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  1. #1
    Advocate mellie's Avatar
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    Earliest Committee Vote is Mar 5
    Some suggested steps to take.

    Looked in to the procedure and the bill has to be in print 31 days before committee can act. March 5 is the day the tax committee can act on Bill 178 which means that is the day the coimmittee can vote on it. If they pass it, it moves out to Assembly for general vote. Again simple majority passes it.

    This is perceived not as a new tax but as a new method of collecting an existing tax. The NY court ruling is being used and it has clout. Also being used is the download tax that was passed in Indiana, Nebraska, South Dakota, Utah and Tennessee (and pending in many other states).

    The way I see it is you have until Mar 5 to really work the committee members. Email and call committee to get a feel for where it stands.

    Link to tax committee members

    http://www.assembly.ca.gov/acs/newco...p?committee=21

    Then move on to your local Assembly person.
    http://www.assembly.ca.gov/acs/acsframeset7text.htm

    You can also access the bill online and leave comments.


    While you are doing that also work on researching merchants to see who's vulnerable for you.
    Melanie
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  2. #2
    Advocate mellie's Avatar
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    California affiliates can leave comments on bill here http://www.assembly.ca.gov/acs/acsframeset2text.htm Enter bill no 178
    Melanie
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  3. #3
    Analytics Dude Kevin's Avatar
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    Not much time... Did these guys whip this thing up in secret, or did we (moreso CA affiliates) miss this along the way somewhere?
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  4. #4
    Affiliate Manager Alan Hamilton's Avatar
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    When it comes to taxes Mellie, the government is rarely if ever stopped from increasing them. The solution to all problems for these people is similar to the solution that all government spenders adopt; raise taxes and they will come...

    Your comment that: they are selling this one as NOT (cough) a new tax but a "method to collect an existing tax" is typical. It's easier to sell (gets less resistance from the public) if they can create the perception that it is a tax that is "already" in place and revenue that poor state needs/is entitled to/ deserves - is being "missed" because it is not effectively collected. Most people won't look past the surface and the small number who might have little if any impact in curbing such antics.

    It is truly sad that the overall national mentality right now is that taxing is the way to cover bloated budgets. Those of us who actually work for a living, creating jobs and creating the actual products and services that go into make up our GNP see it from another perspective; we cut spending, streamline efficiency and eliminate programs that would be "nice" to have, but can be done without for a time in order to balance budgets.

    With what seems to be evolving as an entitlement mentality in gov't, I'm guessing (key word = guessing) that the assembly will get their way on this and other states will then follow. I hope that guess is wrong. Either way, you have done a heck of a job of getting involved and I admire you for that.
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  5. #5
    Advocate mellie's Avatar
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    Alan, I am not optimistic when it comes to this either, more or less the same outlook I had in regards to the Amazon & Overstock lawsuits. The bottom line is the sales tax is due, Ca has use tax as do the other states. Since consumers are not remitting it on their own, they want to make the merchants collect it.

    Having said that I still think it is crucial to speak up, there is at least a small chance to have it stay in committee for further study. By then the Federal actions may gain momentum.

    Thanks, I am hoping that Ca affiliates and all merchants will have an easier time becasue they will be prepared.

    It is happening. Another state or two and merchants will be under more pressure to either collect and remit the tax or change the model of business.

    Yup, Kevin we missed the initial talk of the bill when it was written and assigned a number. I think we need to start monitoring bills. I am trying the email alert feature for a couple of states, hoping it might help a little. This one I heard about from an political aide for a NY senator.
    Melanie
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  6. #6
    Troll Killer and best Snooper!
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    Let's stay on topic and cut the political crap, shall we?

  7. #7
    AM Navigator Geno Prussakov's Avatar
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    Quote Originally Posted by Kevin
    Not much time... Did these guys whip this thing up in secret, or did we (moreso CA affiliates) miss this along the way somewhere?
    More than likely it's the former. In the beginning of January I've heard about a similar law being considered for the State of Illinois too (another wave may be coming), but you wouldn't find any official information on it in public.

    Geno

  8. #8
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Unfortunately, I'm in the middle of some real estate stuff that's taking much of my time right now, but besides emailing a couple of LA Times columnists, I wrote letters to the sponsors, committee members, and my local Assemblyman, that I'll get in the mail today, and if I can today, if not tomorrow, I'll stop by his local office. I plan to follow up with emails and calls to Assemblypersons, plus leave comments, as suggested.

    Virtually all of the posts on this issue have come from NY affiliates who have suffered through this. Have any other California residents besides markwelch actually done anything about this yet? I think it would be a good idea to let us know that there are others who are doing something.
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  9. #9
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    I spoke with the staffer who coordinates the hearings in the Rev & Tax Committee. She indicated that the committee normally meets every Monday, starting March 9; there is a May 1 deadline for committee action on this type of bill, so the last hearing date would probably be April 27. Until the bill is officially referred to the Rev & Tax Committee, the committee staff can't start any work on it.

