Wal-Mart vs Amazon in California tax law battle: Booksellers in the crossfire

Summary:California's internet tax battle reveals a clash of retail titans Amazon.com and Wal-Mart, making pawns out of American booksellers and consumers.

California's state tax battle reveals a nationwide clash between retail titans Amazon.com and Wal-Mart, while American booksellers and consumers are used as pawns.

At the end of June, Amazon.com dropped thousands of California affiliates when the state passed a sales tax law that the online retailer believes is unconstitutional. And Amazon wants to take this fight to the ballot box.

Amazon has submitted referendum papers to undo the new law in the next statewide election - while Wal-Mart and pals ramped up its national anti-Amazon "Main Street Fairness" PR campaign.

That's right: Wal-Mart (along with Target, Overstock.com, Target, Best Buy, Home Depot and Barnes & Noble) are behind the propaganda-heavy "Alliance for Main Street Fairness" PR campaign. They're the ones pushing states to make the new tax laws, while making no bones about the fact that they're after Amazon.com on a nationwide scale.

I'm guessing you're with me in thinking that Wal-Mart isn't exactly what anyone would call synonymous with "main street fairness." And yes: they were quick to blame Amazon for Borders' shutdown.

See also: RIP: Borders Books

However, I'll be the first to agree that Amazon dumping over 10,000 online affiliates (small businesses in their own right) didn't exactly do them any favors in the goodwill department.

California lawmakers aren't coming out of this smelling like roses either.

Californians already pay sales tax on their online purchases due to recent enforcement of the "use tax" laws, where residents are required to declare what they owe in out of state online purchases on their tax returns. Passing the new tax law on top of the use tax law feels to me like double-dipping and dirty pool - and it's called double taxation.

Amazon hasn't exactly turned their backs on the issue. After the Board of Equalization declared that Amazon still had nexus in the California, on July 7 the online retailer formally filed a request with the California Attorney General's office for a voter referendum to overturn AB 28X.

Wal-Mart's sock puppet "The Alliance for Main Street Fairness" has an excellent PR department, with which they've spun the tax law rhetoric into "sales tax fairness" and trotted out appliance salesmen to plead the case of the little guy.

Many were quick to point out that few people buy refrigerators online.

Prior to the dramatic signing of the nexus law in California, "Main Street Fairness" had cozied up to the American Booksellers Association, Northern California Independent Booksellers Association, and Southern California Independent Booksellers Association. This enabled "Main Street's" message to tap into booksellers' grass-roots reach.

It also tapped into the fear, uncertainty and frustration felt by booksellers faced with a turbulent market whose uncertain future is being shaped by consumer demand for e-books and other hallmarks of the e-commerce era.

Amazon has been fighting state law tax battles in many states - in some instances dropping affiliates, in others, coming to agreements with states. Amazon states they want a tax structure that is applied evenly across all states.

Amazon cites the Supreme Court's 1992 ruling that expanding nexus in this way puts undue burden on, and in fact, hinders interstate commerce. In it, the Court overturned North Dakota's expanded nexus, saying that Congress should resolve the matter. They determined that there should be a safe harbor for vendors "whose only connection with customers in the taxing State is by common carrier or the United States mail."

Nonetheless, Amazon has launched an effort to overturn the law and submitted referendum papers to the State Attorney General's office. If approved, Amazon will begin collecting the 504,000 signatures needed to qualify the measure for the next statewide election in 2012, currently set for February.

The American Booksellers Association responded by reaffirming their ties with Wal-Mart's "Main Street Fairness" while claiming in an email statement to booksellers that Amazon was merely trying to maintain its "unfair sales tax advantage over Main Street retailers."

The ABA also said the associations would be reaching out to California booksellers to do outreach in support of Main Street's agenda and engage their customers to do Main Street's lobbying.

I'm an author, small publisher and a book lover - I was also a California Amazon affiliate, so as an individual and an indie small business owner I have a lot of interest here. The ABA is an organization with the best intentions for American booksellers, but I can't help but thinking that partnering up with the interests behind "Main Street" and parroting its PR simply smells rotten.

I feel like people I care about, the booksellers themselves, are being used as pawns by Wal-Mart, Target, Best Buy, Home Depot, Overstock.com and Barnes & Noble.

It's especially disturbing because the small retailers have been the ones most put to early graves by Wal-Mart and pals.

While getting the ABA to spin rhetoric to booksellers about creating a "level playing field" it's the so-called big box retailers that destroyed the real Main Street shops through competitive advantages - such as tax loopholes and Wal-Mart's notorious state tax avoidance schemes.

Basically, Wal-Mart is being hurt by online retailers and claims that online retailers have an "unfair tax advantage" so they're doing something about it.

At any rate - thanks for the extra tax, Wal-Mart. You may be selling it, but I'm not buying it.

Image by Kevin Dooley, under Creative Commons 2.0 Generic license, via Flickr.

Topics: Amazon, Hardware

About

Ms. Violet Blue (tinynibbles.com, @violetblue) is a freelance investigative reporter on hacking and cybercrime at Zero Day/ZDNet, CNET and CBS News, as well as a noted sex columnist. She has made regular appearances on CNN and The Oprah Winfrey Show and is regularly interviewed, quoted, and featured in a variety of publications that inclu... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.