Gee, thanks, Gov. Brown

Got this notice in the mail today:

Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to,, MYHABIT.COM or Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from,, MYHABIT.COM or

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.


The Amazon Associates Team

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  • Zachriel

    Do you think that people should be able to avoid paying sales tax at the local store by buying off the Internet? Do you agree with Amazon’s CEO that this should be resolved on the federal level, with the federal government imposing a national sales tax system?

  • Don Quixote

    Yes and probably yes. 

  • JKB

    Well it should be kept in mind that California has the most highly educated legislature in the country.  Really, CA legislators are brain trusts! | CalWatchDog But is 47th in economic and fiscal freedom.  Surprisingly there seems to be a correlation between credentialed legislators and poor economic performance.  That doesn’t mean there is causation but it does seem you need a lot of educating to become so economically stupid.

    The Chronicle of Higher Education recently conducted a study finding that California has the most educated Legislature with most legislators earning a bachelor’s degree or higher.

    When comparing the top and bottom 15 states to the Mercatus Center’s Freedom in the 50 States Economic and Fiscal Freedom Indicators, the statistics show that the bottom 15 educated states have a higher economic freedom and fiscal freedom score than the 15 most educated states.  Fiscal Freedom is measured by spending, taxation and fiscal decentralization.  Economic Freedom is a measure of individual liberty, government spending, income taxes and sales taxes. South Dakota, which has one of the least educated legislatures, ranks number one on the economic freedom scale due to its high fiscal decentralization, and low levels of taxation and spending. California, which ranks 47th out of 50 according to the Mercatus study, “not only taxes and regulates its economy more than most other states, it also aggressively interferes in the personal lives of its citizens.”

  • jj

    Yes to the first part, definitely.  The fact that it’s done through the mail doesn’t change that it’s an out-of-state purchase.  People who live in New York along the northern New Jersey border tend to cross the border to buy gas because it’s 50 cents a gallon less in New Jersey – that’s hard cheese for NY, and maybe a hint to lower the gas taxes.  Looking east, Pound Ridge and Bedford NY are the original homes of the multi-million dollar weekend and summer house.  Both towns are rural, shopping for all but groceries is in Connecticut.  (There isn’t even a drug store in Pound Ridge – the nearest one is New Canaan, CT.)  You buy whatever it is you buy mostly in CT.  You don’t expect to pay NY for the privilege of doing so – and NY doesn’t expect it either – there are no inspectors at the border.  If you go to Barnes & Noble in Stamford CT, you pay CT taxes, not NY.  If you have Barnes & Noble mail your books to you, the use of the mail does not suddenly mean NY gets to charge taxes.  Buying through Amazon – or anybody else – is simply shopping out of state.  It’s tax-free altogether because you aren’t physically present int he home state of whatever you’re buying.
    I’m a little dubious about “national” anything – we should all have learned by now that there is no entity on the planet that can take something simple and logical and f*** it up to the point Jesus Christ couldn’t translate or understand it better than our federal government does.  There most definitely should not be a national sales tax system on top of existing state sales taxes – unless it replaces the IRS altogether.  If the idea is that I should pay state sales taxes on whatever I buy in-state, and then a national sales tax on whatever I buy through the mail – no.

  • Zachriel

    jj: The fact that it’s done through the mail doesn’t change that it’s an out-of-state purchase.

    Even if states have the same sales tax rate, without a collectable use-tax, the rate for mailorder is 0%. It undermines local businesses who have to collect the tax, doesn’t it?

  • FunkyPhD

    No, it doesn’t undermine those businesses; it forces them to compete. That’s called “the market.”

  • suek

    Besides…even though the mail order business avoids the expense of tax which makes the product cheaper than buying at a local business, the customer has to weigh in the cost of freight.

    You can’t ship anything UPS for less than about $6.00. Shipping _may_ be cheaper than tax, or it may not. My guess is probably not.

    Shipping, of course, adds to the income of UPS, which then pays federal and state income tax upon the income. So the state doesn’t really lose…not in the long run.

  • suek

    And USPS – except for your regular mail – is pretty much more expensive than UPS. Maybe not for book/media rate – but anything else?? More. Not much more, but more.

