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I'll play devil's advocate. First, governments consistently think of the economy as a static model. So you add up how many online sales you have, add in a perc

I'll play devil's advocate. First, governments consistently think of the economy as a static model. So you add up how many online sales you have, add in a percentage tax, and expect to make that money. Second, Amazon pulling out or not is simply a short-term obstacle. The long term strategy is to put a stake in the ground, then continue to lobby and work at the national level. This sets precedent, even if it doesn't work. Third, there's a lot of ignorance. You don't have to pass an economics test to become a legislator. I think sometimes in any group that deals with another group there's an "us versus them" mentality that takes over. In some folks' mind, if you're making money, they should get a share of it to spread around. Trying to adapt and configure your business model to optimize -- or simply just to survive -- is a sign of selfish, unethical behavior. Both sides of tax debates engage in a lot of emotional over the top rhetoric. It's easy to lose track of priorities and principles.

chopsueyar 15y ago
The part I have a hard time comprehending in these situations is that many legislators have legal backgrounds being attorneys, yet seem to completely forget about the constitution.
- jbooth 15y ago
  Seems that the collateral damage to affiliates from this law is specifically because those legislators understand the commerce clause of the constitution.
  - OstiaAntica 15y ago
    The constitution explicitly prohibits states from interfering with interstate commerce, which is what Connecticut is doing (forcing regulation on a company outside their state), and is why Amazon is calling the law unconstitutional.
    - earl 15y ago
      Except it doesn't occur outside their state if an amazon affiliate is in CT. Hence amazon withdrawing.
      - nkassis 15y ago
        Exactly, they are bending they are pushing the rules just enough to get away with it and have something that's not unconstitutional (at least according to them) It's in a way ingenious what they are doing. Law making is a form of hacking in my view.
jonkelly 15y ago
responding to each point. 1) expecting to "make that money" when no other state has is idiocy. 2) the "stake in the ground" is just symbolic. Do they really think that helps at all? 3) like I said, I can see both sides of tax debate, I just find it wildly irresponsible to nuke the revenue for a bunch of your constituents because you've lost track of priorities.
- jbooth 15y ago
  RE: 1), you'll notice a lot of big market states have all jumped at the same time. That makes the jump look a lot more appealing to me if I'm a state legislator. Eventually Amazon won't want to forfeit affiliate business in every big state economy except Texas and Delaware. Or that's the gamble, at least.
  - jonkelly 15y ago
    nostromo had the right response to that below. There are plenty of jurisdictions for the larger affiliates to jump over to. I'd be very surprised if Amazon doesn't have a 95/5 ratio like most affiliate programs in terms of revenue produced by largest affiliates. The bigger affiliates will have no problem incorporating in one of the no tax states.
    - 18pfsmt 15y ago
      Just to illustrate your point, in Colorado the legislature did this same thing (lobbying by small business was used as justification), but the large affiliates I'm familiar with (2, specifically) moved their offices to Laramie, Wyoming (2.5hrs from Denver). Keep in mind, there are ~5M people in our entire state.
jbooth 15y ago
Thanks, that's the argument exactly, specifically the second part. Regarding the static model, it's not so much that it's a static model as that for the overwhelming majority of online purchases, it's displacing a local purchase. It's actually a more capitalist economy from a certain point of view to make online and local purchasing compete on the same ground, especially when the market distortion (which yes stems from sales taxes' existence in the first place, coupled with the commerce clause) discriminates against your voters.
