Amazon.com has notified all of its affiliates in Colorado that it is terminating its relationship with them because of a recently passed state law designed to make online retailers report sales tax on sales in the state. This action will affect Christian web sites based in Colorado that are Amazon.com affiliates.
The Colorado law requires online retailers to either collect sales tax or share information with the state about all of the purchases made by residents, ostensibly so that it can require those citizens to pay “use tax” on the purchases.
Many big online retailers like Amazon.com feel that states that create such laws in a desperate attempt to fill their coffers are in violation of Federal interstate trade statues. Up until the present financial crisis virtually all states have required that companies have a so-called “brick and mortar” presence in order to have any sales tax-related reporting liability.
In this case, the State of Colorado has financially crippled 4,200 Amazon.com affiliates in their state who would have otherwise made $37.5 million (2008 figures) from Amazon.com. By killing the goose that lays golden eggs Colorado is not getting any sales tax from Amazon.com nor is it getting any income tax from the $37.5 million worth of sales generated by the Colorado affiliates.
Politicians seem clueless about how their money grab affects e-commerce. The Wall Street Journal quoted Colorado Governor Bill Ritter as saying, “Amazon has taken a disappointing–and completely unjustified–step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.”
In reality, citizens believe they are already paying enough taxes and don’t like the new ones being cooked-up by politicians. The only group agreeing with the politicians seems to be local booksellers who do not feel they can compete with the Amazon.com business model or their pricing policies. Nineteen Colorado booksellers, along with the American Booksellers Association (ABA) and Mountains and Plains Independent Booksellers Association (MBPIA),wrote to Governor Bill Ritter to thank him for publicly criticizing Amazon.com’s decision and urge his continued support of HB10-1193 as pressure from Republican legislators grows against the measure.
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