    I also spoke with a staffer for Chuck DeVore, who is the Republican vice-chair of the Rev & Tax Committee. I don't yet know whether Mr. DeVore will oppose or support the bill (normally I'd expect any California Republican to oppose any "new taxes" but this is "merely" a tax-enforcement provision, not a "new tax," so the outcome isn't so clear).

    In the past 24 hours, I've taken the following actions:
    - I called the staffers for the bill's sponsors (Skinner & Calderon) to express my opposition and request more information; I don't expect them to respond.
    - I submitted the online "bill comment form" (thanks, mellie)
    - I sent an email to the bill's authors, Rev & Tax Committee members, and my Assembly Member, outlining my concerns and expressing my desire to submit additional information regarding the likely impact of the bill.
    - I called and spoke with my own Assembly Member's staffer, Mr. DeVore's staffer, and the Rev & Tax Committee staffer.

    I have also drafted a letter to print and mail, but I'm waiting in the hope that I can include some specific factual information regarding the impact of the New York law (e.g. a list of merchants who've fired all NY affiliates, and some information about the impact on those affiliates' income and behavior). I'm also trying to decide whether to share some of my personal financial information to disclose the impact this law would have on me personally.

    My wife and I have also discussed the idea of moving out of California.

    What would help: Legislators are more likely to actually respond to constituents. Since my Assembly Member isn't a member of the Revenue & Taxation Committee (and since I don't have any professional lobbyists or fund-raising power), I'm already at a disadvantage. If you live in the district of one of the Rev & Tax Committee members, your comments are likely to have more impact.
    Last edited by markwelch; February 26th, 2009 at 01:20 PM.

  10. #10
    Advocate mellie's Avatar
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    Rumblings are also in states of Illinois, Ohio, New Jersey, Washington, Minnesota, Texas, Michigan, plus the states I mentioned above that have download tax -Indiana, Nebraska, South Dakota, Utah and Tennessee- (that was their step one - it stuck & is working).

    Mark, it is impossible to give a list of all the merchants, it is over 200. Some will not admit it publicly. Some just terminated NY Affiliates saying (site does not meet criteria" or something else vague. Overall, depending on business model of affiliate and the niche, income drops ranged from 20-90%.
    Melanie
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  11. #11
    Advocate mellie's Avatar
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    BTW Mark & Affiliate Hound, great work on getting info on the committee meeting and in getting mails out. I suggest using both snail mail and email.

    This forum will be a great way to help your coordinate and organize your efforts, so thanks Haiko!
    Melanie
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  12. #12
    Analytics Dude Kevin's Avatar
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    Mark: Wish I could give you a number as well, but for me, because I was transitioning roles at the time of the tax change, there wasn't a hard dollar amount involved for me.

    What I will say is that 4 key merchants became unavailable in my niche. The income I lose daily from a well trafficked niche site is indeterminate, but substantial.

    Give me a jingle if you want more detail.
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  13. #13
    Advocate mellie's Avatar
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    All it takes is the loss of one or two key merchants to destroy your business. Best bet is to be prepared with replacement merchants and a backup to your backup.
    Melanie
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  14. #14
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    So far I've sent emails to KCRA Ch.3, KXTV Ch.10, KOVR Ch.13, Sacramento Bee, my Senator and Assemblyman as well as all of the members of the Committee on Revenue and Taxation. I also submitted a comment to the bill and have a letter typed up & ready to go out...
    Hi, I'm a signature.

  15. #15
    Outsourced Program Manager John Jupp's Avatar
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    Quote Originally Posted by Kevin
    Not much time... Did these guys whip this thing up in secret, or did we (moreso CA affiliates) miss this along the way somewhere?
    I don't want to quote Pot, Kettle, Black but I did warn this was going to happen. Yeah sure I needed to read up on stuff (and thanks to everyone for the lively debate) but it does seem I was proven right that California was on the cards.
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  16. #16
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    Legislative process; side arguments
    FYI, I just received an email advising that the March 9 meeting of the California Assembly Revenue & Taxation Committee has been cancelled. If this is true, then the earliest hearing date for AB 178 would be March 16.

    Kevin wrote: > "Did these guys whip this thing up in secret . . . ?" <

    From the timing of the press release by the American Booksellers Association, they certainly knew about the bill before it was introduced. I assume that this bill was probably driven by lobbyists for that group and other "local" industry groups who perceive that many of their businesses are failing because Amazon doesn't charge sales tax in most states.

