ArsTechnica had an article recently about how Amazon has decided to cut off its California affiliates in order to avoid having to collect California sales tax. The California law considers independent affiliates to be a physical presence of the affiliated company, a position Amazon disagrees with. In the midst of an overwhelming budget crisis, it’s understandable that Governor Brown would want California residents to pay the same tax on their Amazon purchases that they would at BigBoxStoreCo. There’s concern that this could end up resulting in a loss in tax revenue as employees of these affiliates lose their jobs. I did a cursory search for reports of such job losses in other states that have enacted similar laws, but couldn’t find anything concrete.

I understand why Amazon is taking this position. They’re not avoiding paying taxes (the customers would be the ones paying), they’re avoiding the overhead of determining the appropriate sales tax for every combination of address and product. Sales taxes are complicated. They vary not only by state, but sometimes by county and city. Different products are sales-taxable and others aren’t. Some customers are exempt from sales tax for certain purchases. Trying to keep all of that straight for the entire country is a non-trivial overhead.

So what’s the solution? One argument is that sales taxes are inherently unfair as they disproportionately affect the poor. Some would argue that a uniform sales tax is the solution. Another issue is that sales taxes are the sometimes only way to get money people who don’t live in the area but use services and infrastructure. This is a complicated problem and the solution is way more political than I care to be on this blog (if you like law and politics, Doug Masson’s blog is an enjoyable read). I take this as an example of how governments have yet to catch up with technology. It’s not unreasonable that online retailers collect sales taxes, but it’s unreasonable to expect it until the process is simplified.