Amazon Attempts to Negate California Sales Tax Law, Uses Affiliates as Smokescreen
FOR IMMEDIATE RELEASE: Tuesday, July 12, 2011
AMAZON ATTEMPTS TO NEGATE CALIFORNIA SALES TAX LAW,
USES AFFILIATES AS SMOKESCREEN
Corporation Has Nexus in Cities Across California (and 18 other states)
Jeff Milchen, co-founder, American Independent Business Alliance 406-582-1255, Jeff@AMIBA.net
BOZEMAN, MONT. – Just weeks after the California Legislature passed a law requiring Amazon.com to start collecting sales tax on items shipped to the state, the corporation is attempting to negate the law via a statewide referendum.*
Amazon dismissed all of its in-state affiliates that send traffic to Amazon in return for commissions, but the move is “purely a bullying tactic,” said Jeff Milchen, co-founder of the American Independent Business Alliance (AMIBA). “The Amazon Corporation has facilities and employees in at least seven California cities, any one of which constitutes a physical presence and now obliges them to collect sales tax.”
AMIBA has gathered information (shortcut: http://tinyurl.com/canexus) on Amazon’s wholly-owned subsidiaries in 19 states across the country (the corporation collects sales tax in five). In California, these include A9 in Palo Alto, A2Z and Alexa in San Francisco, and the Internet Movie Database in Los Angeles.
Amazon filed initial paperwork to pursue a ballot measure last week. While the company would easily spend more than $1 million just to gather the half-million valid signatures required to place an item on a statewide ballot, that may be a small price to pay for maintaining the 9% - 10% handicap it currently enjoys at the expense of brick and mortar businesses that long have collected sales tax on all in-state sales.
Amazon’s opponents range from mom and pop retailers to titans like Walmart Corporation -- no stranger to using ballot measures to attempt reversing laws its executives don’t like. Milchen notes Walmart often has used ballot initiatives -- theoretically the purest form of democracy -- to serve its own corporate interests, such as defeating restrictions on big box development in California communities.
While independent businesses typically have little common interest with big box chains, they’ve become allies toward leveling the playing field when it comes to sales taxes. “All we seek is fair competition--something antithetical to Amazon’s business model,” said Clark Kepler, president on Kepler’s Books in Menlo Park.
“Victimizing web-based merchants who have invested in referring sales to Amazon is pure thuggery,” said Kepler. “For years, Amazon claimed they were helping many small businesses through offering referral fees, but now they’ve stabbed affiliates in the back in a failed attempt to intimidate California’s lawmakers.” Kepler noted many companies that willingly collect sales tax are ready to provide affiliation deals for the people Amazon dumped.
Incredibly, Amazon.com executives have cited jobs as a reason citizens should continue the effective subsidy for the world’s largest online retailer. “In fact,” noted Milchen, “storefront businesses employ many more people per sales dollar, meaning thousands of new jobs could be created in California by ending the Amazon sales tax exemption if fewer people purchase online once the playing field is leveled.”
See http://www.amiba.net/resources/news-archive/amazon-nexus-subsidiaries (shortcut: http://tinyurl.com/canexus) for a wide array of background resources, including documentation of jobs statistics by the National Retail Federation, scholarly articles, and more. Jeff Milchen has written at length on the remote sales tax dispute for Bloomberg-BusinessWeek.
* A referendum typically refers to either: 1. a party gathering a proscribed number of signatures from registered voters within the jurisdiction to force a popular vote on whether or not to overturn legislation already passed by a government body, or 2. a government body choosing to let voters decide a (usually) controversial issue, rather than deciding themselves.
Initiative typically refers to legislation drafted by a non-governmental body which then gathers a proscribed number of valid signatures to force a popular vote as an alternative to pursuing passage through a governmental body. Referenda and initiatives are commonly referred to as ballot measures and, sometimes, initiatives (creating some confusion we attempt to clear up with this footnote).
The American Independent Business Alliance (AMIBA) helps communities successfully implement programs to support community-based entrepreneurism, build local wealth and help independent businesses compete successfully against major corporations. Since 2001, AMIBA has helped more than 70 communities nationwide (seven in California) to launch Independent Business Alliances to achieve these goals, collectively representing nearly 20,000 businesses.