As a former resident of California, I am saddened by how low my state has gone. Alright, I can accept that we elected the governator (this was kind of sad/awesome, to be honest), that we produced shows like The O.C. and (the infinitely sadder and more pathetic) Laguna Beach and The Hills. Yes, my state is the origin of "stars" like that blonde girl who started her own clothing line, that girl who is famous for her implants and that girl who moved to New York to "strike out on her own" in a new reality T.V. show- and yes, they all came from that Laguna Beach show. I'm sorry!
My state is now drowning in debt (can I blame that on the Laguna Beach-ers too? Somehow? No? Okay fine.), forcing government employees to take mandatory furloughs (this means that going to the DMV on Fridays got even more annoying than before) and is currently (desperately) trying to collect backed taxes from all the people in fancy houses in Orange County and L.A. We are in dire straights people!
But apparently when it rains it pours, because now even Amazon has turned against us (for background see the article in The Economist "Interstate Sales Taxes: The Amazon War"). Don't get me wrong, I really love Amazon- not only has it revolutionized the choice and convenience that allows consumers to buy products online, it has generally changed the whole consumer system altogether- allowing for a digital storefront has increased competition, ultimately decreasing consumer costs. (In all fairness, I should also point out that this decreases overall profit margins, particularly for small businesses, but I think that's a topic for another day.) Moreover, Amazon is a fantasy for people who enjoy talking about operational logistics- moving beyond supply and demand, you can talk about regionalization, localization, market and merchant segmentation, warehouse location strategy, and now (wonders of wonders) as they move into digital music lockers (Amazon MP3) and more targeted customer experiences (which potentially one day could rival Google's- I mean they are one of the first to offer consumer reviews to "socialize" the buying experience and "suggest" new products based on buying history).
Back to the topic at hand. Enter California, America's largest consumer market. In the opposing corner, Amazon, the largest online retailer. California argues that because residents buy so much, Amazon (and the merchants that fall underneath it) should charge taxes. Amazon argues that it is unlawful for them to mandate out of state merchants to charge taxes to in-state residents. The law (from 1992) says that states cannot force retailers that do not have an in-state presence to collect sales tax. The argument centered around "where" Amazon was located, because although Amazon has no brick and mortar stores, they do have warehouses all over the place. Fearing that these warehouses would be counted as an "in-state presence" or "nexus" in legalese, they pulled many of their warehouses out of states on the east coast (like New York). They are currently taking this to the ballot boxes by getting Californians to "support mom and pop shops".
Here's where I'm sad about Amazon and California fighting each other- not only because I am deeply tied to both of them. The reason is this- at the end of the day, Amazon pulling out of states means that mom and pop stores have less leverage to sell their products. On the same note, states that have gotten Amazon to collect taxes, like Rhode Island, have openly admitted that they have raised no money from their efforts to increase tax revenues. So if it's really just hurting the little guys, the ones we want to protect, and the money at stake is not as large as we had hoped it would be (some predicted it could be up to $10B a year), is this a fight worth fighting? In the meantime, I would imagine that Amazon, long the defender of the little guys- the catalyst for those microbusinesses that are based out of someone's apartment- would want to continue to offer support. This means not pulling out. In all reality, Amazon will probably collect enough signatures to suspend the law until next year, in which case it really doesn't make sense to add all of that extra overhead by moving out of America's number 1 consumer state.
Please don't fight anymore Amazon and California. I feel like I'm watching my parents fight.
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