5 New State Laws and Cal Bill Sent to Governor

On Thursday the California legislature responded to Governor Jerry Brown’s budget veto by passing a new budget that included Assemblywoman Nancy Skinner’s Amazon Tax bill (AB 153)once again (and two companion measures having the same result through expanding sales tax to anyone with a nexus).  Staff projects that the provision could generate $1.145 billion in additional revenue, but that does not take into account lost revenue due to affiliate terminations which at times has been estimated to be half of that amount.  Brown tipped his hand a little on the Amazon question after his veto when he urged Republicans to “join Democrats in supporting job creation and ending tax breaks for out-of-state companies.”  Also worth noting is that the measure is not included in the California Chamber of Commerce’s list of job killer bills.  If enacted, nearly one-third of the country’s population and GDP will be in states with Amazon tax laws or related legislation.

Brown’s move comes after Texas Governor Perry vetoed an Amazon Tax bill while calling for further dialog on the issue.  Amazon Tax bills also remain in play in Hawaii, Louisiana, Minnesota and Massachusetts (there is rumor that the Texas bill could resurface in a special session).  So far this year Arkansas, Connecticut, Illinois and Vermont have adopted Amazon Tax bills, while South Dakota joined the “Big Brother” list of states (i.e., states imposing disclosure not collection requirements).  Termination notices were recently sent out by Amazon for affiliates in Arkansas and Connecticut.

The Amazon fight returned to the courts, as the Performance Marketing Association has filed a constitutional challenge to the newly enacted Illinois Amazon Tax.
Before Amazon and other online retailers terminate their California affiliates, they might consider the fact that the Amazon tax is succeeding because it raises taxes without raising taxes and avoids serious political consequences.  With another tough fiscal year projected for next year, e-tailers will be at risk as long as the policy debate is focused on finding budgetary gimmicks.  E-tailers should consider taking the offensive and encouraging an honest dialog over budget issues rather than relying on budgetary gimmicks to avoid addressing the disconnect between the government we want and that we are willing to pay for.


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