I’m sure I’m not telling you anything you don’t already know when I say that few online retailers have benefited from outdated sales-tax laws more than you have. For decades, most states haven’t required mail-order businesses to charge and collect taxes on sales they make outside the states where they are physically located, and this has definitely given you a competitive pricing advantage over bricks-and-mortar vendors. And even though you’ve expanded your distribution operations into more states during the last few years, you’ve been able to negotiate deals to escape charging taxes on sales you make within most of them, according to this map:
Customers in only three of the states where you’re located are being charged sales tax on their purchases. (And apparently New York and North Dakota are just tough cookies.) Sure, it saves your customers money when they don’t have add anywhere from 6% to 10% to the cost of their order to help fund state government, but you’re gaining additional sales and saving yourself administrative costs and headaches, so you’ve really been winning this game.
But don’t think the states have been happy about that, Amazon. Even if you’re not a physical presence within their borders, they know about your customers. They see all that potential tax revenue slipping away, and times are tough. Some of the states want to change the rules and get a piece of that sales-tax pie, but it looks like you won’t make it easy. My own state is one of them, as Shelf Awareness tells me:
“Amazon has thrown down the tax gauntlet in California, threatening to sever ties with affiliates if the state government passes legislation requiring the company to collect sales tax on items sold to residents. In a letter to California’s Board of Equalization, Amazon said four bills introduced to the state legislature ‘are unconstitutional because they would ultimately require sellers with no physical presence in California to collect sales tax merely on the basis of contracts with California advertisers,’ the Wall Street Journal reported.
“In a letter to State Board of Equalization member Senator George Runner, Paul Misener, Amazon’s v-p for global public policy, wrote: ‘If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon Associates Program.’ Misener also warned that ‘similar legislation in other states has, counter-productively, led to job and income losses and little, if any, new tax revenue.’
Runner observed: ‘In no uncertain terms, Amazon has made it clear to me that the checks they send Californians will be cut off overnight if pending legislation aimed at regulating their operations becomes law.'”
I am one of your 10,000-plus California Associates, Amazon. Are you trying to argue that we constitute your “physical presence” here, and that you’d cut us all off just to avoid collecting taxes on your sales within the state? Out of curiosity, I have to ask: do you still have Associates in New York and North Dakota?
Well, fine, if you want it that way. I’m not going to give you the chance to fire me; I quit, effective immediately. I don’t think it’ll make a big difference to either of us, frankly – apparently I wasn’t sending many sales your way, because in nearly three years as your Associate, I have earned nothing. I may be the least productive Associate you’ve ever had, anywhere. Therefore, I realize my action is largely symbolic (mostly to me) and is more about making a point than making a real economic impact, but I’m doing it anyway. I will promote other affiliations – such as my existing one with IndieBound – in your place.
As a Kindle owner, I will continue to be your customer – and if California beats you in this face-off, I’ll pay the sales tax on my purchases from you. But for what it’s worth, and even if you back down from carrying out this particular threat, I am done sending other customers your way.