'Click' tax prompts Amazon warning

Lower taxes will help us climb out of this recession. The current Democratic policies will only push us deeper in this economic doldrums.

"What does Amazon care, though?'

For Amazon, it's a huge (and very real) slippery slope. Unlike almost all their competition, Amazon doesn't collect (state) sales taxes on the products they sell, because a 1992 Supreme Court said they didn't have to. But that didn't make the taxes go away, the consumers are supposed to pay them anyway (which we don't). Barnes & Noble.com has to collect these taxes, because they have actual brick and mortar stores in these states. If they want to compete with Amazon on pricepoint, B&N has to drop their retail price a little to make up for the sales tax. So they're not really competing, because they make less profit.

Whether we should pay tax for junk we buy on the Internet aside for a moment, what ticks me off about Amazon's behavior here is:

a) They are well aware they are helping consumers defy already existing tax laws in various states, but they act like nothing's going on,

b) In these e-mails and press statements they keep bringing up this "unconstitutional tax collection scheme", even though the NY court rejected that claim,

c) They are trying to pressure their Affiliates into becoming "proxy" warriors against state legislatures, and misleading them as to the reasons why,

d) They are floating thinly-veiled threats of expensive lawsuits to scare state legislatures: Why do you think Patty Smith mentioned this little nugget to the newspaper:

The company is suing New York state over a similar law. Three other states, Maryland, Minnesota and Tennessee have considered but not adopted similar taxes, Smith said.

This is the equivalent of telling N.C. lawmakers: "Mess with us, and we'll sue you; or be smart like these other states and avoid a lawsuit."

I generally try not to get angry these days, because it messes with my chi (and blood pressure). But you know what? Let. Them. Sue. I would really, really love to see Amazon.com brought before the State Supreme Court, and be grilled over their complicity in the loss of tens (hundreds?) of millions in state revenue.

So Amazon is being stupid then. They could only charge sales tax to NC residents. Online, those you refer to Amazon may not come from NC, so those people wouldn't pay sales tax on a sale from a NC associate.

What does Amazon care, though? They're still going to be making more revenue through referrals than if they dropped the entire state from the program.

"The company is suing New York state over a similar law."

Methinks Patty Smith has left out some pretty vital information, like the fact that Amazon has already been ruled against once:

In the end, the Commission-Agreement Provision does not broadly tax any and all
internet sales to New York consumers. It requires a substantial nexus between an out-of-
state seller and New York through a contract to pay commissions for referrals with a New
York resident along with realization of more than $10,000 of revenue from New York sales
earned through the arrangement. The neutral statute simply obligates out-of-state sellers to
shoulder their fair-share of the tax-collection burden when using New Yorkers to earn profit
from other New Yorkers.
Accordingly, it is ORDERED that the State's motion to dismiss the complaint
pursuant to CPLR 3211(a)(7) is GRANTED and Amazon's cross-motion for summary
judgment is denied as moot.

North Carolina doesn't want to additionally tax the referral payment, they want to charge sales tax on the entire transaction (paid by the purchaser, the referrer would still pay income tax on their referral fee.) The reasoning is the transaction is based in NC (since the referrer is based in NC,) and therefore NC sales tax is due.

Since Amazon doesn't charge sales tax, they easiest way to take care of the problem is to drop the NC referrers.

Another bad idea by the legislature desperate for more money.

The income from Amazon is already taxed as income...what this sales tax does is add another tax on top of the income tax. Unless they are willing to drop the income tax on that income, I can't see how they could do it.

For example, I already pay a certain percentage to the feds and the state on this income stream, and this would be another tax.

I support Amazon choosing to end the affiliate program in NC. What this will force me to do is to move out of the state, or incorporate my online activities, and station that activity out of state. Either way, North Carolina loses not only the "sales tax", but now will lose my income tax from that activity.

If I leave the state, then all my other economic activity leaves the state as well...further lowering tax revenues collected by the state of North Carolina. Capital goes where it is wanted.

@dahedgehog - This is already treated as taxable income

How about privatizing the liquor stores in this state and letting the state make a mint off of the licenses and leaving the micro businesses out of this mess.

Yes, they should be taxable income already. I'm not sure what the justification for adding them to taxable sales is. I think the legislature was right to add some services to be covered by the sales tax, but I don't think this is right.

So does Amazon charge a sales tax when a sale is made based on a referral by an associate? Or do the associates somehow have to pay a sales tax on their commissions?

Shouldn't these referral payments already be counted as taxable income?