Amazon Tax Stopped in California

Published July 1, 2009

A bill that would require online retailers to collect sales taxes from California residents failed to make it through the state legislature.

A hearing in late April to mark up Assembly Bill 178 was abruptly cancelled, essentially removing the issue from the docket for the rest of 2009. The bill was an attempt to circumvent the Commerce Clause of the U.S. Constitution by asserting a company has a physical “nexus” in California if a sale goes through a third-party advertiser based in the state.

Taxpayer Revolt?

“I would attribute the failure of AB 178 to fear of another taxpayer revolt,” said Pete Sepp, vice president for policy and communications for the National Taxpayers Union in Alexandria, Virginia. “Hi-tech firms in Silicon Valley are struggling to maintain even a fraction of the business they once had. They would be none too happy to see Assembly members making life more miserable.”

“High-tech entrepreneurism is one of our state’s key competitive advantages in the world,” said Vince Vasquez, senior policy analyst with the San Diego Institute for Policy Research. “We will lose that if state lawmakers send signs that they would rather support more government and higher taxes than foster a business-friendly climate.”

James G. Lakely ([email protected]) is a research fellow at The Heartland Institute and managing editor of InfoTech & Telecom News.