The "Amazon Tax"

Last month here:
Kallah Magazine: the blog for the magazine: No mere tarrifs but an outright ban for NY
I blogged about New York's state law requiring out of state businesses to collect NY sales tax if they advertise within NY. This has major ramifications for the internet companies that advertise with NY based affiliate programs. I wondered at the fact that people just accepted this imposition on trade within the country.
Facing budget deficits and a slowing economy, the Paterson administration enacted two provisions this year aimed at boosting state tax revenues by tens of millions of dollars. One that became known as the "Amazon tax" requires the Internet giant and other online retailers to collect city and state sales tax on all goods shipped to New York State.
But now Amazon is doing battle, as you can read in the source for the quote above.
Amazon has challenged the provision on constitutional grounds, arguing that it violates the Commerce Clause and citing a 1992 Supreme Court ruling in Quill Corp. v. North Dakota that reaffirmed that a business must have a "physical presence" in a state in which it is assessed sales taxes.

There is a Federal law that the new NY law may violate. Nevertheless, NY insists it does not want a loss of revenue. And the quote from the NY side does not address the legal question at all but only takes a limited view of the economy on a very local level:

Mr. Weiner, a candidate for mayor in New York City next year, defended the bill in a statement. "New York's business community, particularly our vital financial services sector, has been hammered with business activity taxes in states and localities where they do not operate," he said. "It's bad for our economy and kills jobs. Period."

What of the general economy?


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