California’s latest budget deal continues their now-familiar trend of chasing small business out of the state. In a desperate and unconstitutional power grab, they are saying that any business that is even affiliated with anyone in California has to pay sales tax on everything sent to customers in the state. This affiliate tax is toxic to the digital economy.
I’m most often complaining about Congress overstepping their bounds in controlling the states, but this is a rare case (Like Arizona’s recent immigration laws) where the opposite is true. Interstate commerce is squarely under the jurisdiction of Congress. Let’s say that a product is manufactured in Texas, sent to Colorado to an Amazon distributor, and then shipped to a customer in California; what’s to stop Texas from saying they can charge sales tax on the item because they made it? Or Colorado to charge it because they are where the sale was shipped from, or every state in between because it passed on through? The Federal government is there primarily for two purposes, foreign policy, and making sure states don’t enact anti-competitive laws that interfere with the commerce between the states, thus, states were only allowed to regulate transactions from those companies which they have jurisdiction over because of a physical presence in the state.
California is now claiming that I, along with ten thousand others are ‘sister companies’ of Amazon, because we are paid to advertise for them. I’m nobody’s ‘sister company’. I have no Obligations to Amazon, they don’t tell me what to do, we don’t have any claim over each other’s assets, I just post a link to Amazon on my page, and Amazon reimburses me for doing so when paying customers arrive there through my sites. I’m no more connected with Amazon than television networks who advertise for them, UPS who carries their products, or Visa, who handles their transactions.
Living in an extremely liberal town, I hear a lot of people cheering this affiliate tax as somehow sticking it to the evil corporations and finally making them pay their fair share, but that isn’t what is going to happen out of this. Amazon has already announced that they will end their business dealings with everyone in California, which means not only are ten thousand more Californians now very suddenly out of work, but California won’t see a cent of it, since the companies won’t actually be taxed after cutting ties, and California will be out the revenue from those people and quite possibly paying to add them to its welfare rolls. Also, it isn’t legally Amazon’s responsibility to pay sales tax on your purchases, it’s yours, so if you aren’t paying taxes on your online purchases, then point the finger at yourself first.
I wish I’d seen that this ship was sinking before I bought a home here. If it were any easier to leave, I would.