I would think looking for things to cut or was to save money might have better long term results than trying to seek revenue from something that may shrink up.
Proposed online sales tax draws criticism lawmakers are eager to harpoon the great white whale that is Amazon.com to force it to collect sales tax on every HDTV and Kindle it sells here. But those efforts could ensnare scores of smaller fish: mom-and-pop Internet businesses that rely on Amazon and other e-tailers for their livelihood.
The e-commerce behemoth has avoided paying sales tax in California because it has no offices, stores or warehouses in the state.
But California contends that Amazon does have a presence here.
This week, the state Legislature is considering a bill that says California Web sites known as affiliates that send customers to Amazon and other e-commerce companies in exchange for a commission constitute a sales force, giving Amazon and others a physical presence, or "nexus," here. Under a 1992 Supreme Court decision, only retailers with a nexus in a state can be compelled to collect sales tax from its residents.
Cash-strapped California says it could garner $150 million a year from the so-called Amazon bill if out-of-state retailers collected tax on every laptop, Cuisinart and best-seller they peddle to folks here. Consumers are supposed to pay that tax themselves, but it's a rare shopper who does.
Scores of mom-and-pop California Web sites that drive traffic to e-tailers say they would be unfairly ensnared by the state's attempts to force Amazon to pay up. Meanwhile, brick-and-mortar retailers say Amazon's use of the Internet as a sales-tax haven is unfair to them.
Amazon (which did not return calls), Overstock and other large out-of-state e-tailers say they will cut off their California affiliates to duck the sales-tax obligation. The affiliates say that means they'll lose their income and the state still won't get the sales tax revenue.
California has more than 25,000 affiliates, ranging from part-time Web-masters earning a few bucks to large enterprises pulling in millions, said the Performance Marketing Association, their trade group. In 2008 they had revenues of $202.7 million and paid $18.9 million in state income tax, the group said. Industry reports say e-tailers generate about 10 percent of their sales through online affiliates.
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