    But please note: I think it would be unwise to engage in major "side arguments" about such issues as: whether sale-tax-avoidance is a significant factor in consumers' decisions to purchase items online or recent declines in retail businesses; whether a law modeled on the New York law is constitutional; or the cost of litigation over the validity of the "Amazon tax." I'm not suggesting that these arguments not be presented, but that we strive to avoid the distraction of side arguments that aren't likely to sway legislators. Instead, I think our focus should be on the "unintended side effects" of AB 178, and the fact that the loss of income for Californians will far exceed the amount of sales tax collected.

    Remember that legislators are elected by California residents; they were probably "sold" on this bill by lobbyists who viewed out-of-state retailers as "easy targets," and who probably pointed out that Amazon did collect the New York sales tax, and would probably begin collecting California sales tax if AB 178 is passed. But I'm sure the lobbyists for this bill never disclosed that only a few other out-of-state retailers will actually begin collecting California sales tax, nor that hundreds of out-of-state retailers will simply terminate their relationship with California residents and thus reduce income (and income taxes).
    Last edited by markwelch; March 3rd, 2009 at 05:11 PM.

  17. #17
    Analytics Dude Kevin's Avatar
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    Instead, I think our focus should be on the "unintended side effects" of AB 178, and the fact that the loss of income for Californians will far exceed the amount of sales tax collected.
    Correct. That's a far stronger argument.
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  18. #18
    ABW Ambassador affninja's Avatar
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    Thanks all for posting. I've written my Assembly members and the committee members why AB 178 is bad news for California's small businesses.

  19. #19
    ABW Ambassador Snib's Avatar
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    I just wrote to them as well. Hope it helps!

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  20. #20
    ABW Ambassador CathyM's Avatar
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    Instead, I think our focus should be on the "unintended side effects" of AB 178, and the fact that the loss of income for Californians will far exceed the amount of sales tax collected.

    Correct. That's a far stronger argument.
    But is it true? The amount of sales tax that could be collected from all Amazon sales to customers in California could be a huge number. You are saying that the amount of income taxes on the commission income to affiliates in California that will be lost because merchants drop the affiliates is greater than that tax number? Or am I mis-reading it?

  21. #21
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    CathyM asked: > "But is it true?" <

    I believe so. If it's not true, I doubt that any other argument (including lost income for Californians) will overcome the state's urgent need for revenue.

    I believe the most likely way to defeat this bill is to demonstrate that the sales taxes gained are less than the income taxes lost. But it's nearly impossible to prove.

    I assume that Amazon alone would collect millions of dollars per year in California sales taxes, if the law passed. I suspect that all other companies "captured" by this law, combined, would collect less sales tax than Amazon.

    The question we can't answer, of course, is how much income is being paid to California residents by merchants who aren't willing to collect California sales tax, and would thus be likely to terminate their relationships with California affiliates if this law passes. And we don't know how much income tax is being paid to California based on that income.

    I'm not confident that anyone will be able to present credible evidence on this. To identify the amount of earnings that California affiliates would lose, we'd need sales and affiliate data from several hundred private out-of-state companies (or from several affiliate networks, in the unlikely event that their contracts permitted disclosure or they obtained permission from merchants).

    Making matters worse, if an out-of-state merchant discloses that it sells millions of dollars of products to California residents, then it's likely that that company would become a "target" as the Board of Equalization might work overtime to try to find a "nexus" so that they could force that company to collect taxes. If you were an out-of-state merchant in this situation, would you offer your data? I don't think I would.

    Quite frankly, I've concluded that we're almost certainly going to lose this battle, and I'm already starting to adapt my business now in anticipation of this probability.

  22. #22
    ABW Ambassador delsol's Avatar
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    Quote Originally Posted by CathyM
    But is it true? The amount of sales tax that could be collected from all Amazon sales to customers in California could be a huge number. You are saying that the amount of income taxes on the commission income to affiliates in California that will be lost because merchants drop the affiliates is greater than that tax number? Or am I mis-reading it?
    Good point Cathy. However the fact of taxing Amazon sales is not creating any net value for California. It is simply making California online shoppers pay more for their goods. On the other side, the lost of revenue for CA affiliates and the affiliates moving out of state will be a net loose for California.

    I don't think politicians, care about the "better good of their state", when it comes to collecting tax they start behaving like Sally (Meg Ryan) in the Katz dinner ;-)

  23. #23
    ABW Ambassador CathyM's Avatar
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    However the fact of taxing Amazon sales is not creating any net value for California. It is simply making California online shoppers pay more for their goods.
    Not sure what you mean here, sales taxes will stay within the state.

  24. #24
    ABW Ambassador delsol's Avatar
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    Quote Originally Posted by CathyM
    Not sure what you mean here, sales taxes will stay within the state.
    What I'm trying to say, is that, the money shoppers would have not paid in taxes would have also stayed in the state and most likely be spent in the state. This is not creating any net value for the state.

    Will the Californian stores generate an increase in revenue equal to the lost of revenue the state will experience?

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