What happens when the 800 lb gorilla of online retailing doesn’t like your state law?
In response to Maine’s implementation of a requirement that online sellers collect Maine sales tax, Amazon is shutting down its Maine Associates program. The Associate program is an Amazon advertising program where individual bloggers or website managers can link to products they like, and Amazon gives them a small percentage of the sales price for any sales generated through that link. In theory, dissatisfied bloggers will lobby the state government to force it to end the implementation of its tax. On the other hand, many state business interests see it as being unfair that Amazon is undercutting their prices because they aren’t held to the same sales tax collection standards. This seems additionally unfair since local businesses are already supporting our state through paying the overhead of maintaining brick and mortar stores in the state, hiring Maine-based employees (no matter how apparently unemployable we are), supporting other Maine-based businesses, and generally making things locally available that you might need:
I didn’t realize this before I started looking into it this morning, but Amazon has used the strategy of shutting down an Associate program in response to the state’s implementation of its sales tax with other states. California was one of the earlier recipients of the Amazon policy to end state residents’ access to the Associate Program when their state instituted a law that online sellers selling goods to state residents collect sales tax. The most recent experience to Maine’s that I could find through a quick online search was in Missouri, where the business cut off Associate partners just last month. Here was the state of affairs with regard to Amazon’s use of this strategy in 2011:
This obviously has continued to evolve.
As the map reveals, where Amazon really wants to continue to make money with a state, it doesn’t necessarily maintain this policy. Amazon now collects sales tax on behalf of Virginia and California, for example. In the case of the agreement it reached with California, the business is also apparently obliged to support the effort to create a national online sales tax. Of course, while the national online sales tax passed the US Senate (with both Democratic and Republican suport) it did not get through the US House, where members had more pressing issues to deal with.
While I don’t expect that second part of the agreement to be effectively enforced anytime soon, it does make it pretty clear that Amazon is testing its political strength against that of state governments. In the case of Amazon v. California or Amazon v. Virginia, Amazon is apparently not yet able to best the will of the state government. I’m not sure who I’d bet on in Amazon v. Missouri, however.
And Amazon v. Maine?
I think it will depend to some degree on the political will of the people who Amazon is attempting to mobilize through this move. Here are the blog responses that I’ve found to the issue so far: