Proposed online sales tax draws criticism

The San Francisco Chronicle reports:

This week, the state Legislature is considering a bill that says California Web sites known as affiliates that send customers to Amazon and other e-commerce companies in exchange for a commission constitute a sales force, giving Amazon and others a physical presence, or "nexus," here. Under a 1992 Supreme Court decision, only retailers with a nexus in a state can be compelled to collect sales tax from its residents.

Cash-strapped California says it could garner $150 million a year from the so-called Amazon bill if out-of-state retailers collected tax on every laptop, Cuisinart and best-seller they peddle to folks here. Consumers are supposed to pay that tax themselves, but it's a rare shopper who does.

Scores of mom-and-pop California Web sites that drive traffic to e-tailers say they would be unfairly ensnared by the state's attempts to force Amazon to pay up. Meanwhile, brick-and-mortar retailers say Amazon's use of the Internet as a sales-tax haven is unfair to them.

Amazon (which did not return calls), Overstock and other large out-of-state e-tailers say they will cut off their California affiliates to duck the sales-tax obligation. The affiliates say that means they'll lose their income and the state still won't get the sales tax revenue.

California needs more money to pay bloated pensions.