- jwhite 15y ago
  It may be displacing a local purchase... in a third, unrelated state. Only the affiliate lives in Connecticut, the purchaser may live in Colorado... or Czech Republic, for that matter. I think you have the argument about capitalism backwards. Any time someone says "that's unfair, we should change the laws to help (inefficient business X) compete more effectively with (efficient business Y)", they are directly contradicting the idea of capitalism. Where the social good lies is sometimes hard to work out; but I'd guess in this case Connecticut residents would be better off with an efficient Amazon and the ability to become Amazon Affiliates than with the small amount of tax revenue that this legislation tries to capture.
- yummyfajitas 15y ago
  Online and local purchasing do compete on the same ground. A local store uses CT state services and pays taxes to support them. An online store does not use CT state services and does not pay taxes to support them. Similarly, many companies use Microsoft software and pay license fees. My company does not. Would it be "more capitalist" if we were forced to pay a Microsoft tax, to eliminate the "market distortion" of using lower cost software?
  - crasshopper 15y ago
    yummyfajitas, I think by "more capitalist" jbooth means "more competitive". You are obviously right that forcing companies to use higher-cost inputs is inefficient, but taxes are not an input -- they're a necessary burden meant to be shared. To take an extreme example, using a tax shelter could lower the cost of a company's services while decreasing the efficiency of the economy.
gaius 15y ago
Actually, it only goes as far as if you're making money, they should get a share of it. Pork barrels aren't just Federal.
- DanielBMarkham 15y ago
  Indeed. I find it very difficult to underscore this point without going on a rant -- perhaps because I find it so bad. Let's say I'm living in IL and making 10K a month with Amazon sales. This is all because of a lot of hard work putting bits on a server somewhere in Austin or something. People come from all over the world to consume content and buy things. Aside from the legal discussion, in practical terms what part of this equation involves the state of Illinois? I don't mean to be facile, but looks to me like the only reason they're coming for the money is because they can. In any other scenario we'd call this a shakedown. But because politicians do it we call it policy. Weird. I'm not by any means arguing for no government, just pointing out that most times when I pay a tax there's something concrete and direct in return. If I pay property taxes, it goes to the local school. If I pay a road toll, it goes for road maintenance. If I buy a fishing license, I pay for game inspectors. This payment and feedback loop allows me to be able to judge if a tax is working or not -- and form some kind of opinion about what rates might be best. Here I'm just paying the state because they have the power to hurt me if I don't pay them. Seems to me once you reach a certain point in decoupling taxes from benefits, there's no rational basis to have any kind of compromise any more. Instead you get these hugely polarized debates. This is not a good system for people to live in.
  - earl 15y ago
    What part of it involved IL? Are you being deliberately obtuse? You living in IL. States charge taxes to provide services to the people who live and enter the state. You live in the state, therefore it is entirely appropriate for IL to charge you income tax. If you don't like it, vote in different representatives because the other thing that you get to do in IL is vote for IL state representatives.
    - vampirical 15y ago
sutro 15y ago
You don't have to pass an economics test to become a legislator. Would that it were so.

