advantage. But this is bad policy that they’re trying to protect -- it’s starving states, killing brick-and-mortar stores and encouraging a race to the bottom among states who want to attract the offices of online retailers.”
This isn’t Amazon’s first rodeo -- when similar bills were passed in six other states -- Amazon dropped its affiliates in those places. The only state Amazon didn’t cut ties with is New York. Gather reports -- instead, it filed a lawsuit.
“Amazon affiliates everywhere anxiously await the results of the New York lawsuit...While states frantically try to prop up flagging budgets with sales tax revenue, they forget that many of their residents will lose their income. Less income guarantees that there will be less money to spend in those brick-and-mortar stores the states are so worried about.”
Finally- CNN suggests California should learn from others’ mistakes.
“California, like other cash-strapped state governments, is flailing about for new sources of revenue... But California should look around at other states that have tried this tactic: it usually doesn't work out so well.”
CalWatchdog reports 25,000 Californians could lose their jobs as a result of Amazon’s decision.
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Transcript by Newsy.
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