California's assault on online retailers 

Under intense lobbying from Walmart, California lawmakers have approved a measure forcing Amazon to collect sales taxes made on purchases by California residents, even though federal law prohibits states from collecting sales taxes from companies that have a physical presence in the state, which Amazon does not.

California, like other states that have passed similar laws, is trying to argue that the law is constitutional because Amazon has affiliates in the state. But these "affiliates" typically amount to to nothing more than somebody who runs a website that links to a product on Amazon and gets a commission. If the law is ultimately upheld in court, which is highly in doubt, Amazon would just sever its links to any such affiliates.

Lobbyists for brick and mortar retailers such as WalMart, Sears and Target argue that the current tax arrangement is unfair to them, because they have to collect sales taxes, whereas consumers could avert sales tax by purchasing online. But this is how federalism works. If California doesn't want to create incentives for consumers to go elsewhere to purchase goods, then they shouldn't have such high sales taxes in the first place.


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Philip Klein

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