Amazon Caves In

| Thu Sep. 8, 2011 4:46 PM EDT

Amazon has spent years fighting ruthlessly to avoid having to collect sales taxes on merchandise it sells over the web. When California recently insisted that it do so, Amazon not only refused, but started collecting signatures for a ballot initiative that would nullify the new law. But now Amazon has backed off:

Under the deal, Amazon would delay collecting taxes until September 2012, Assemblyman Charles Calderon (D-Whittier) said. The new law had mandated that Internet retailers start collecting state taxes in July if they had offices, workers or other connections in California.

....If Congress acts by next summer to settle the contentious issue of how online retailers should be taxed, that decision would override Amazon's deal with California. "It's a safe harbor for up to a year," Calderon said of the agreement he helped strike. "If they can't get Congress to act by next July, then they will start to collect the tax in September 2012. If by chance they get Congress to act, then that would trump the state law."

So I wonder what happened? Was Amazon's signature gathering going poorly? Did their lawyers finally conclude that there was a serious chance of a court forcing them to comply with the law and assessing damages? Did public opinion finally get to them? Or do they think that maybe they can get Congress to pass a federal law by next September that addresses the issue nationwide?

It would actually be nice to have a federal law on this issue. But I sure don't see how we can get one. States would go ballistic if a federal law upheld the general exemption of internet retailers from collecting sales taxes, and there doesn't seem to be any path through the Senate for such a bill. On the other hand, the anti-tax jihadists would burst a vein if Congress passed a law that effectively increased taxes by putting e-tailers on a level playing field with brick-and-mortar stores, and the House is controlled by the anti-tax brigade. So there's deadlock.

So I dunno. Either Amazon has some inside-the-Beltway knowledge that I don't have, or else they just caved in because they decided their ballot initiative was going to fail. I'm not sure what else explains this.

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