This has barely been reported yet, so even though it is California news and not specifically Monrovia, I thought I'd comment on it.
At a time when the state needs every penny it can get, the state's proposed budget has a provision that will actually cut state revenue by eliminating taxable income going to thousands of California companies and individuals.
The proposed budget has a provision that would require Amazon.com to collect sales tax on sales it makes to California residents.
Now, there is a good case to be made that it is unfair for physical stores to have to collect sales tax while online, out-of-state, retailers do not to have to do that, but Amazon is a Washington corporation, and California law does not have jurisdiction over Washington unless Amazon has a physical presence in California.
And it does! It has "associates," which are California individuals or companies that make money by promoting Amazon products.
But, while it does have that physical presence, it won't for long.
Amazon has just sent a notice to all its California affiliates saying it "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." (I know this because as an associate - who hasn't made a dime in a decade - I got the letter.)
So, the only thing that will change is that more Californians will be unemployed (or underemployed) and as a result the state will collect less income tax. Amazon can still sell to Californians and still does not need to collect California sales tax.
Again, I agree the current situation is unfair, but this is just dumb and makes matters worse.
UPDATE - Well, the dumbness is now official. This, from Amazon: "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."
- Brad Haugaard
I agree with you, Brad.Jerry Brown has labeled Republican legislators "moronic" for blocking his desired tax increases. "Moronic" has to describe someone who wants to pick this fight with Amazon. In the half dozen other states which have taken this path, Amazon has swiftly terminated the associate relationships in the states and the states are not making much if any more money. I don't know how Brown could figure there would be a different outcome because he was doing it, and whether he thinks he and other Democrat savants are clever enough to manipulate the concept of nexus to win a court case. That CA has such a lousy business climate and the second highest unemployment rate in the country has to say something about the general knowlege of state and local government when it comes to understanding economics and why businesses pick locations to operate. . This is a form of trade protectionism and a desperate grab for money. Jerry has constituency debts to pay off, so he has to grab at anything he can. It is the only way he can help keep taxpayer funding of Democrat political campaigns. Public employee union contributions are funded by the taxpayer. The wrinkle is that even if it does raise money for the state, that money has to come out of the private sector one way or another, and cannot be used for increased consumption or investment.
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