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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Help Repeal The Amazon Tax (Colorado HB10-1193)

Comments (17)

Colorado HB10-1193 – also known as the “Amazon Tax” – really upset me as I wrote about in Amazon Fires Its Affiliates in Colorado (Including Me) Because of Colorado HB 10-1193.  While I discovered a partial solution via a service from a company called Viglink which I wrote about in I’m An Amazon Affiliate Again – Sort Of I’m still really annoyed with the myopia of our Colorado state representatives around this issue. 

I’m also disgusted by the protectionist turn this took as our governor, many representatives, and several progressive organizations that I’ve supported called for a ban on Amazon because of the need to “level the playing field for local merchants.”  When I talked to a number of folks about this, including the organizations that I had previous supported, they demonstrated that they didn’t really understand the issue, were getting confused about states rights vs. federal rights (an issue I expect we’ll see come up a lot over the next few years given our federal, state, and local government search for additional revenue wherever they can find it), and didn’t get that a protectionist attitude was actually offensive to most business people (except, presumably, those being protected by the government.)

Finally, legislation like this is completely tone deaf to both the growing impact of technology on our society as well as a huge shift in the way information based goods are bought and sold.

I’ve been told by several Colorado representatives that didn’t support this bill that there is no way this tax will be repealed, but I haven’t given up yet.  I’ve enlisted my friend David Binetti to crank up another Twitter Campaign To Repeal Colorado’s Internet Tax.  If you are a Colorado citizen with a twitter account, it’ll take less than a minute to tweet out this message along with delivering a physical letter to your specific representatives. 

Let’s make sure our representatives know that this is a piece of legislation that should be repealed.

  • http://www.businessmoneytoday.com phanio

    Great post. I feel the same way and I don't live in CO. My problem with all of this is that our legislators are afraid of actually looking at a situation and finding good solutions – they are too afraid of losing votes and not keeping their own power. Thus, they (as you state) are only after new ways to raise revenue (more revenue, more ways they can buy votes). All of which hurt people and businesses in this country.

    Just look at the effects the horse carriage industry is now facing in New York. All they have done is forced those businesses to raise prices – in a down economy. How many do you think will survive?

    Keep up the good fight – the fight against stupidity.

    • Bill Mosby

      You ain't seen nothin' yet. The "need" for revenue increases is just barely getting started.

  • Michael Donohue

    Besides saying "Technology is awesome" what is the reasoning behind allowing Amazon transactions to proceed without sales tax, but taxing an identical transaction from a local retailer?

    • http://intensedebate.com/people/bfeld Brad Feld

      The Supreme Court already decided this one a while ago.  Amazon doesn’t use any state services – why should they pay state tax?

      • http://intensedebate.com/people/James_Mitchell James_Mitchell

        Brad, the Supreme Court's opinion was a bit more nuanced than this. I think there are two relevant factors:

        First, what nexus does Amazon has with Colorado? In court, I suspect Colorado would argue that by having affiliates in Colorado, Amazon has sufficient nexus with Colorado for Colorado to impose a sales tax upon Amazon sales to Colorado residents. I suspect this is why Amazon terminated its connection with Colorado affiliates, in order to eliminate any possibility that Colorado could establish sufficient nexus with Amazon to then impose a sales tax.

        Second, I haven't read that decision for a few years, but my recollection is that one consideration the Supreme Court stated was a practical one, namely that it was too complicated and expensive for an online retailer to comply with sales taxes throughout the U.S., which can be imposed city by city, with each taxing jurisdiction imposing sales taxes on different items. I think they left the door open if there was a simple enough system nation wide, they would revisit the issue.

        I can see both sides on this issue. It does seem unfair that local merchants have to compete with an online retailer who can offer a lower total price because it does not impose sales taxes. On the other hand, those local retailers use services from local government that Amazon does not.

        I think when Congress exempted on line retailers from certain taxes, it was an "infant industries" argument: this is a promising development that the U.S. wants to encourage the development of. Given how much is sold online in 2010, I don't think that is a valid argument any more. But you've still got the "Amazon does not use any local services argument." This assumes that sales tax are meant to be directly proportional to the services used or consumed by the retailer. I don't any one would argue that. Rather, the truth is that sales taxes are simply another form of tax. If that is the case, the argument for exempting online retailers becomes a lot weaker.

