Leftist Wreckers In California Just Stole $3500-$5000 A Year Right Out of My Pocket

Well, I got up this morning, and, as I do every day, clicked on my Amazon Associates account link to see how things were going. In large red letters across the top of the page, I was informed that my account had been closed.

I knew it was coming. I knew the greedhead leftists and wreckers who are destroying California were going to steal my money. It’s just sad to see that it has actually happened, after I spent a great deal of time and effort at building up my Amazon sales to the point that they put a significant sum of money into my (retired person’s) pockets.

And, of course, the most infuriating thing about all this is the futility of it in terms of the stated reasons for it. Oh, and the morons who think that Amazon is somehow supposed to do what no other out-of-state corporation has to do – collect the state’s sales taxes for it. In fact, Amazon is constitutionally protected (a notion reinforced by a modern Supreme Court decision) from being forced to do so.

What this all hinges on in the idea that only if a company has a “nexus” in a state can it be forced to collect state sales taxes on sales made to customers within that state. California has advanced the claim that the mere existence of people operating web sites that have links to Amazon products, on which they receive commission for sales, is somehow a “physical nexus.”

Examine the logic. Let’s say mail order company “A”, located out of state, runs targeted magazine ads in California with enclosed coupons. And let’s say that those California magazines have a deal on these ads, in which the company will pay them an extra ad commission for each coupon redeemed from their ad. Can these companies be forced to collect California sales tax on these purchase?

No. And nobody, not even the leftist greedhead wreckers running the California state government, is trying to claim otherwise. The law is quite clear on the matter as well.

Still, California passed this law, claiming that the Associates program gave Amazon a “physical nexus” in the state, so Amazon did exactly what it said it would do in any state that tried to run this extortion on them, and shut down their Associates program in California. Amazon will also ignore any demands based on the Associates Program/nexus idea, and will continue not to collect any Californa sales tax. Net benefit to California greedheads? Zero. Even worse, the ten thousand or so Associates in California who paid California income tax on their earnings from Amazon will no longer be doing so. Nor will they be spending their money in California to help build the economy. Net benefit to California leftist greedhead wreckers? A big minus of tens of millions of dollars.

And the truth is, California legislators knew this would happen going in. They knew Amazon would kill the Associates program in the state, collect no income tax, and that the state would also be deprived of the income, and income tax, generated by the program. So why did they push this law through?

Did I mention that these people are leftists, greedheads, and wreckers? Let me add that they are also corrupt bribe-takers on a massive scale. They pushed this law through, and are more than happy to see the Amazon Associates program permanently shut down, because that is the goal the real backers of this law were after in the first place. It has nothing to do with sales tax collections. It is, in its entirety, designed to use the government as a club to shut down Amazon’s Associate Program in the biggest states in the country.

How so?

Big companies like Wal-Mart, (an out of state corporations itself) who have associate programs that are much less effective at driving sales than the Amazon Associate program is, can’t handle that competition head on by beefing up their own programs. Or at least they don’t want to. So what these sponsors were really after was not to collect additional sales tax for California, but to shut down the competition in the state. They got what they wanted. The politicians behind this bill will get what they want – more money and support (bribes) from companies like Wal-Mart. And the state will get nothing, in fact, will lose money.

But of course the big drive now is to somehow make Amazon the villain in all this. And too many people are buying the propaganda. Sad.

And I’m out big bucks (for me) so that Wal-Mart no longer has to compete with Amazon’s Associate program in my state. That makes me sad, too. And angry.

I’d like to thank all of those who clicked my Amazon links and helped to support me and my websites through no cost to yourselves, and bought things that you wanted on needed at good prices in the process. I am very grateful to all of you. Unfortunately, thanks to the leftists, greedheads, and wreckers of the California government, we will no longer be able to participate in this mutually beneficial exchange. I’ll be taking down those links today sometime. I hope you will wish me well. My state government certainly doesn’t.

UPDATE: California ‘Nexus Tax’ Bill Crashes Website Owners, Says Performance Marketing Association – KYTX CBS 19 Tyler Longview News Weather Sports

These California web-based companies earn income from ads placed on their websites. In 2010 they paid $151 million in state income taxes. The result of ABX1 28 will mean these small businesses will go out of business or move out-of-state to preserve their incomes. As a result, California’s current deficit and economic outlook will get worse.

“I hope the education community in California is ready for those trigger cuts, because in January not only will income tax revenue from these small businesses be lower, the illusory ‘sales tax’ will not have been collected, putting California in a more precarious economic situation,” Madigan concluded.

