Amazon to Axe "Associates" in California Over Sales-Tax Threat

Amazon is on its way toward running out of states to run its "Amazon Associates" program. The retail giant just sent a letter to all its Associates (website owners who make money off placing ads and widgets to Amazon products on their websites) warning them that the program will be killed if Gov. Jerry Brown signs a bill that would force the company to collect sales taxes from the shillers.

In an e-mail to Associates today, Amazon wrote:

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

Amazon already shut down Associates Programs in Illinois, Hawaii, Connecticut, and North Carolina over similar laws. New Mexico, Minnesota, and Vermont are also considering such legislation.

At the end of the day, Amazon's axing its associates is about using jobs as a kind of political football to pressure state politicians to think their way.

No one who's in public office and would like to stay there wants to be the guy that got a bunch of people laid off.

The problem for Amazon is that at this point, states are so broke that not forcing Amazon to pay its share of sales taxes (as they would have to if they were brick-and-mortar establishments) has become less palatable than biting the bullet and letting the company axe its Associates.

But as the list of states that require Amazon to collect these sales taxes grows, its leverage in using this tactic diminishes.

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