Amazon Fights Back...

Several states have passed the so-called “Amazon tax”, intended to force Amazon to collect sales tax for the state.  These tax measures are predicated on a redefinition of what it means to have “operations” inside the state (which in turn drives the issue of sales tax collection).  Specifically the redefinition means that participants in the “Amazon Associates” program are counted as “operations”.  Amazon Associates are owners of web sites that sign up with Amazon to direct traffic to Amazon in return for a (tiny) sales commission.  For instance, were I so inclined I could sign up for Amazon Associates and then put links on my blog for you to click on to buy a book (or some other product).

The states that passed this law expected that Amazon would simply sigh and comply.  They were wrong.  Amazon's reaction is to play hardball: it is shutting down the Amazon Associates program for anyone in those states.  This is a lose-lose-lose proposition: Amazon loses a source of referrals, the Amazon Associate loses a source of sales commissions, and the state loses the income tax (and most likely, some sales taxes) on the Amazon Associate's lost income.  It's a great example of ignoramuses in government not realizing what the consequences of their actions would be (despite Amazon telling them loud and clear), and it's also a great example of an American business exercising it's freedom. 

Let's hope the states wise up before too much time goes by.  The last thing we need in this recession is more government meddling with successful business models...