That’s right. California just dumped $151 million bucks down the tubes, in order to collect…um…zero sales taxes. What a great move!

UPDATE: Welcome, Instapundit readers!


Leftist Wreckers In California Just Stole $3500-$5000 A Year Right Out of My Pocket — 35 Comments

  1. I don’t know how California law works, but here you are still obligated to pay state and local sales taxes on products bought on-line, but you have to self-report.

    The state taxeaters here, and I suspect in California, fear that people will forget these purchases when filing state tax forms.

    I do know that the total difference price difference between Wal-Mart.com and Amazon.com on the same item was that WM charged sales tax, while Amazon did not.

  2. but you have to self-report.

    Works the same way here.

    And it still doesn’t matter. Arkansas has no right to force Amazon to collect sales taxes for it. Nor does California. Nor does any state that doesn’t have a Wal-Mart have a right to force Wal-Mart to collect sales tax on purchases made from a Wal-Mart web site, as far as it goes.

    total difference price difference between Wal-Mart.com and Amazon.com on the same item was that WM charged sales tax, while Amazon did not.


    Look: If Wal-Mart doesn’t want to collect sales taxes, let it change its business model to Amazon’s, which has no legal obligation to collect these taxes in most states.

    Since Wal-Mart owns Arkansas, it’s no surprise that the state has also pushed through a similar bill benefiting themselves, with the result that Amazon still isn’t collecting taxes for Arkansas, and Arkansas is no longer receiving income tax from Amazon Associate earnings.

    So, nobody is happy except for Wal-Mart, whch no longer has to compete with Amazon Associates.

  3. I’m still researching it, but it’s possible that setting up an out-of-state LLC and then use that as an address and for address registration on my domains might do the trick. PITA, $300 setup fee, and $300/annum in Delaware, but still worth it. And I’d so much enjoy sticking it to the thieves and wreckers in Sacramento.

  4. Bill,

    I immediately thought about you when I heard the- not unexpected- news. Also, I see that Alfred beat me to the punch on a way to get around the thieves that currently run your state.

    CA logic:

    1) add massive new tax on Amazon
    2) force Amazon to cancel its sales associates program in the state, thereby eliminating ALL of the projected revenue increase while simultaneously reducing the income taxes garnered
    3) ???
    4) Profit!!!

    Oh wait: #4 was evil, so that can’t be it. Maybe #Winning?

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  6. There’s also the fact that due to us stupid troglodyte California voters, the good people in Sacramento were not getting paid with no budget in place.

    Anything that would appear to balance the budget and permit getting paid again would be embraced with open arms.

    This is not in any way contradictory with also being greedhead leftists and wreckers

  7. Yeah, as somebody pointed out elsewhere, they get to use this to help kick the can down the road another year. They know they aren’t going to get zip, and are, in fact, going to lose $150 million or so in income tax, but they can claim that this will “raise $317 million.” And thus they paper over a third of a billion hole in their pathetic “budget.” Next year, that paper will be demonstrated to be illusory. But that’s next year.

    Here’s a clue for the clueless. If you live in California, go put something in your basket. Go through checkout far enough to see the total price, sales tax included. Note that no California sales tax is included. Why? Because Amazon still isn’t collecting that tax, despite Jerry Brown and the Socialists waving their little fists and stamping their tiny feet.

    And that is exactly how much sales tax Amazon will be collecting in the future in response to this piece of junk law: zero.

  8. Works the same way here.

    And it still doesn’t matter. Arkansas has no right to force Amazon to collect sales taxes for it

    That horse is already out of the barn. The point of contention is not the income taxes paid by the Associates. That money is dwarfed by the sales taxes imposed on the products that the small amount of income is earned from. The states want that money something fierce. WalMart.com tried to argue that there were (from memory, so these numbers are suspect) either 13,000 or 130,000 separate taxing entities in their marketplace, and that the logistics of knowing the proper tax and collecting that tax would be unreasonable.

    States do not care for commerce that the state can’t extort their cut collect their taxes from. You often see brick and mortar stores along state borders struggle with the same issue. You can go to OK or MO and buy that automobile, but when you license the vehicle in Arkansas the staties will impose the tax anyways.

