Jerry Brown’s Shakedown: Californians to Pay More, Get Less

Last week, Jerry Brown signed a law earlier this week that will force Californians to pay even more taxes than they already are. The law will require online retailers like Amazon.com to collect sales tax on all purchases made by California residents.

As a result, Amazon cancelled contracts with 10,000 California-based Amazon Affiliates’ participants.

As fate would have it, I am among those 10,000.

According to The New York Times, the original law said “that an online retailer needed to collect taxes on purchases if it had a physical presence, or a nexus, in a particular state. Any retailer with an office or warehouse qualified.

Since Amazon has no physical presence in California (obviously for good reason), Amazon did not have to collect an exorbitant 9%+ sales tax from California customers on their Amazon purchases.

So “Shakedown Jerry Brown” and state legislators expanded the law by declaring that a company’s affiliates would qualify as a physical presence.

So Amazon responded in a very predictable and rational manner. They cancelled their contracts with thousands of affiliates like me, who earn a small commission on links to Amazon’s website.

Here is the first email I received on June 29th from Amazon:

Hello,

For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes
from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we
must take this action.

As a result, we will terminate contracts with all California
residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the
event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the
regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com, Endless.com, MYHABIT.COM
or SmallParts.com.

We have enjoyed working with you and other California-based
participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

Here is the second one:

Hello,

Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

Frankly, California just does not get it. The taxpayer needs relief in this state, as does the average small business.

Governor Jerry Brown is providing neither constituency with any mercy. He is more focused on shaking down the average Californian for an additional $317 million a year in sales taxes.

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About Sean Patrick Hazlett

Conservative clean energy crusader, national security hawk, financial analyst, engineer, and former military officer.
This entry was posted in Blogging, Business, California, Finance and Economics, Media, Policy, Politics, Taxes and tagged , , , , , , , , . Bookmark the permalink.

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