May 06, 2011 09:54 PM UTC

"Amazon Tax," Democrats, and Fiction

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• by: Colorado Pols

We’ve spent a considerable amount of time discussing the battle over last year’s so-called “Amazon Tax,” in truth a law, now mired in court proceedings, that would have required online merchants to notify Colorado customers of the use tax they owe (and have always owed) on purchases–and supply the state with monetary totals for verification. As the Durango Herald’s Joe Hanel reported yesterday, this law could be on a fast track to the circular file:

A repeal of last year’s “Amazon tax” on Internet sales gained bipartisan support Wednesday.

House Bill 1318 passed the House on an initial vote, with Republicans and most Democrats supporting it.

It tells Internet retailers like Amazon to include a link to the Department of Revenue website when they send receipts to customers. The receipt also has to tell customers that they owe taxes on their purchases.

The bill takes away the state’s power to subpoena sales records from companies…

“It was a good bill, but it’s turned out to be counterproductive. It’s a bust,” said Rep. Sue Schafer, D-Wheat Ridge, who voted for last year’s bill and is now sponsoring the repeal effort.

House Bill 1318 is contingent on online retailers withdrawing their lawsuit. The cost/benefit of fighting that suit, in relation to revenues that might be collected, makes support for this rollback by Democrats who supported the original legislation last year, well, technically justifiable. The new law still requires online retailers to notify Colorado customers about their tax liability.

But we were thoroughly appalled to learn that Democratic Rep. Sue Schafer, and others who should know better, regurgitated idiotic “thousands of jobs lost” talking points during debate, which we’ve lampooned in this space ever since the original bill came up last year (although who knows about Schafer, also a co-sponsor of the Payday Lending bill). To briefly recap, in March of 2010 Amazon terminated “online affiliate” agreements with Colorado websites who carried ads for Amazon products after this law was passed–pure political retaliation, as the law was carefully written to have no effect on these affiliates. Represented breathlessly as “thousands of Amazon.com jobs lost,” the truth is that these “jobs” in most cases paid out totally insignificant commissions on sales, on the order of pennies. Not a “job” by any stretch.

Bottom line: the misnamed “Amazon Tax” law has been plagued by purposeful disinformation, and exaggeration of its effects from the moment it was introduced. The battle over online merchants, and the effect of their tax-free sales in local communities and on local retailers, could be a much larger issue than anything Colorado has the power to change–a federal resolution to local tax on online purchases may be needed. Until then, it would be beneficial if Democrats, who should be taking a longer view of online merchants and revenue shortfalls, did not repeat a steaming pile of debunked corporate nonsense: even if they are choosing to fight another day.