California budget update (... Updated)

(please scroll down to bottom of the post for update)



Maybe this is where Jerry Brown and the Democrats are going to get that additional $11 billion to help close the state's budget gap.

Err... then again, perhaps not.

Last night, California Democrats reached an agreement with Gov. Jerry Brown on a proposed state budget that, among other things, would force online retailers like Amazon.com and Overstock.com to collect sales tax in California.

Already, Amazon has made its objections clear, threatening to drop the thousands of "Amazon Associates" in California who make money by referring web users to Amazon.com to buy goods.

The Associates program gives a blogger a small cut of the action if a reader purchases something through a link at the blog.

All these people are at risk of being cut off from this revenue source should the California budget pass on Tuesday.

Amazon.com sent its associates an email this afternoon that reads, in part: "We will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice."

Statists: they just never quite grasp the fact that people and companies can and do alter their behavior according to how they are taxed.

Of course, this goes beyond just taxes and the missing revenue from collecting internet sales taxes.

According to Internet Retailer, Amazon more recently offered to create new jobs in Texas if the state would agree not to collect sales tax on Internet sales.

In one fell swoop, the geniuses in Sacramento lose out on projected tax revenue because of the static model they always use and compound the problem by losing real revenue by driving jobs out of the state.


We're in the best of hands.




(UPDATE #1:) Here's a portion of the email our blog buddy Harrison, an Amazon affiliate, received from them:

For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective.

Then, in a later email the plug was pulled:

Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today,June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com , Endless.com , MYHABIT.COM orSmallParts.com.

Read the rest of his post on the subject, here.


To reiterate: losing out on projected tax revenue via the static tax model plus losing out on real revenue because of the loss of jobs is a double-whammy that could only be achieved by the statist brilliance possessed by those at the levers of power in Sacramenton.