Amazon Battle Heats Up

Last week we wrote about Amazon’s first shot over the bow of California’s new law aimed at boosting use tax collections. This week the Amazon Empire took the first steps in a process aimed at referring the state’s new law to the ballot, where voters would be asked whether it should be maintained or repealed. The flood of media reports on this issue in recent days have largely downplayed one key fact: No one – including Amazon – disputes the fact that even prior to the new law, California consumers legally owed “use taxes” on purchases made from out-of-state sellers – equivalent to sales taxes that would be paid to a California-based retailer. Amazon’s business model simply assumes that the vast majority of their California customers aren’t law-abiding citizens.

In light of the clear obligations of the state’s use tax law, I’ve been surprised at the number of Californians who have been willing to support Amazon’s position, such as the individual who claimed, in this morning’s New York Times to patronize Amazon four times a week. Would the news media nonchalantly provide this much space to someone claiming to understate their income or inflate their deductions when they file their income tax returns – actions that have the same impact on the state’s bottom line?

Amazon has hit back hard in other states, as well. Yet California’s market share and the availability of the state’s initiative and referendum process have encouraged the firm to take this latest extreme action. If there’s a silver lining to the current debate, it is the possibility of spurring Congressional action to overturn the Quill decision, giving states the tools they need to truly level the playing field for mainstreet businesses and protect revenues desperately needed for critical state and local services.

– Jean Ross

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