Amazon kicked me out of their "Associates" program because I am a resident of Connecticut. That state, as have a few others, recently passed legislation subjecting sales through state-based affiliates to the sales tax. Amazon is protesting such bills nationwide by terminating affiliate contracts like the one I absent-mindedly signed up for a week ago. They claim the taxes are unconsitutional, as online traffic is protected by the commerce clause.
I think this is bullcrap.
Internet and catalog sales are already subject to the use tax, the ubiquitous but rarely obeyed companion to all (I think all) state sales taxes. The states are attempting to enforce, where they see legal nexus, i.e. with affiliates, the established use taxes. Given the situation with state budgets, to enforce existing, widely flouted tax laws seems like a reasonable idea.
The moritorium on taxing online sales was established in the 1990s as a way of encouraging an exciting new growth-industry. It seems to have worked. Well, whether or not the moritorium had any role in the explosion of e-commerce, online sales without a doubt have thrived. In fact it's the old-fashioned way of shopping that seems vulnerable today. Blockbuster and Borders are pretty much gone, driven out of business by online rivals, mainly Netflix and Amazon.
It would be a shame if the existence of online shopping continues to diminish oour access to stores. Stores are places to gather. They also offer an effortless way to see what the world offers. Videos are in three dimensions organized by genre, alphabet, and nation of origin. A bookstore table might be heaped with a hundred new novels the staff recommneds. At the moment, Americans are strolling through stores and shopping online. They get the benefit of both. But one business model is profitable and thriving while the other is weak and looking for ideas.
Equalizing the sales taxes we pay in the two ways we shop would be a good place to start. I don't see how that's not fair. Why should someone who buys via internet or catalog pay less taxes than someone patronizing a local store? Given the communal and eductional benefits of stores, you might argue they should pay less taxes than an online merchant, who extracts business from your state's resident without delivering your state a three-dimensional amenity.
But now Amazon, another corporation enjoying the benefit of existing law, has found someone to bully, and twist their arms into helping to preserve their sop. In this case, the victims, of all people, are their affiliates! These are small business people who steer business to internet retailers and earn a small percentage in return. The contrast in the personas of the players involved is almost comical. The thriving internet retailer who is putting bookstores out of business is fighting to withhold pennies from strapped state governments by terminating the tiny business operations of local resellers, the lowest-cost route to entrepreneur status for people with spare time and a desire to work from home.
I say tax Amazon sales and damn their whining!
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