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Amazon.com Declares War on California

Posted 8/20/2011 20:47 | Filed under General | Comments (0)
If you live almost anywhere in California, you've seen the signature collectors in shopping centers and in front of stores like Ikea, Lowe's, Target and Walmart with signs saying "Stop Internet Taxes" or messages to that effect. These signature collectors are hired by Amazon.com and probably being paid minimum wage with a bonus per signature collected. They have no legal obligation to tell you the truth about what they are doing or why they want you to sign. In fact, most will gladly lie in order to collect a signature.

Here are the myths and truths about this issue:

Myth #1: All internet purchases are sales tax free, and Amazon is trying to stop California from raising taxes or adding a new tax.

Truth: The opposite is true. California is owed sales tax on ALL purchases of taxable goods on the internet OR at brick and mortar stores. However, a 1992 Supreme Court ruling (Quill Corp. v. North Dakota) regarding a mail order business stated that businesses that did not have a "substantial nexus" in a particular state could not be forced to collect sales tax in that state. The ruling did not mean the purchase was tax free, because in fact the purchaser actually owes the tax to the state he or she lives in, called use tax. Use taxes are almost universally ignored by purchasers because they are either unaware of them OR they are aware that the state isn't going to annually audit the entire population in order to dig up all of their out-of-state purchases and collect use tax.

California's new law, AB153, signed into law by Governor Jerry Brown, simply clarified existing sales tax law in order to force Amazon.com to collect California sales tax that it should already have been collecting. Amazon, of course, claims that it doesn't have a substantial nexus, which brings us to . . .

Myth #2: Amazon.com is exempt from collecting California sales tax because it doesn't have any brick and mortar stores in this state or anywhere else.

Truth: Websites of retailers that have brick and mortar locations in California such as Target.com DO collect California sales tax from California residents because their physical stores obviously constitute a substantial nexus. However, the 1992 Supreme Court ruling did not narrowly define a "substantial nexus" as retail only, otherwise the ruling would have stated "retail location" instead of the much broader term "substantial nexus" which could be warehouses or any physical facilities.

The fact of the matter is that Amazon.com has a massive, not just substantial, nexus in California. Amazon owns A2Z Development Center Inc, which is the developer of the Kindle and has offices in Orange County, San Francisco and San Luis Obispo. Amazon owns A9, a search engine technology company with offices in Palo Alto. Amazon owns Alexa, another internet technology company headquartered in San Francisco.

Myth #3: By asking Amazon to collect sales tax, California hurt itself because Amazon cut off all its affiliates within the state, reducing income and causing layoffs.

Truth: This might be the most ridiculous whopper of them all. Amazon cut off its California affiliates in a vain attempt to declare itself without a nexus in the state (conveniently ignoring the three large California companies that it owns) and to retaliate against AB153. For California to reverse itself because of Amazon's misguided, greedy attempt at punishment would be a public declaration that the government of the world's eighth largest economy can have terms dictated to it by a greedy, gutless guy in Seattle named Jeff Bezos. The loss of income and jobs is unfortunate but caused entirely by Amazon, and it's a mere drop in the bucket compared to the California sales tax that Amazon has evaded collecting for more than a decade.

Myth #4: Requiring Amazon to collect California sales tax will cost Californians money and hurt the economy.

Truth: Again, the exact opposite is true. The California sales tax that Amazon is not collecting is giving Amazon an unfair price advantage over every other retailer in the state. As these retailers lose business, shed employees and go bankrupt, untold billions of dollars are lost in business, income, property and sales taxes, damaging California's economy. Furthermore, the sales tax revenue that Amazon refuses to submit to the state contributes to layoffs of firemen, policemen and teachers. It contributes to library, park and school closings. It contributes to college budget cuts, forcing students to take extra semesters because they can't get into all the classes they need to graduate.

Amazon's refusal to comply with AB153, and sending scumbags to collect signatures to reverse the law in front of the very retail stores they are actively trying to bankrupt is a declaration of war against the state of California. If you sign this petition you aren't contributing to a fight against higher taxes, you are contributing to your own state's demise in order to benefit a greedy, unethical, massively profitable corporation that couldn't care less if the state went belly up. Signing this petition is like stealing money from your kid's PTA bake sale and mailing it to Jeff Bezos.
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