HolyCoast: California's Amazon Tax Has Been an Incredible Flop

Tuesday, September 06, 2011

California's Amazon Tax Has Been an Incredible Flop

As I expected:
California's new Internet sales tax law may far short of the $200 million in new revenue that supporters have said would be collected by out-of-state online retailers. That word comes from George Runner, member of the State Board of Equalization that oversees sales and use tax collections.

The main source of income is to be sales tax collected from California customers by out-of-state retailers that have affiliate relationships with California-based websites.

An estimated 25,000 California websites participated in affiliate marketing programs with hundreds of out-of-state retailers including Amazon, LL Bean and Overstock.com. Dozens of these retailers cancelled their affiliate programs with California sites after the law went into effect in late June.

"We’re not aware of a single online retailer that has registered with (the Board of Equalization) to collect sales tax because of AB 28X (the official name of the bill)," Runner said. "According to Board of Equalization staff, the number of out-of-state registrations in July 2011 was actually lower than July 2010."
Amazon has offered to build a distribution center employing 7,000 Californians if the state will roll back this tax, but Jerry Brown probably won't take the offer. He'd rather have this failure of a tax on the books than have 7,000 Californians working.

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