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Amazon Takes On California At The Ballot Box—And It Thought E-Commerce Was Rough

July 13th, 2011

But that would mean a very large state that’s notoriously averse to passing tax measures had OKed the Amazon tax. That, in turn, would likely encourage other states to pass such laws (currently only seven states have them on the books: Arkansas, Connecticut, Illinois, North Carolina and Rhode Island, along with California and New York).

It would also light a fire under Congress, which has been procrastinating for years on legislation to clear the way for Internet sales taxes. When the U.S. Supreme Court last ruled on state laws pushing sales tax on out-of-state retailers, the Court made clear that it expected Congress to straighten things out. That was in 1992. But a California popular vote in favor of such a tax could turn that tide.

There’s yet another level of stakes in Amazon’s gamble, though. When Amazon goes to court to fight sales taxes, consumers don’t notice—it’s a low-profile, long-term process. But when Amazon hires hundreds of people to collect as many signatures as it can from California voters, it becomes a high-profile political move. Even if Amazon doesn’t actively advertise that it’s behind the referendum to spike the law, its brick-and-mortar opponents will make sure potential petition signers know who’s pushing it.

And Amazon will need lots of petition collectors. Over a period of about 10 weeks it will have to collect roughly 500,000 valid signatures to get on the ballot. To get bragging rights and a good start to its campaign, shooting for a million or more signatures would be a better idea.

That’s a lot of politicking for a retailer—probably more than any retailer has every publicly engaged in before.

But politics—especially California ballot-measure politics—quickly turns personal, bruising and frequently brutal. Californians can expect to hear that retailers shouldn’t be playing politics (that will come from brick-and-mortar retailers who are, of course, also playing politics). And that Amazon has higher prices than it otherwise might due to its electioneering. And that out-of-state troublemaker Amazon is willing to destroy California’s schools and roads, not to mention mom and apple pie, all for a few cents from each sale to line Jeff Bezos’s pocket. And that’s all before anyone even mentions WikiLeaks, Kindle censorship or books for pedophiles.

Will all that hurt Amazon’s sales in California or anywhere else? That’s unknown. But over the next year and a half, Amazon is likely to find out.


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