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Thursday, June 30, 2011

California Can't Say It Wasn't Warned: 'Amazon Terminates Contracts With CA Affiliates'

“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.”--- Portion of Amazon's termination letter.

25,000 California websites and small businesses were just terminated by due to a law California Governor Jerry Brown just signed which would require and other large out-of-state retailers to collect sales taxes on purchases that their California customers make online.

Had Amazon not terminated those contracts, Accounting predicted the tax would bring in an estimated $200 million a year, but the end result, which Amazon did provide adequate warning of, is a loss of $152 million California revenue instead.

Many of about 25,000 affiliates in California, especially larger ones with dozens of employees, are likely to leave the state, said Rebecca Madigan, executive director of trade group Performance Marketing Assn. The affiliates combined paid $152 million in state income taxes last year, she pointed out.

"We have to consider it," said Loren Bendele, chief executive of, a West Los Angeles website that links viewers to hundreds of money-saving deals. "It does not look good for our business."

The terminations will effect affiliates of, and as well.

Since we are talking about the affiliate program, I will put my own affiliate Amazon banner below... just for my own personal entertainment and income.

More possible unintended consequences for California below the Amazon ad.

Although the California law's intent was to go after Amazon, Big Government points out one unintended company that may now be caught in the crosshairs- EBAY.

But from the Sacramento Bee, we learn that California-based eBay– a big name in the state– has also grown deeply concerned about the effects of the proposed legislation:
California lawmakers thought they were targeting, the out-of-state giant, when they voted last week to force Internet retailers to collect sales tax.
It turns out eBay Inc., California’s own golden child of e-commerce, isn’t so thrilled about it, either.
The San Jose online auction company says the legislation would hurt its business model, which relies on thousands of entrepreneurs who sell goods on its site.
The intent may have been to go after Amazon, but “we’re literally caught in the crossfire,” said David London, senior director for state government relations at eBay.

George Runner, a member on the Board of Equalization rips into Brown for signing the law. "Even as Governor Jerry Brown lifted his pen to sign this legislation, thousands of affiliates across California were losing their jobs. The so-called 'Amazon tax' is truly a lose-lose proposition for California. Not only won’t we see the promised revenues, we’ll actually lose income tax revenue as affiliates move to other states."

[Update] Retired Bill Quick on the money California just cost him, headlines with "Leftist Wreckers In California Just Stole $3500-$5000 A Year Right Out of My Pocket."