Late last week, Amazon.com filed a petition that would bring the issue of Internet taxation to the voters of California through a referendum. Governor Jerry Brown signed legislation into law two weeks ago that would force out-of-state online retailers to collect and remit sales taxes, even if the business has no physical presence within the state. The law essentially expands what it means to do business in California for the purpose of tax collection, considering in-state advertising affiliates of an out-of-state online retailer as a physical nexus of the retailer itself. The referendum moves to overturn this law in its entirety, allowing affiliates to get back into business with their respective online retailers within 90 days of the referendum’s passage. In order for the referendum to appear on the next state-wide ballot, 504,760 must be collected from California residents.
The Internet tax law has already proved to be harmful in California. In order to avoid paying for the unconstitutional tax, online retailers have already started cutting ties with their in-state ad affiliates. Many affiliates, whose income is dependent upon their relationship with online retailers, have already stated their intentions to move their business to a state where an Internet tax has not been implemented. George Runner, a Republican member of the California Board of Equalization, recently stated:
Each termination represents lost jobs and lost income for California – losses that could have been easily avoided had the governor and Legislature exercised a little common sense…Clearly, the ‘Amazon Tax’ is not working.
The Performance Marketing Association (PMA), which represents affiliate marketers, announced their support for this referendum. The referendum halting the law will keep 25,000 California ad affiliates up-and-running. Should the law remain, affiliates’ income will drop as a result of the tax, causing layoffs and business closings statewide.
Creating new taxes for the sole benefit of justifying the terrible spending habits of California legislators is irresponsible and shows a lack of concern for the well-being of the citizens of California. With this referendum, California voters will have the opportunity to tell their legislators exactly how they feel about this harmful tax.