SAN DIEGO -- Amazon.com announced Wednesday it will drop nearly 25,000 California businesses that sell goods on the its mammoth online marketplace.
The online superstore's announcement comes after Gov. Jerry Brown signed a new online sale tax law Wednesday, which basically treats Amazon.com as if it's an in-state retailer, forcing it to collect sales tax on purchases. The move is expected to hurt many small California businesses like Adams Avenue Book Store in Normal Heights, that have partnered with Amazon to extend their reach.
Michael Smythe has been managing Adams Avenue Book Store for about a decade and said over the recent years, the online side of business has been booming.
“Right now, 25 percent of our business is online, and half of that is on Amazon,” said Smythe. “If we don't have Amazon, it would seriously impact our business. It would make it difficult to remain open as a bookstore.”
Amazon said California's online sales tax bill is unconstitutional and counterproductive.
“Amazon sent a letter to all their California associates saying, 'We're going to be dropping you, because we will not be subject to the new Amazon tax in California,'” said San Diego State University professor of taxation Dr. Steve Gill.
Gill said even if Amazon doesn't pull out, the tax wouldn't raise enough revenue to make an impact California's budget problems.
“The state's estimate of the additional tax that will be collected as a result of the Amazon tax is about $200 million, which seems like a lot of money but isn't very much considering the $22 billion gap they’re trying to close in the budget,” Gill said.
“Businesses are losing, the state of California is losing. If Amazon pulls out, they lose. I don't see a winner here,” said Smythe.
