Diary

Amazon.com Goes Galt

To quote one of my favorite Useful Idiots, “Some people push back…”

DENVER | Amazon.com, the nation’s largest online retailer, is waging a bare-knuckles campaign over sales-tax proposals pushed by cash-strapped state legislatures eager to tap into the lucrative online market.

A half-dozen state legislatures are considering bills this year that would require online retailers doing business with state-based “affiliates” to pay the state sales tax. Affiliates are independent Web site operators that earn revenue by posting links on their sites to retailers such as Amazon.com and Overstock.com.

The only state to approve a so-called “Amazon tax” so far this year is Colorado, and the reaction was swift. A week after Gov. Bill Ritter Jr., a Democrat, signed the bill, Amazon announced in a March 8 e-mail to its affiliates that it had pulled its advertising from all Colorado-based Web sites.

“We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway,” said the Amazon e-mail. “There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way.”

Other online retailers are expected to do the same, which could spell the end of the state’s affiliate industry.

Basically, Amazon is arguing that the state taxes conflict with a 1992 Supreme Court ruling, which held that states could tax companies only if the companies have a physical presence in the state. Not surprisingly, Democrat lawmakers in favor of the Amazon tax have taken the position that affiliates represent a physical presence. Of course, end-runs are becoming quite fashionable with the statists, so I fully expect quite a number of online retailers to eventually be forced into a similar position. My hope is that they follow Amazon’s lead, thereby effectively starving state legislatures into fiscally responsible submission.

Predictably, the loons on the left are apoplectic:

“Amazon has taken a disappointing — and completely unjustified — step of ending its relationship with associates,” one legislator said in a statement. “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.”

The liberal group ProgressNow Colorado has called for a boycott of Amazon, asking for supporters to avoid the retailer “until Amazon.com stops using Coloradans as pawns.”

“Today, with Colorado in the midst of the greatest fiscal crisis since the Great Depression, properly collecting taxes owed on these purchases means millions of dollars in badly needed revenue for schools, roads, and health care,” ProgressNow said in its boycott pledge.

Yeah…good luck with that one, chuckles. With over $24 billion in revenue last year and a supremely efficient business model, the progs may as well be standing outside of Wrigley Field with a “Cubs Suck” sign right after the first their first World Series win in over a century (hey, it could happen).

Three states — New York, North Carolina and Rhode Island — passed Amazon taxes in previous legislative sessions. Amazon.com ended its affiliate programs in North Carolina and Rhode Island shortly after the laws were enacted. Iowa, New Mexico and Vermont also are considering Amazon taxes this year.

God bless America, and God bless the capitalists.

PS – Dagny, you still have my number, right????