Amazon Cuts Off Its Online Affiliates in Vermont

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In response to news that Amazon had fired its Vermont affiliates because of a 2011 e-fairness law that could potentially kick in this year, the American Booksellers Association and Advocates for Independent Business have launched an e-mail campaign asking Vermont indie retailers to contact Gov. Peter Shumlin in support of the law.

The Vermont e-fairness law would require remote retailers with a broad network of online affiliates to collect and remit sales to the state once 15 states passed similar laws. Though Vermont has stated that, to date, only 13 states have laws that it deems “similar,” Amazon announced on Wednesday, January 7, that it was nonetheless firing its online affiliates.

The associate program is closing, Amazon said in an e-mail to members, as “a direct result of Vermont’s state tax collection legislation,” according to Vermont’s NPR News Service. In the e-mail, the company stated: “Amazon strongly supports federal legislation creating a simplified framework to uniformly resolve interstate sales tax issues. We are working with states, retailers, and bipartisan supporters in Congress to get legislation passed that would allow us to reopen our Associates program in Vermont.” Amazon has also fired affiliates in Arkansas, Colorado, Maine, Missouri, and Rhode Island, except in those cases, the e-fairness laws were not predicated on how many other states passed similar laws.

ABA CEO Oren Teicher noted that the move to fire its Vermont affiliates was just more of the same from Amazon. “For some time, Amazon has based its business model on evading its obligation to pay sales tax and then bullying states into subsidizing its operations with tax deals in exchange for a facility and the promise of jobs,” Teicher said. “Amazon may have professed disappointment over the demise of the federal e-fairness bill last December, but, clearly, the action they have taken in Vermont and other states significantly calls into question their true support of e-fairness. We urge Vermont lawmakers to hold firm in the face of Amazon’s hardball tactics. We firmly believe that, with the implementation of Michigan’s sales tax bill, it is likely that Vermont’s 15-state threshold will be met this year. Vermont’s commitment to leveling the playing field for Main Street businesses can play a leadership role for other states that will be debating e-fairness legislation in 2015.”

Amazon’s firing of its affiliates does, however, appear to have swayed some elected officials in the state. Gov. Shumlin is going to request that Vermont lawmakers amend the sales tax law by increasing the threshold to 25 states. And Mary Peterson, the state's tax commissioner, told Vermont’s NPR News Service that her department hopes to find a solution to the situation that works better for Vermont businesses. "We will be reaching out to Amazon and affiliates in Vermont to work towards a solution without harm to Vermont businesses, if at all possible,” she said.

In his e-mail to Vermont booksellers, Teicher stressed that Amazon was attempting to strong-arm state lawmakers, and added: “Unfortunately, this tactic seems to be working. It appears that Gov. Shumlin wants to placate Amazon by amending the law and raising the threshold to 25 states, thereby allowing your out-of-state competition to continue to skirt sales tax laws at your expense.”

Despite Amazon’s boasts of bringing jobs to a state, according to the Institute for Local Self-Reliance, the true engines of job growth are local businesses: Main Street retailers employ 47 people for every $10 million in sales. By contrast, Amazon employs only 14 people per $10 million in revenue. So as Amazon grows and expands market share, the end result is a decline in jobs.