Amazon takes its tax battle to the ballot

Jennifer Collins Jul 12, 2011

Amazon takes its tax battle to the ballot

Jennifer Collins Jul 12, 2011

Kai Ryssdal: If you’re looking to learn a little more about American exposure to Eurozone debt, you might consider some some light reading on currency futures or the Euro’s role in the sovereign debt crisis.

There are plenty of choices on Amazon we could recommend to you. And if you buy today, chances are, you won’t pay any sales tax. That’s obviously a huge issue for states. In California — a $300-million-a-year issue. Which explains why there’s a new law here that forces online retailers to collect those unpaid taxes. Now in the true spirit of direct democracy, Amazon’s fighting back. It’s pushing a ballot referendum that would let Californians decide whether we want to be taxed.

Marketplace’s Jennifer Collins reports.

Jennifer Collins: It’s not really hard to imagine how shoppers will feel about this referendum — hm, tax? No tax?

Shaun Bowler: Californians don’t like tax increases.

Shaun Bowler teaches political science at the University of California, Riverside. Amazon is proposing a ballot initiative to overturn California’s law. The company’s state sales tax bill would amount to $83 million this year.

Bowler: I mean there’s clearly a lot of money at stake.

Bill Dombrowski of the California Retailers Association says all states are watching California’s battle.

Bill Dombrowski: Because every state is having revenue problems and is looking for solutions.

California is the latest state to pass a law to collect online sales tax. Amazon has pulled up stakes in some states and is challenging a New York law as unconstitutional.

Sucharita Mulpuru tracks e-commerce for Forrester Research. She says Amazon’s rivals are concerned about unfair competition.

Sucharita Mulpuru: This is really about giving the competitive balance of power in many ways back to the large big-box retailers who’ve lost it.

Walmart, Target and Best Buy feel they’re at a disadvantage because their shoppers have to pay taxes. And Dombrowski says retailers are prepared to spend millions to defeat any Amazon referendum.

Dombrowski: I don’t think there’s any limit to the checkbook. It’s a direct threat to their business model.

If Amazon succeeds in California, it could put pressure on other states to re-think online taxes.

I’m Jennifer Collins for Marketplace.

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