Reporting Dave Bryan
ANAHEIM (CBS) — A controversial budget-related bill that was signed into law by Governor Brown Wednesday has already touched off a political war between the largest online retailer and the State of California.
The new law imposes a California sales tax on online purchases made by people living in this state.
Independent recording artist Glenn Richards, based in Anaheim, is an Amazon.com affiliate. This means that he earns a commission from Amazon.com on any item sold to a customer, who was referred by a link on Richards’s musical website.
But Richards and about 10,000 other Amazon affiliates, got emails from the company announcing they will no longer be a part of the affiliate program. Amazon shut down the program for California entrepreneurs, because the State of California is forcing Amazon to collect sales tax on California purchases.
“As a result, we will terminate contracts will all California residents that are participants in the Amazon Associate’s Program. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com,” said Richards reading the letter from Amazon.
Richards, whose “fright wig” has become his calling card as a performer, said he feels like he has been caught in the middle of a political battle, which was not of his making. Now he and other small affiliates are being crushed by the angry big corporation, whose message — disenfranchising about 25,000 California-based affiliate websites — is very clear.
“You’re out of business. Sorry, we don’t like what your government is doing. And I don’t think that is a fair message… It’s wrong. They’re fighting the wrong people. They’re fighting the people, who make them money. I mean, I don’t have anything to do with politics,” Richards said.
With California desperate for additional revenue, the Internet was an easy target. Supporters claim the tax could bring in about $200 million in additional revenue at a time when it’s sorely needed.
But opponents claim the law forces companies like Amazon to exclude Californians from the affiliate program and with it will go thousands of jobs and millions of dollars in business revenues for small entrepreneurs.
Some of them blamed the state and said they will move out of state to save their affiliate revenue.
But Richards blamed Amazon and its CEO, Jeff Bezos, who he charged are unfairly punishing he affiliates.
“No discussion, no consideration. It’s just them versus the government or they disagree with the tax policy and so they’ll put you out of business for it, because they don’t want to deal with it,” Richards said.
Amazon called the new law is unconstitutional and destructive to states like California, claiming it would actually reduce revenue.
Amazon said it would continue to fight the law. In the meantime, the law reportedly goes into effect immediately, which means the State of California will be getting sales tax revenue from Amazon and other online retailers.