    I don’t know about FedEx. One of our vendors uses them and UPS equally, and says that they’re about the same – but we don’t use them, so I don’t know.

  • jj

    Two responses.  First: the philosophical.
    “Undermines” is an interesting word, and it sort of presupposes that one of our higher purposes in being placed here on earth is to support businesses and, by extension, support cities, counties, and states through taxes.  I’m not sure the point of anybody’s life is to be a wallet for anybody else.  Am I merely a support mechanism for the state?
    Second: the practical.
    I live in one of the most beautiful and unspoiled places on earth.  The penalty for being beautiful and unspoiled is that there often isn’t much availability of just about anything.  We do a lot of shopping on the internet because what we need – or want – is just simply, flatly, not available within a hundred miles of the house.  I’m not sure who should have to pay for that, but I don’t feel the least bit guilty that the state doesn’t get a piece of much of what we buy.
    On the other hand, I pay a fair amount of real estate taxes.  I often wonder why.  Do we have town water?  No.  Do we have sewers?  No.  Do we have a transportation system?  Nope.  Does the town pick up the garbage?  Uh-uh.  Do we have a fire department?  Yeah – it’s volunteer.  Do they maintain the roads?  Yeah, the county roads, but not ours, ours is private and our little association maintains it ourselves.  So what the hell am I paying for?  I don’t have a kid in school – and if I did have one that age I’d home-school it because I’ve noticed I’m twelve times as literate as the head of the English department in the local high school.  So what’s my benefit?  Do I have a benefit?  I mean, that anybody could find without a microscope?  Out here on the point most of us are veterans and we’re all more heavily armed than the cops are, and highly unlikely to dial 911 except after the problem’s over – we don’t even have much use for the cops!  What the hell are we paying for them for – so they can ride around all day, eat donuts and harass drivers?

  • Zachriel

    FunkyPhD: No, it doesn’t undermine those businesses; it forces them to compete. That’s called “the market.”

    We’re not talking about price, but the sales tax. It’s not the free market, when the government is giving one business an advantage at the expense of another.

  • suek

    >>we’re all more heavily armed than the cops are, and highly unlikely to dial 911 except after the problem’s over – we don’t even have much use for the cops!>>

    Now now.

    Don’t diss the cops. After all, when seconds count, they’re only minutes away…

  • suek

    >>It’s not the free market, when the government is giving one business an advantage at the expense of another.>>

    Can’t believe you said that!!

    Hey guys!!! Look at that! We’re making progress!!

  • Ymarsakar

    Suek, that’s because their unions have rules about how hard you can work the police employees. They have something called contracts and mandatory pay raises.

  • Ymarsakar

    Suek, it’s not progress. It’s just chaff in the wind. Words that distort, when it comes down to it, Z will support 99% of the Leftist socialist economic platform.

  • Zachriel

    Zachriel: It’s not the free market, when the government is giving one business an advantage at the expense of another.

    suek: Can’t believe you said that!!

    That’s because you’d rather erect strawmen to fight rather than try to understand our actual position.

  • Ymarsakar

    Z’s actual position is opposite Z’s claims of being a conservative. Just an FYI.

  • Charles Martel

    suek, Zach often gives straightforward definitions, but will not say whether he agrees with them.

    Notice that there is nothing in his statement that says he thinks crony capitalism is wrong. By stating the obvious but not commiting to it, he is able to pose as somebody who believes what he has just said rather than just having cut and pasted it to give the appearance of believing it. 

  • jj

    Sue:  Clallam County is bigger than Rhode Island.  There are about 47,000 people therein.
    And we have: town cops; county cops, state cops; sheriffs; tribal cops; ICE cops; and NPS cops.  “Cops” is probably the second biggest employer in the county, after the hospital.  (And the hospital’s only that big with all that very expensive and super equipment because of the Canadians lined up around the block for services they don’t get from their swell health care system.)  You can get a speeding ticket from a jerk in any one of seven different uniforms, driving any one of seven different highly decorated and festive cars.  Seven different police agencies for 47,000 people – we must be the most lawless bastards in North America.  No: we see them as a “make-work, shovel-ready” project, not as useful public servants.

