Colorado learned a valuable lesson today

If you raise taxes on companies you will lose revenue not gain revenue. Colorado has imposed a sales tax for online sales that would greatly effect Amazon. So how does Amazon react to this new tax? They pull out of Colorado and screw the state.

In response to recent legislation in Colorado (HB 10-1193), Amazon.com has sent a letter to its affiliates in Colorado informing them that the on-line sales giant will no longer be advertising through businesses in the state that that make money by referring buyers.

In order to close a $1.5 Billion budget gap, Colorado Democrats this session have passed a law that would make it possible to collect sales taxes on on-line purchases by creating an economic nexus between state residents and on-line retailers.

The bill, which was part of a package of tax measures aimed at increasing revenue, originally sought to create a nexus between the state and on-line retailers based on their ties to local affiliate websites, which link to products. The bill was ultimately altered due largely to fears that retailers like Amazon would simply cut ties to Colorado companies that make money by referring buyers.

The final bill, which was signed into law in February, instead required large online retailers to start collecting sales taxes or provide a summary of people's web purchases in the state, leaving affiliates out of the equation. This created an economic nexus without making local affiliates a scapegoat for paying local sales taxes.

Amazon has apparently elected to cut dies to its Colorado affiliates regardless. Colorado affiliate Nat Torkington wrote "So let me get this straight: I've done nothing, and Amazon just fired me?"

Nat, you can thank your legislators for getting fired. This is what happens when you over tax and over regulate business. They go where it is cheaper and easier to make a profit. That's called common sense. Something most politicians lack.