        On a fairly unrelated note, I would love it if all income and death taxes were abolished and government was financed solely on sales taxes, including online retailers. Tax consumption, not production. Bill Gates pays no taxes while he earns $50 billion but to the extent he spends money, he then pays.

        James Mitchell

  • http://intensedebate.com/people/James_Mitchell James_Mitchell

    “I’m also disgusted by the protectionist turn this took as … several progressive organizations that I’ve supported”

    I think the lesson is here is that Brad the wealthy venture capitalist should stop supporting “progressive” organizations.

    “The Capitalists will sell us the rope with which we will hang them.” – Lenin

    James Mitchell http://www.jmitchell.me

    • http://intensedebate.com/people/bfeld Brad Feld

      There are a lot of things I like and support about the progressive organizations I support and there are some things I dislike.  Protectionism is one that I particularly dislike.  That said, I’m not sure the right lesson is not to support progressive organizations as this experience didn’t inspire me to suddenly decide that I don’t support and progressive perspectives!

      • http://intensedebate.com/people/James_Mitchell James_Mitchell

        I think the issue is that you are expecting progressive organizations to be rational about economic issues and to demonstrate a level of economic sophistication sufficient to earn a C- in a principles of economics course offered at a local community college. In my opinion, that expectation is naive and unrealistic. It's like expecting my dog to understand physics. She is cute and even smarter than more dogs, but she is never going to be able to compute trajectories. Progressives will never understand basic microeconomics, it's simply not in their DNA.

        Have you read the details of the financial regulation bill in Senator Dodd's committee? They are proposing to increase the net worth requirement to qualify as an accredited investor, repeal the exemption that prohibits each state from regulating a private securities offering, and requiring companies seeking angel investments to file a full SEC-type securities prospectus. In other words, kill any chance most companies have to raise angel financing. They just don't understand the effects of laws they pass, they are that clueless. If being dumb was a crime, all of them would be on Death Row.

  • http://sicakiliski.com sicakiliski

    progressive organizations that I’ve supported called for a ban on Amazon because of the need to “level the playing field for local merchants

  • http://www.pass4sure.eu/Cisco/642-105.html 642-105

    I think the lesson is here is that Brad the wealthy venture capitalist should stop supporting “progressive” organizations.

  • http://intensedebate.com/people/JeffDonnici Jeff Donnici

    I like that Amazon is headed the right direction on this… they're playing hardball with North Carolina, which is trying to pull the same stunt as Colorado (requesting purchase data on state residents). Amazon pulled their Affiliates program there, just as they did here.
    http://news.cnet.com/8301-13578_3-20002870-38.htm

    I wrote to several state representatives when this was being pushed through and heard back from only one – the rest didn't so much as acknowledge receipt. I predict this and the "software tax" (HB-1192) will become frequent topics during the governor's race (with the Republicans offering to repeal).

  • http://www.rrpm.com Christophe

    Michael you are part of the mis-informed people. This issue is simple but not trivial. Our own Colorado retailers do not collect sales taxes in others states. Also how is a small retailer to handle the quarterly (monthly?) payments to some many states with so many tax rates. Additional this law make retailers subject to the judicial system of each state, potentially forcing these retailer to have legal and accounting advise necessary to operate in each site. Wow all this is great for business…NOT! Their is good reason for the "commerce clause" in the constitution.

    Brad I voted for all those democrats (wanting to punish those 8 "bush" years). I will have a very difficult time voting for democrats at the local level. Maybe it is better to vote republican at the local level (many of the the local republicans own small businesses are understand the issues surrounding 1193). The truth is that we need a new generation of politicians made of people like you and me. Democrats have demonstrated that they are blind to the current economic times (some of them are flat out nuts: One called "Amazon evil" in front of all to see during the state public debates on 1193) and solve nothing. Obama/democrats would regain my vote by doing one of the 3:
    - Break the "lobby system" that is paralyzing our government
    - Get us off foreign oil
    - Bring back the 100000s of troops posted in countries like: Japan 50000, Germany 60000, South Korea 27000, Italy 10000, UK 10000 etc…
    - Cut all the wasteful government programs on a massive scale while going strong on the ones we need and want (Education,Medical) to help balance the buget

  • dnaiss

    Thanks for voicing this so well. I was crushed by the decision Amazon had to make earlier this year. I am a CO resident and HB 1193 is terrible. I'm ready to contact every and all people that need to hear about this.

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