chopsueyar 15y ago

The part I have a hard time comprehending in these situations is that many legislators have legal backgrounds being attorneys, yet seem to completely forget about the constitution.

jbooth 15y ago
Seems that the collateral damage to affiliates from this law is specifically because those legislators understand the commerce clause of the constitution.
- OstiaAntica 15y ago
  The constitution explicitly prohibits states from interfering with interstate commerce, which is what Connecticut is doing (forcing regulation on a company outside their state), and is why Amazon is calling the law unconstitutional.
  - earl 15y ago
    Except it doesn't occur outside their state if an amazon affiliate is in CT. Hence amazon withdrawing.
    - nkassis 15y ago
      Exactly, they are bending they are pushing the rules just enough to get away with it and have something that's not unconstitutional (at least according to them) It's in a way ingenious what they are doing. Law making is a form of hacking in my view.

jonkelly 15y ago

responding to each point. 1) expecting to "make that money" when no other state has is idiocy. 2) the "stake in the ground" is just symbolic. Do they really think that helps at all? 3) like I said, I can see both sides of tax debate, I just find it wildly irresponsible to nuke the revenue for a bunch of your constituents because you've lost track of priorities.

jbooth 15y ago
RE: 1), you'll notice a lot of big market states have all jumped at the same time. That makes the jump look a lot more appealing to me if I'm a state legislator. Eventually Amazon won't want to forfeit affiliate business in every big state economy except Texas and Delaware. Or that's the gamble, at least.
- jonkelly 15y ago
  nostromo had the right response to that below. There are plenty of jurisdictions for the larger affiliates to jump over to. I'd be very surprised if Amazon doesn't have a 95/5 ratio like most affiliate programs in terms of revenue produced by largest affiliates. The bigger affiliates will have no problem incorporating in one of the no tax states.
  - 18pfsmt 15y ago
    Just to illustrate your point, in Colorado the legislature did this same thing (lobbying by small business was used as justification), but the large affiliates I'm familiar with (2, specifically) moved their offices to Laramie, Wyoming (2.5hrs from Denver). Keep in mind, there are ~5M people in our entire state.

jbooth 15y ago

Thanks, that's the argument exactly, specifically the second part. Regarding the static model, it's not so much that it's a static model as that for the overwhelming majority of online purchases, it's displacing a local purchase. It's actually a more capitalist economy from a certain point of view to make online and local purchasing compete on the same ground, especially when the market distortion (which yes stems from sales taxes' existence in the first place, coupled with the commerce clause) discriminates against your voters.

jwhite 15y ago
It may be displacing a local purchase... in a third, unrelated state. Only the affiliate lives in Connecticut, the purchaser may live in Colorado... or Czech Republic, for that matter. I think you have the argument about capitalism backwards. Any time someone says "that's unfair, we should change the laws to help (inefficient business X) compete more effectively with (efficient business Y)", they are directly contradicting the idea of capitalism. Where the social good lies is sometimes hard to work out; but I'd guess in this case Connecticut residents would be better off with an efficient Amazon and the ability to become Amazon Affiliates than with the small amount of tax revenue that this legislation tries to capture.
yummyfajitas 15y ago
Online and local purchasing do compete on the same ground. A local store uses CT state services and pays taxes to support them. An online store does not use CT state services and does not pay taxes to support them. Similarly, many companies use Microsoft software and pay license fees. My company does not. Would it be "more capitalist" if we were forced to pay a Microsoft tax, to eliminate the "market distortion" of using lower cost software?
- crasshopper 15y ago
  yummyfajitas, I think by "more capitalist" jbooth means "more competitive". You are obviously right that forcing companies to use higher-cost inputs is inefficient, but taxes are not an input -- they're a necessary burden meant to be shared. To take an extreme example, using a tax shelter could lower the cost of a company's services while decreasing the efficiency of the economy.

gaius 15y ago

Actually, it only goes as far as if you're making money, they should get a share of it. Pork barrels aren't just Federal.

DanielBMarkham 15y ago
Indeed. I find it very difficult to underscore this point without going on a rant -- perhaps because I find it so bad. Let's say I'm living in IL and making 10K a month with Amazon sales. This is all because of a lot of hard work putting bits on a server somewhere in Austin or something. People come from all over the world to consume content and buy things. Aside from the legal discussion, in practical terms what part of this equation involves the state of Illinois? I don't mean to be facile, but looks to me like the only reason they're coming for the money is because they can. In any other scenario we'd call this a shakedown. But because politicians do it we call it policy. Weird. I'm not by any means arguing for no government, just pointing out that most times when I pay a tax there's something concrete and direct in return. If I pay property taxes, it goes to the local school. If I pay a road toll, it goes for road maintenance. If I buy a fishing license, I pay for game inspectors. This payment and feedback loop allows me to be able to judge if a tax is working or not -- and form some kind of opinion about what rates might be best. Here I'm just paying the state because they have the power to hurt me if I don't pay them. Seems to me once you reach a certain point in decoupling taxes from benefits, there's no rational basis to have any kind of compromise any more. Instead you get these hugely polarized debates. This is not a good system for people to live in.
- earl 15y ago
  What part of it involved IL? Are you being deliberately obtuse? You living in IL. States charge taxes to provide services to the people who live and enter the state. You live in the state, therefore it is entirely appropriate for IL to charge you income tax. If you don't like it, vote in different representatives because the other thing that you get to do in IL is vote for IL state representatives.
  - vampirical 15y ago

sutro 15y ago

You don't have to pass an economics test to become a legislator. Would that it were so.