  • abc

    Here is an explanation of the issue:

    And Z is right.  There is a tax advantage to businesses that can operate in the state of California and avoid the sales tax in their pricing.  This issue was raised in the late 90’s, but the internet companies managed to avoid sales tax because they were not a large part of total consumer sales.  Now they are.  Companies like Walmart are certainly lobbying for a level  playing field, since their off-line sales are much larger than their online sales.  So politically, this is a loser for Amazon.  Given the budget problems of many states, it is no surprise that untaxed internet sales would eventually be targeted.  But thinking in terms of principles of fair competition, there is no reason (that I can think of) why Amazon and other online retailers should enjoy this tax advantage. 

    The argument about a free market made above makes little sense.  It is one thing to talk about NY shoppers going out of state for purchases in order to save a couple of percentage points in sales tax, but quite another to be defending companies that avoid sales taxes entirely on a nationwide basis.  Amazon’s sale in Los Angeles of apparel should be compared to the local apparel companies that lost out on that sale since they have at least an 8% price disadvantage on an after tax basis.  That sale is not the same thing as an LA-based consumer flying to a low-consumption-tax state to make that purchase, both because the tax rate purchasing at Amazon is 0% not something less than 8-9%, and because the trip to the low cost state is rendered unnecessary in that online Amazon sale.  States are free to set rates relative to other states as they see fit, but they are not free to tax different businesses operating within their state at differential rates.  This should be obvious.

    As for rectifying the problem, Amazon is too small to push for a national system on its own, and Congress is too disfunctional on tax issues to make anything happen.  So each state will likely do this in a hodge-podge fashion, and Amazon will have to deal with the complexity of tracking consumers and remitting tax payments across 50 states.  I hear their code is already a mess, so this is a non-trivial task.  But it’s a cost of doing business.

    Either way, people buying products from or selling referrals and ad space to Amazon without paying taxes are technically tax evading, although the administrative costs are too high for the government to stop it.  Putting the burden on Amazon, ebay and others will make such evasion less likely going forward.

  • kali

    Just to be precise, tax evasion is illegal, tax avoidance isn’t.

  • Moose

    Suek touched on the market aspect of this issue and it flew right over everyone: Shipping cost. Amazon took advantage of a tax situation at the COST of shipping goods across the country (and world). Each time a consumer purchases something on Amazon, they are entitled to weigh the cost differential between getting it shipped to them or driving to a local store and buying the product and paying sales tax.
    I myself make that buying decision every day. The net result is the majority of the time; I drive to a local market and make my purchase there. When Amazon runs a promotion and offers free shipping, then Amazon is absorbing the cost of shipping thereby reflecting the cost of their market disadvantage.

  • JKB

    There seems to be some confusion here.  When someone buys items from Amazon, they are responsible to pay any state sales taxes.  The issue is that the states want Amazon to do their job, collect and report those taxes.  The states could just set up an easy, convenient way for citizens to do their duty.  But the states don’t do that, the bureaucrats love their paperwork and won’t stand for having it streamlined as an e-commerce transaction.  

    Now, here is a simple solution that I’d bet the internet merchants could be encouraged to participate.  Simply create a simple state-run tax extraction site that the vendors put a button link to on their check out page.  Then after the buy, the citizen could pop right over to pay their tribute to their state masters.  But no, the state tax authorities want long forms filled out to keep their FTEs up.

    Of course, a separate charge for the tax would make the taxes very much apparent to the citizen who might just use that information when they exercise their voting rights.

  • Moose

    Ah, yes, JKB. The revenuers DID discover that loophole and closed it a few years ago. I remember the outcry by internet merchants. Many internet merchants won’t even display the cost of the sales tax until the final checkout page.

    Good catch.

  • suek

    As a by the way…
    Amazon is challenging California’s law as unconstitutional.
    This could be interesting.  Not likely to be speedy, but as long as you don’t find watching paint dry unduly boring, interesting.

  • abc

    kali, that is true.  But tax avoidance is the use of the tax system to legally minimize a tax bill.  Failing to pay taxes on out-of-state purchases or internet purchases doesn’t qualify.  THere are laws that require payment of taxes on these actions, although no state bothers to enforce them because of administrative costs.  So your comment is really irrelevant.

    Moose, the shipping cost is irrelevant.  The government should not give preferential tax treatment to one retailer over another because one ships and another doesn’t.  By that logic, the local furniture store that delivers should have a lower tax rate than Ikea, which makes you haul it out to your car.  The tax rate should be level, excluding particular industry subsidies that some argue are necessary to support nascent industries (e.g., R&D tax credits).  But in any case, the reason for the lack of taxation on Amazon has nothing to do with the shipping, so it is irrelevant.

    suek, I’d be shocked if Amazon doesn’t lose.  States have obtained standing against companies or individuals for even less than the representatives that Amazon has operating in the state of CA.  Heck, pro athletes from out of state pay taxes to CA for games occurring inside the state, and the state isn’t alone–WI, IL, OH and other states have similar laws that haven’t been successfully challenged.

  • Charles Martel

    JKB, way too sensible.

  • suek

    >>the shipping cost is irrelevant. >>
    Maybe for you it is.  Personally, it doesn’t matter to me whether the cost is a tax or due to shipping – I’m going to minimize it if I can.  In California, my local purchase has to equal $78+ before taxes equal a $6.50 UPS charge.
    Who does the shopping in your house?
    My Mom used to say…”Watch the pennies and the dollars take care of themselves.”
    >>The government should not give preferential tax treatment to one retailer over another because one ships and another doesn’t.>>
    Who is “the government” here?  It isn’t the Feds.  It’s the States.  States have different tax rates.  Are you saying the Feds should require that they all charge the same sales tax rate?  This is not a retailer preferential taxation problem, it’s an interstate commerce problem.

  • suek

    >>pro athletes from out of state pay taxes to CA for games occurring inside the state>>
    Different issue.  That’s an income tax issue.  The Amazon deal is an interstate commerce issue.

  • suek

    Here’s a good analysis of the problem:

  • FunkyPhD

    Of course, the easiest way to get rid of any “tax advantage” would be to eliminate the tax. Funny how that doesn’t occur to many of the commenters, especially those on the left. Sales taxes are about the most regressive taxes that exist, yet Z and abc defend them. Hmmmm

  • Charles Martel

    Funky, the better to finance those marvelous public schools that keep producing all those highly literate college students and Democratic voters.

  • abc

    Funky, I clearly stated that states are free to set tax rates wherever they want, but they cannot create unequal tax rates across businesses.  How you inferred my view of state sales tax rates from this is beyond me.  Like most conservatives you assume much that isn’t true.  And it’s what you think you know for sure that ain’t so that always seems to get you guys…

    suek is a little lost.  The key issue in the Amazon case will be standing, which applies equally to income and sales tax, so your last comment about it is misguided.  As for the “who does the shopping in your house” comment, you clearly don’t think much about tax policy, which will not be driven by the shipping issue, as in the Ikea vs. mom-and-pop furniture store with free delivery.  Good thing you’re not writing laws in California or on the federal level…  Oh, and lastly, state governments are called governments too.  In case that common usage of the word confused you.

  • Danny Lemieux

    Just wondering…how long do people think that it will take before companies like Amazon and Boeing relocate to the Cayman Islands or Brazil?

  • FunkyPhD

    abc, we seem to be talking past each other.  My point is that there shouldn’t be sales taxes, as they are highly regressive–something that progressives ought to be against, I would think.  You approve of sales taxes as a legitimate way for states to raise revenue; I don’t see why the government should slap an excise on every purchase I make.  Doing so raises the price of all commodities (price=amount I pay to take possession of the merchandise).  You think everyone should pay sales taxes, regardless of which state is supplying their product; I think sales taxes amount to an outrageous intrusion of the government into mutually-agreed upon transactions between free individuals.
    There’s really no point in our arguing with each other, as we proceed from mutually incompatible presumptions.  But perhaps I’m assuming something that isn’t true. . .