Dems kill thousands of Colo. Internet businesses 

Colorado's Democratic legislature and governor thought they were being clever. By putting the screws to online retailers, they could reap millions of dollars in tax revenues from items sold over the Internet and fill the budget gaps created by their failure to control spending and plan for hard economic times.

So they imposed new rules designed to bludgeon retailers into compliance. Sorry, but no dice: Inc. cut ties Monday with Colorado online businesses that help it sell products because of a new state law aimed at getting out-of-state, online retailers to collect sales tax.

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The move hurts businesses — many of them small, home-based operations — that earn money by using their Web sites and blogs to link customers to online retailers. Colorado has at least 4,200 such businesses, known as affiliates or associates, accounting for about 5,000 jobs, and most of them rely on Amazon to some degree, according to their trade group, the Performance Marketing Association.

The group's executive director, Rebecca Madigan, said some get only about 10 percent of their revenue from Amazon but others are totally reliant on it.

According to the wishful numbers on Recovery.Gov, the stimulus package "created or saved" 9,300 jobs in Colorado. So with the stroke of a pen, the state's Democrats have destroyed more than half of them -- only this time the jobs are for real.

Republicans in the state legislature opposed the bill, predicting that this very thing would happen. Years ago, former Republican Gov. Bill Owens argued, and I think well, that out-of-state online retailers don't use state services the same way brick-and-mortar stores use them, and therefore should not have to pay all of the same taxes. (To the extent that they use roads to deliver their products, their delivery vendors pay gasoline taxes to the state already.) But right now, with public-sector unions driving states into penury, Colorado's Democrats are eager to reach for every available straw in the quest to fund their programs.

Democratic lawmakers, including Gov. Bill Ritter, criticized Amazon for cutting off affiliates, with some calling it "corporate bullying."..."They've done nothing here but spit in our face," Senate Majority Leader John Morse said.

There's nothing more pathetic than the big bully who whines about being bullied by a small bully.

One victim of this new law -- a self-described supporter of Ritter -- writes on his blog:

I’m especially disappointed in the Governor’s statement – it’s completely tone deaf to the actual issue and what Amazon is clearly stating.  I’ve heard several people saying “Amazon is the problem” or "well – this is good – now people will buy locally.”  Neither of these statements is valid – Amazon behaved like a rational company in the face of government regulation that had no upside for them and substantial downside.  Also, this has zero impact on consumer purchasing activity as this doesn’t impact the end customer of Amazon products in any way.

Rather, the many small businesses and solo entrepreneurs who make money off of Amazon’s affiliate program just lost a revenue stream (which, by the way, is used to employ people and pay state taxes.)  Colorado just got a big black eye in their historical effort to be a place that is friendly to business, especially high growth technology companies.

About The Author

David Freddoso

David Freddoso came to the Washington Examiner in June 2009, after serving for nearly two years as a Capitol Hill-based staff reporter for National Review Online. Before writing his New York Times bestselling book, The Case Against Barack Obama, he spent three years assisting Robert Novak, the legendary Washington... more
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