    I used to drive across the Oklahoma border during my college days and pick up Coors beer and bring it back to Arkansas for Sunday afternoon gatherings. That was illegal (folks used to get caught all the time) and people were charged for bringing untaxed beer into the state. That is also what makes it illegal to bring cigarettes from North Carolina to New York state. It is not the inherent evile of the smokes, it is the evileness of not paying NY state taxes on the smokes.

    Anytime anyone takes money from your wallet at gunpoint, they are going to want the opportunity to take more and more. It is just the nature of the beast. Given that state, county, and city sales taxes can easily top 10%, it makes a difference to the taxing jurisdictions.

  9. That horse is already out of the barn.

    What horse? That states can force out of state operations to collect sales taxes for them? I don’t see how it is, given that Amazon is not collecting sales taxes in California, or most of the other states that have tried this bit of extortion, once they canceled their Associate programs in those states. The only reason they haven’t canceled in New York, in fact, is that they are litigating there.

    If you are in Arkansas, go to Amazon and check to see if they are collecting sales tax on your purchase. I think you’ll find they aren’t.

    As for the vast imbalance between the income taxes paid by Associates, and the supposed huge increase in sales tax collections, I think you’ll find that is a myth as well.

    In California, it is estimated by a trade association that Associates pay about 150 million in income taxes on their Associate earnings. The state is estimating the total increase in sales tax collection of about 327 million, a bit more than double. But keep in mind that the Associate income tax is paid on gross income – so they are making something like three billion dollars in their commissions, all of which is now poof into thin air. In other words, three billion has been subtracted overnight from the California economy. Figure in the velocity of money, and the damage to the state’s economy is actually probably considerably greater than the supposed 327 million increase in tax collections. Which, of course, is actually going to be zero increase.

    I understand that leviathan will try to steal every penny from you it can, and then sell your children into debt slavery to steal even more.

    I’m just saying that in this case, the theft is so clumsy and stupid that the would-be thieves are not only ending up with nothing, but losing money out of their own pockets to boot.

  10. With Leftists, even though they like to talk about money, it’s really about power. And so this play makes sense to them. They can’t stand that Amazon flips them off. Add in the bribery from Wally’s and yeah, it’s a go.

    Sorry about this, Bill. I’ve been using your link for a long time, and I buy a lot through Amazon.

  11. If you are in Arkansas, go to Amazon and check to see if they are collecting sales tax on your purchase. I think you’ll find they aren’t.

    No, they don’t. Nor do most other on-line retailers. I, of course (prove otherwise) will carefully monitor on-line purchases and pay the tax. Living a ways out in the country, I buy quite a bit on-line. Calculate the delivery charges vs. driving to town and on-line works. This week I’ve received a solenoid for my ATV, R.A.M. for this old dinosaur of a computer, and a Monet print. If they could get ice cream here before it melts, I’d be a happy camper.

    I’m just saying that in this case, the theft is so clumsy and stupid that the would-be thieves are not only ending up with nothing, but losing money out of their own pockets to boot.

    Greed clouds judgement. That oughta be embossed on the Statehouse doors.

    Ever wonder at all the fuel stickers on those tractor-trailer rigs? That is because certain states force truckers to pay state fuel taxes on fuel burned in the state, regardless of where the fuel was purchased.

    If you, as I have, work in multiple states during a tax year and are paid in each state, filing your taxes becomes a Kafkaesque struggle to keep some small part of your earnings yours.

    As for the vast imbalance between the income taxes paid by Associates, and the supposed huge increase in sales tax collections, I think you’ll find that is a myth as well.

    Let us use round numbers. Say the product sells for $1K, of which you realize income of $100. Sales taxes at ten percent on $1K are $100. Income taxes at 30% yield $30. Where it all falls apart, of course, is the reporting done by the seller and the buyer. That is the part that states hate, the fear that they’re not getting their fair share. Their fair share comes right out of the muscle and bones of the operation.

    As Hillary Clinton once observed, “I (i.e. the government) can’t be held accountable for every under-capitalized business out there.”

    To say that taxes are a crazy-quilt operation insults quilts, which at least keep you warm on winter nights.

  12. Texas is calling.

    I feel your pain. My own small e-business has made me around what your does, and I wanted to join the affiliate program — but I live in Illinois, which was already blacklisted.

    If I didn’t have a far larger consulting income from a company’s local HQ, I would already be in the Lone Star state.

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  14. Well that sux. I’d been using your link as my default Amazon link since you started with the Associates program and, living in the hinterlands, we buy a lot of stuff from Amazon.

