California Pushes for an 'Amazon Tax'

California’s proposal to institute an “Amazon Tax” took another major step forward last week.

The last of three bills aimed at getting the Seattle giant and other out-of-state online retailers to pay sales tax passed the Assembly on Wednesday afternoon.

“It’s something we’ve been working on for years,” said Assemblywoman Nancy Skinner, D-Berkeley, who authored the bill. “But this is the first time that so many businesses up and down the state are supporting it.”

A companion bill, authored by Assemblyman Charles Calderon, D-Whittier (Los Angeles County), passed the full floor on a 47-16 vote on Tuesday.

“This bill levels the playing field for businesses in California,” said Assemblyman Bill Berryhill, R-Ceres (Stanislaus County). “Not a day goes by when I don’t hear from businesses about their ability to compete.”

Which is what supporters of the so-called e-fairness legislation have been shouting from the rooftops for years, despite vetoes from former Gov. Arnold Schwarzenegger and dire threats from Amazon.com (2010 profit: $34 billion) and Utah’s Overstock.com to pull their affiliate business out of the state.

Assemblyman Berryhill was the lone Republican to back the bills; now both AB 153 and 155 will head to the Senate for approval, while Senate bill 234, another “Amazon Tax” bill, is anticipated to be taken up by the Assembly. Democratic Gov. Jerry Brown still hasn’t voiced an opinion either way on any of the bills.

Even if they were passed and signed into law, each bill remains likely to face serious legal challenges and unlikely to pass muster on a close reading of applicable law. Though Democrats who back AB 153 and 155 claim they require only a simple majority to be passed, the wording of California’s Proposition 26 that passed last year indicates that they in fact require a 2/3 majority vote (which none of the bills has thus far received). Critics further charge that all three bills are unconstitutional, a conclusion that appears to be strongly supported by the Quill v North Dakota Supreme Court decision.

Besides the legal challenges, these “Amazon Tax” bills are likely to do economic damage to a state that is already dealing with 11.7 percent unemployment, while bringing in at best a small amount of revenue and at worst actually costing the state money.

Companies like Amazon have already stated that if bills like AB 153 become law they will completely pull out of California. Meanwhile, another “Amazon Tax” law passed and signed into law in Illinois is already provoking an expensive legal challenge.

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