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Fairness online

Original post made on Aug 22, 2009

Last June, both the State Assembly and Senate approved a budget containing an e-fairness provision, which would have clarified state law and required out-of-state online retailers with connections in the state via online affiliates to collect and remit sales tax. It was estimated that the provision would have raised $176 million per year for our cash-strapped state, but on June 30, Gov. Arnold Schwarzenegger vetoed the measure after online giants, including Amazon.com and Overstock.com, had threatened to de-list their affiliates in the state if the final budget contained the e-fairness provision. That's just in uncollected sales taxes on internet book sales.

Read the full story here Web Link posted Friday, August 21, 2009, 12:00 AM

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Posted by Daniel Ballon, Ph.D., Senior Policy Fellow, Technology Studies, Pacific Research Institute
a resident of another community
on Aug 22, 2009 at 1:01 am

The Performance Marketing Alliance estimates that 25,000 California small businesses earned $1.3 billion in 2008 from advertising relationships with out-of-state companies. If advertisers terminate these relationships, the state could lose $123 million in income taxes. Because advertising income drives the creation and growth of countless online services, this sudden loss of income could devastate Silicon Valley and compromise California's status as a leader in high-tech innovation.

Therefore, expanding the definition of nexus results in no benefit for the state, but incurs considerable harms. Desperate to end the budget crisis, the legislature advanced this proposal as a fix existing only on paper. By insisting on budget figures that accurately reflect reality, the governor has made an important commitment to find enduring solutions that “keep jobs and businesses in California." After rejecting the nexus measure, Governor Schwarzenegger personally contacted Overstock's CEO and convinced him to reinstate all advertising relationships with California businesses.

from here: Web Link


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