    An interesting article about the little house in Wyoming. One thing the article doesn’t mention but would probably be a big selling point for incorporating and maintaining a business address and bank account in the State of Wyoming is that there’s no state income tax. I’d bet that far more of the clients of that outfit are there to avoid state income taxes and business taxes in their home states than because they’re running a scam of some sort.

  15. By the way, Kiplinger also rates Wyoming as one of the ten most tax-friendly states for retirees.

    We’ve also got world-class fiber optic telecom systems in much of the state and excellent cell service most places. My entire town will be a wifi hot spot starting some time this summer.

    And if that’s not enough, at midnight tonight Wyoming’s new “Constitutional Carry” law goes into effect. No license required for residents to carry a concealed weapon, although it takes more than a box-on-the-wall address to establish official residency.

    What’s not to like? … Well, okay, snow up to yer hip pockets, No Trader Joe’s closer than Santa Fe, 165 miles to the nearest CostCo from where I sit, produce at the local groceries that looks like it was dragged here behind the truck and fairly high food prices in general — there are a few downsides. But that’s why we shop Amazon. UPS delivers and Amazon Prime only takes two days, just like the real world.

  16. Bill,

    As you are considering a new Coroporate home, you may want to think about FL.

    The legislature, Governor, and and ALL statewide offices held by Republicans. The Republicans even have a veto -proof majority in the Legislature.

    No income tax, and the legislature just reduced business taxes this year.

    Creating a for profit corp. is VERY easy and cheap. I filled the forms out myself (Downloaded from the web) and you can file your annual reports on the web.

    Creating a corp. is $78.75 total (minimum, you can spend more if you like for extras. I don’t.) and the annual fee is $150.00.

    You will need a resident to act as Agent. I live there and I work cheap. (um. . . uh . . . free, actually.)

    Just a thought.


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  18. Bill, Here in Ohio, we have clever politicans who decided a few years ago to make the Point of Sale the home of the purchaser. So if anyone in Ohio were to buy something, and we own a small internet business, we were required to collect taxes on their city/county !@!@!@! I cannot tell you how stupid this was when the rates changed in the various counties and quarterly we’d get little updates on what the rate was NOW. So March 20th in Franklin County might have been 6.95% but as of April 1 it is 7.0% but the reporting form only allowed you collect for a six month period so you had to swollow the differece because they always went with the higher amount as being due.
    For a small business, this was insane. And if in Cuyahoga the sales tax on a car is 7.25% but next door in Lorain it is 6.5%, don’t think you are getting away by buying a car in a cheaper place because they have now figured out that you need to pay the tax for your home address or at the point of sale or both.
    What they didn’t see is the people rushing to buy somewhere else for less, and the opportunity for volume. So just like you, I don’t promote, advertise or encourage any folks in Ohio to buy from me because of the hassels of reporting, and the penalties for getting it wrong if I err in not giving them enough. I could literally be fined $500 for not collecting $0.40 (example) because the rate varied and I wasn’t sufficiently diligent in keeping up.
    Fortunately, we threw the bums out and now might have some adults in charge but it takes alot of time, effort, and energy just to keep smacking the “undo” button.

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  20. Fortunately, we threw the bums out and now might have some adults in charge but it takes alot of time, effort, and energy just to keep smacking the “undo” button.

    That probably won’t happen here in CA. They’d just be replaced with other bums, with the voters expecting a different result.

  21. I’m an affiliate marketer in Florida and have watched the legislation all over the country. I’m not sure I would go with dcp’s advise because I keep on hearing rumors that they may enact something here. If you were going to go the route of forming a corporation I would do it in Nevada.

    I also have a friend living in a state that implemented an affiliate tax and Amazon dropped them. As an alternative my friend found an English site called Skim Links and once again they can advertise Amazon products.

    The advantage of Skim Links is you don’t have to establish a corporation, and the disadvantage is Skim Links takes some money off the top so your commissions are lower.

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  23. I have seen stories in the past few weeks about other states possibly implementing this tax and Florida is always on the short list. My memory is a little groggy, but think one of the stories was published on Yahoo News a few weeks ago. It isn’t likely, but possible.

    Now, even though I am a Florida resident, I don’t pay that much attention to state politics. But it seems like a lot of the Republican legislatures have a Charlie Crist type of glad handing attitude and ideology. They have no principles and many will do whatever gets them good press, and pissing off Rick Scott will certainly help them in the pursuit of becoming darlings of the BM (big media). Passing this tax would accomplish this.

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