On Tuesday, an Examiner Local Editorial warned that Maryland Gov. Martin O’Malley’s attempts to tax Internet purchases
would have serious repercussions for Maryland residents, to wit:
“Large e-retailers like Seattle-based Amazon.com and Utah-based Overstock.com are already moving to end local marketing arrangements and close warehouses and distribution centers” in states attempting to tax Internet sales.
The very next day, the Orange County Register reported the real-world consequences of an Internet sales tax bill that was signed into law by O’Malley’s fellow Democrat, California Gov. Jerry Brown:
“Amazon has already emailed its termination of its affiliate advertising program with 25,000 websites” - which will “immediately cut small-business website revenue 20% to 30%, experts say.”
OCR quoted a letter from Amazon in which the Internet giant said it “deeply reget[s]” having to cut off the mostly small and independently run websites, most of which employ fewer than 75 high-tech workers:
“We opposed this bill (AB 28X) because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue.”
Facing a $1.6 billion budget gap largely of his own making, O’Malley will still be tempted to slap a sales tax on Internet sales in Maryland just like California has done.
But he won’t be able to claim he didn’t know what would happen next.