[markwelch]

Attached is a PDF copy of my letter sent today to relevant members of the California Assembly, opposing AB 178 (the "Amazon Tax").

If I had more time, I would have shortened the letter (it's six pages long). At this length, nobody other than the committee's legal analyst (and perhaps one of the sponsors' staffers) is likely to read the whole letter.

If I had any data at all, I would have included it. But unfortunately, I've received no response whatsoever from large merchants or networks.

Since I know that AB 178 cannot possibly pass "as written," I considered omitting any discussion of the current draft, but ultimately I felt that I needed to address this. I expect that there will be a "last-minute amendment" submitted at the hearing, so that the authors can claim to address issues raised by objectors while affording them no opportunity to respond to the new draft.

[Kevin]

If I had any data at all, I would have included it. But unfortunately, I've received no response whatsoever from large merchants or networks.

That's a very telling statement.

Thanks for including a copy of the letter. I think you did a nice job, and I hope it has an impact.

[Adam Ward]

6 pages...
http://en.wikipedia.org/wiki/Bloviate

[CathyM]

Mark, thanks for sharing your letter. I have been struggling with what I want to say in mine. I have finally come up with text that I like and expresses my feelings about the situation. I will try using email contacts on the web for the committee members as listed in your letter. Thanks for getting me motivated!

I am writing to express my opposition to California Bill 178. I am a small business owner, specializing in Internet Marketing, residing in Torrance, CA.

I oppose California Bill 178 because it attempts to gather sales tax at the expense of driving business out of California. If the legislature wants to tax out of state online retailers, this should be accomplished through a method that does not target California businesses as the “nexus” by which such a tax is collected. The way the bill is written, if an out of state merchant purchases advertising from a California company, they must collect sales tax in California. This means that the retailer is encouraged to discontinue doing business with California based marketing companies and such companies are encouraged to leave the state to save their business. This is, in fact, the impact that was seen from the similar New York law.

California is the home of technology and Internet Marketing. To penalize these businesses for having California as their base of operations is a great injustice.

The collection of sales tax dollars should be based solely on the citizen’s residence not on the residence of companies that provide services to the online retailers.

Please consider deferring CB 178 and instead working with other states to support a national sales tax that is fair and does not penalize California based Internet Marketing businesses.

[markwelch]

Cathy, I'd like to offer one suggestion:

Almost every tax measure is opposed on the grounds that it will "cost jobs" and "drive businesses out of California." Legislators aren't likely to view that argument as credible UNLESS you can persuade them that this time, it's different.

Affiliates' experience after the New York law was enacted are very convincing proof that the law will actually cause out-of-state companies to terminate their advertising/affiliate relationships with California web publishers. Unfortunately, there is no way that you or I could assign a particular money value since we lack access to any data that would help quantify the losses.

In contrast, of course, a company like Commission Junction could provide extremely effective data. While its letter to affiliate this week was pretty vague and "wishy-washy," I remain hopeful that they will give their lobbyist useful data to use to convince legislators to defeat this bill. Unfortunately, I remain worried that CJ will look out for its own interests first (to make sure that merely having a relationship with CJ that involves commission-based fees does not force a merchant to collect & pay sales taxes), which could lead to amendments that would help CJ but not California web publishers.

[CathyM]

Mark,

I don't think that my letter (or any single letter) is going to convince the committee members that this time it's different but I do want them to know that there is an impact on California businesses, small and large. I hope that many publishers will send comments that will collectively have an impact on the committee.

I think that cj, amazon, google and other large players will be lobbying and will, of course, be looking out for their own best interests. In this case, their interests should coincide with ours.

On a side note, most of my largest merchants either already collect sales tax or will start doing so (based on their history with NY). I do not believe this law will have a large impact on my business (but it will have some). I do believe that the law is unjust and the definition of nexus is misguided so that is why I am writing.

Cathy

[markwelch]

I'm not sure that Amazon can be a significant force against this bill. Amazon's relationships with affiliates are NOT going to be affected by this bill; no Amazon affiliate will be terminated if it passes.

Based on the New York experience (in which Amazon immediately began collecting New York sales tax), legislators are going to look at that revenue as the primary reason for enacting this law. If legislators could legally enact a law requiring Amazon (and Amazon only) to begin collecting sales tax, they would probably do so. But they can't.

California legislators are trying to write a bill that will get Amazon to collect California sales taxes, while also forcing some other e-commerce merchants to also collect California sales taxes -- even though the total of sales taxes newly-collected by all other companies will probably be much less than the amount collected by Amazon alone.

Of course, the initial draft of this bill would reach far, far, far beyond e-commerce retailers, and would absolutely be unconstitutional; thus, we're currently fighting a ghost since this bill will not be enacted as written.

[brookschaaf]

Hi Mark,

Thanks for sharing your letter. It was very well written and, I think, about as persuasive as it could be.