07 January 2011

Killian Bezos Is Lying to You

After still more Life, I was less than amused to find the following e-mail in my inbox last night.

Greetings from the Amazon Associates Program:

We regret to inform you that the Illinois state legislature has passed an unconstitutional tax collection scheme that, if signed by Governor Quinn, would leave Amazon.com little choice but to end its relationships with Illinois-based Associates. You are receiving this email because our records indicate that you are a resident of Illinois. If our records are incorrect, you can manage the details of your Associates account [link].

Please note that this not an immediate termination notice and you are still a valued participant in the Amazon Associates Program. But if the governor signs this bill, we will need to terminate the participation of all Illinois residents in the Associates Program. After that point, we will no longer pay any advertising fees for sales referred to amazon.com, endless.com and smallparts.com nor will we accept new applications for the Associates Program from Illinois residents.

The unfortunate consequences of this legislation on Illinois residents like you were explained to the legislature, including Senate and House leadership, as well as to the governor's staff.

Over a dozen other states have considered essentially identical legislation but have rejected these proposals largely because of the adverse impact on their states' residents.

Governor Quinn's office may be reached here [link].

We thank you for being part of the Amazon Associates Program, and wish you continued success in the future.



Wow, that sure sounds scary, doesn't it? Too bad it's almost entirely a lie. In no particular order:

  • Notice that this never identifies the bill in question? Well, a little research on my part determined that it's Illinois House Bill 3659, Senate Floor Amendment 3, which has been passed and is on the Governor's desk for signature. This amendment would force Amazon to collect use (sales) taxes for Illinois-based "affiliate sellers" — and, most significantly, would not impose a new tax, but would merely require collection of an existing one via the payment system.

    This is a stupid policy. It is being put forth as an alleged "level the playing field" provision by brick-and-mortar retailers, who resent having to collect sales tax in Illinois while out-of-state 'net-based retailers don't. (We'll leave aside that the out-of-state retailers must (1) pay taxes where they're located, and (2) don't get the benefit of a lot of the services for which Illinois sales taxes are — at least purportedly, and at least by law — dedicated, such as police protection, fire protection, and our charming local schools.) Further, it is being put forth as a "revenue-enhancer" in a state that has a worse budget crisis than does California... meaning, in turn, that it's at best a bandaid being applied to a gushing femoral artery.

    However, not every stupid policy is "unconstitutional." Without explanation of any kind — and, in particular, without reference to the language of the statute, which does pass constitutional muster under Quill1 — this communication just says "unconstitutional." It's not even a close call.

  • The tax collection scheme would definitely not "leave Amazon.com little choice but to end its relationship with Illinois-based Associates." Amazon already collects sales taxes in other jurisdictions, in particular in Washington State (its corporate home). Many other 'net-based retailers already collect Illinois sales taxes, such as one of my favorite computer hardware vendors. Nothing in the statute would make anything that Amazon does unlawful; it would only require Amazon to do some things it doesn't want to do, and it won't "need to terminate the participation of all Illinois residents in the Associates Program" if Governor Quinn passes the bill.
  • The real prize, though, is that assertion that over a dozen other states have rejected "essentially identical legislation but have rejected these proposals largely because of the adverse impact on their states' residents." Bullshit. The rejections in question arose from business/chamber-of-commerce/antitax ideological opposition during election cycles, lobbying, and behind-the-scenes logrolling and skullduggery. None of the states in which this legislation actually came to a floor vote had more than token rationalizations entered in their legislative records concerning any purported adverse effect on the states' residents.

If I needed any further warrant for my opinion that Jeff Bezos and his staff either aren't paying attention to whatever competent legal advice that they are offered,2 or are not getting it in the first place (and, based on other recent bullshit from the Big Brazilian River, may not even be asking for it at all), this letter is more than adequate. Even though I'm against sales taxes on principle — they're regressive, inefficient, distortive, and insufficient — I know better than to call something that's administratively inconvenient (and not even that costly to administer) "unconstitutional" just because I don't want to comply with it.

  1. Quill Corp. v. North Dakota, 504 U.S. 298 (1992). In fact, the provisions of proposed § 1.1 of the amendment are substantially less burdensome and overreaching than were the statutes at issue in Quill, particularly given the automated system that Amazon already has in place for calculating Washington State sales taxes...
  2. I have had extensive dealings, and attempts to deal, with the in-house legal staff at Amazon. As a result of that frustration, I have long held, and continue to hold, in-house counsel in less than minimal professional regard. Be that as it may be, one thing that is quite clear is that nobody in-house qualifies as a constitutional scholar...