Crush Liberalism

NY’s economic illiteracy results in lawsuit, departing business

This is what happens when liberals try to collect dimes at the expense of dollars:

Unwilling to collect the Empire State’s new “Amazon Tax,” Patrick Byrne and Overstock.com have jettisoned their New York-based affiliate marketers.

Late last month, New York Governor David Patterson rubber stamped a $122bn state budget that attempts to collect an additional $50m in sales taxes from various online retailers. People call it the Amazon Tax, but it affects more than just Amazon.

Under the new law – which takes effect on June 1 – any e-tailer with New York-based affiliate marketers is considered to have a “physical presence” in the state, and that means they’re required to collect sales tax on all goods shipped to a New York address.

Thanks to a pre-Internet-revolution Supreme Court case involving a mail order catalog business, physical presence is the litmus test for sales tax collection. If an e-tailer doesn’t have physical operations in a state, then customers must declare purchases on their own – which few end up doing.

Amazon has since sued New York over the Amazon Tax, calling it unconstitutional. But while the case is pending, the company intends to obey the New York government. “Nothing is changing with regard to Amazon’s relationships with Affiliates in New York state,” Amazon spokeswoman Patty Smith told us. “And we expect to begin collecting sales tax (as the new legislation requires) no later than June 1, 2008.”

Overstock has taken a different tack. As first reported by Shawn Collins and his Affiliate Marketing Blog, the Utah-based e-tailer will cut its New York affiliates loose on Tuesday, May 20.
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You’ll notice that Byrne sees no difference between collecting sales tax and raising prices. “When you collect sales tax, goods get more expensive, and people buy less,” he continued. “A tax is just a government’s price on a service. When you raise your price on something, people consume less of it. And New York is raising the price on the service it provides as a state, and we’re exercising our right to buy less of that service.” …

Here in FL, the Democrat-controlled legislature passed a “tax reform” package in the 1980′s that taxed, among other things, entry fees to B.A.S.S. professional fishing tournaments.  At that time, entry fees were roughly $1,000 (give or take a couple of hundred).  B.A.S.S. held many tournaments in FL, most notably the Florida Invitational on Lake Okeechobee, and the state made a lot of money from the resulting taxes on hotels, restaurants, gas purchases, etc.  Everyone was happy: fisherman, business owners, cities, and the state.

But B.A.S.S. warned FL that its participation would decline in the Sunshine State if the state passed the sales tax on entry fees.  The Dems ignored the warning, passed the tax hikes…and B.A.S.S. scaled back its presence in the best bass fishing state in the country.  Only after the GOP-controlled legislature jettisoned the tax in the 1990′s did B.A.S.S. return full-force to FL.

The lesson?  Raising taxes depresses economic activity on the productive.

June 3, 2008 Posted by crushliberalism | economic ignorance, taxes | 4 Comments