California’s evolving budget crisis continues to meet headwinds with major Internet companies that are lining up to flee the state if Democratic Governor Jerry Brown signs new tax increase legislation into law.
Overstock.com will join Amazon.com in pulling all affiliate sellers from the state if lawmakers insist on additional taxes. A letter from Overstock.com to Board of Equalization Member Senator George Runner said it will terminate its California affiliates should pending affiliate tax legislation become law.
“This issue is much, much bigger than one company,” said Runner. “A law requiring out-of-state retailers to collect sales tax from California consumers could force thousands of online retailers to terminate their relationships with California-based affiliate businesses. This hurts California jobs and revenues.”
A few weeks ago Amazon voiced their concern in the form of a letter and now Overstock.com has done the same.
Mark J. Griffin, general counsel for Overstock.com, said his company has terminated affiliate relationships “in every state where this legislation has passed” and “will do so in California.”
According to Griffin, in 2009 Overstock.com terminated 3,200 California affiliates after the Legislature passed a similar measure.
“Taxes have consequences,” Runner explains. “Too often we assume companies and individuals will keep acting the same after new tax laws are passed. That is simply false. Businesses change their behavior as tax laws change.”