Victims of 'Amazon Tax' Cry Out

Note: If you were fired as an Amazon affiliate, please email me your story to be included in a future article: [email protected]

JULY 1, 2011

By JOHN SEILER

“I was fired today,” my friend Gary Metz wrote me just after Amazon.com notified him on Thursday of the action. Amazon fired him right after Gov. Jerry Brown signed into law the new “Amazon tax,” as it was widely referred to on Capitol Hill, although it affects other companies as well.

Metz’s main job is as a network engineer in Southern California, “helping people with Websites and businesses.” But for several years now he has supplemented his income by about $100 a month through Amazon.

“For me, it was additional income,” Metz told me. “So it wasn’t that big a deal personally. For anybody who is making a living on the Internet, and there are a growing number of people in California who are dong that, this is disastrous. If you want to put those people out of work, too, that’ll do it.”

Metz said he operated a Website and blog on foreign policy, Regime Change in Iran. If you check out the site, you’ll notice that on the right side he lists some foreign policy books. If someone clicked on one and bought it through Amazon, he would get a portion of the sale.

“It was nice additional income,” Metz said. “There are probably thousands of people in California for whom it’s important supplemental income. And for other people, this is how they make their living. For those people, this will force them to either act like they’re in another state somehow, or actualy physically move.”

Or go broke, go in welfare and apply for food stamps and Medi-Cal, thus costing the taxpayers money, whereas before they were taxpayers themselves.

“These kinds of laws will destroy one of the few areas where our economy is growing and is strong,” Metz observed. “So they make a few dollars on some taxes. At the same time they drive the businesses out of business. They destroy the means to make money, which would be spent in the local economy.”

I hope the Legislative Analyst does a study of the Amazon tax. Because it’s clearly a negative tax — it reduces taxes at a higher rate than it collects them. The businesses destroyed will not be paying income, sales and property taxes in California. That amount will be more than that “collected” under the new tax.

Destroying businesses is insane in a state still suffering 11.7 percent unemployment. But, alas, par for the course under Gov. Jerry “Jobs Killer” Brown.

Businesses Destroyed

Katy Grimes’ article on CalWatchDog.com, “Brown Signs Punitive Amazon Tax,” also has drawn comments from Californians whose livelihoods he has destroyed with the stroke of a blood-filled pen.

These are all the “little people,” the Mom and Pop businesses that keep the state going. But Jerry “Jobs Killer” Brown doesn’t care about them. Bill Clinton used to say, “I feel your pain.”

Jerry Brown screams: “I inflict your pain.”

Soquel by the Creek wrote:

I’m a fourth-generation native Californian, a former Amazon Affiliate, and I fully support Amazon’s position in the matter. Amazon did far more for my small business than the state of California ever has, especially for the privilege of spending an additional $800 annually on California corporate taxes.

I fully expect that the California law will eventually end up in the Supreme Court, at taxpayer expense our course. Only the United States Congress has the authority to regulate interstate commerce, not the California Legislature.

The state will never collect their projected revenues from this flawed policy.

For anyone in the “producing class”, California is a high tax state already. California ranks near the bottom on general business climate and in business tax climate. It should come as no surprise that California also enjoys the nation’s 2nd highest unemployment rate.

Casey wrote:

By the time I gave up for the night, I was down by 94 merchants, one of which was Amazon. I don’t blame Amazon or any of my out-of-state merchants for the decision to distance themselves from us here in California.

I’ve said this elsewhere and I’ll say it here: These tax nexus laws make as much sense as removing a car engine to improve gas mileage. Yes, the mileage will be vastly improved (on paper) but you’re not going to get very far very fast.

I want my engine back.

Rexanne wrote:

I was born and have lived in Southern California most of my life. This law has just destroyed my small business that is the only means of support for myself and 2 children and one that has taken me 12 years to build into a viable means of income.

The state of California will not see ANY money from this law. Merchants are simply dropping their CA affiliates so there is no “nexus” (presumption of physical location) and they will therefore not have to pay this unconstitutional interstate tax (taxation without representation).

The budget that Gerry Brown signed is in no way “balanced” and those who created it and stuffed it on the CA people (including Governor Brown who signed and validated it) are now getting their paychecks again. Meanwhile 25 thousand CA businesses are suffering and losing money that would be taxed and spent in the state.

This is not only a blow to California affiliate marketers but a blow to the people of California.

Amy wrote:

I didn’t spend today being productive. Instead we read 100s of e-mails from stores around the country. They are terminating their relationships with us. We had to figure out how to deal with the situation.

When we discovered that most of them made the terminations effective immediately, we had to scramble to get them off of our sites. It’s almost 9pm and we are not done.

I expect that there will be more tomorrow and that they will trickle in through next week.

We won’t be generating income from these stores anymore. Someone in another state will and that state will collect income tax. California won’t get the income tax from those sales.

Oh, and California won’t be receiving sales tax collections from these stores either. Just lost income for the state and its residents.

If you think that people should pay sales tax on what they buy no matter where they buy it, you’re right. That’s the law. Unfortunately this bill won’t make that happen and just hurts businesses like mine.

Amy added later:

And in case anyone thinks that we are going to any satisfaction by being able to say “I told you so” to the legislators and governor, it won’t. It still sucks that we have to go through this even though we knew that our businesses would be devastated by the passage of this law and spent over TWO YEARS telling the legislators and their staffs exactly what would happen.

Today is the day, ladies and gentlemen of the California State Legislature… you ordered this up. Where is your $150 million that the lobbyists for the unions and big box stores promised? Oh yeah, you trusted Walmart when its lobbyist told you that this was about Main Street fairness. Did you bother to see what Walmart did to Main Streets across the country?!?

It’s not too late to repeal this bill. Once our businesses move out of state or close, then it’s too late.

If you want to see what it looks like when affiliate publishers move states, watch this video:http://www.youtube.com/watch?v=ckP0HWl_w3c

Amy again:

It’s almost midnight and I’m not done yet but I can’t look at this screen anymore. It’s just too depressing. The dead stores on our sites will have to stay there a little longer.

With the economy down, is there anything else that the California Legislature wants to put in the way of our small business having any chance of success? Isn’t California where the tech revolution is supposed to be? Shouldn’t our governement be HELPING, not HURTING internet startups?

The state will collect more from the success of Facebook, LinkedIn, Pandora, Twitter, etc. than it could ever hope for from this bill. How about some perspective people?!? HELP the people who are generating income tax revenue and jobs!!!

Amy’s final word:

One last thing that I just noticed… we lost partnerships today that we have had for TEN YEARS!!! We have had good working relationships with many of these companies and worked closely with them.

This is so sad.

Here’s the YouTube Amy linked to, about affiliates leaving Illinois after it imposed an “Amazon tax”:

.

.

Amazon Firing Letter

And here’s the letter Amazon sent to Gary Metz and other affiliates:

Hello,

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 or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team