Internet sales taxes

When California pols imposed strict new regulations on vehicle emissions and demanded automakers meet a quota for selling "green" cars in the state, it would have been interesting had Ford or General Motors told them to stick it, opting instead to close their Golden State dealerships.

That didn't happen, of course -- California is a big market.

But now it appears that some big Internet retailers aren't as timid as the automakers when it comes to battling state meddling.

The main point of contention involves the collection of sales taxes. In most cases, Web retailers don't have to charge sales taxes in states where they lack a storefront. Traditional retailers hate this -- as do many state politicians eager to get their hands on as much money as possible.

So a handful of states have come up with a novel theory, arguing that they can indeed collect sales taxes from Web retailers that use online affiliates which are located within their borders.

These affiliates help large retailers such as Amazon.com by linking to products or promoting deals -- and they receive commissions if sales result.

But the move has already backfired. When North Carolina lawmakers recently moved closer to passing a bill forcing retailers to collect sales taxes based on affiliate sales, Amazon cut off all its affiliates in the state. It has taken similar steps in Rhode Island and Hawaii, as has Blue Nile Inc. and Overstock.

The states are "shooting themselves in the feet," Rebecca Madigan, founder a California group that represents affiliate marketers, told The Associated Press. Affiliates are advertisers, not salespeople. "They don't deliver product, they don't take any money from a consumer, and most of the time they don't even know who the consumer is," she said.

Nor is this all simply a matter of fairness. Storefront retailers by their very physical presence impose certain costs on communities that their Web counterparts do not.

Where this will lead, nobody knows. But rest assured that the government's pursuit of online sales tax revenue will never end -- it is simply the nature of the beast to seek domain over every human endeavor.

In the meantime, kudos to Amazon, Blue Nile and others for fighting the good fight in the effort to keep the Internet a relatively tax-free zone.