Northern California booksellers are claiming victory to selling their souls to The Institution.  Sadly, I don’t think they see it that way yet.   Most people don’t know when they are in battle fighting against their own interests.

What’s worse is, according to one literary blog, Andy Ross Agency, these business owners got in bed with the “devil” to win this battle against Amazon.com.

BackStory: Backed by Wal-Mart, Northern California Booksellers demanded Amazon.com to collect  sales taxes on internet purchases. This in an effort to level the playing field.   Amazon doesn’t have to collect sales taxes in states it has no physical presence.  Therefore, lawmakers used the affiliates program as proof of Amazon’s presence and then requested Amazon collect taxes. Amazon ended the affiliates program in each state this law went into affect. Illinois, New York now California.

I don’t know why I’m always amazed at the lengths people will give away their power. I guess we can chalk it up to “intellectual laziness and narcissism.”   Unfortunately, from this perspective, Northern California Booksellers are pawns in the game called “Pledge Allegiance to the Institution.”

Lack of perspective, and through their actions, Northern California Booksellers are helping us, the middle class, to further conform to the soulless institution run by corporations whose sole allegiance is to the faceless shareholder.

At the very least, Amazon and other large online retailers such as Overstock and eBay have a business/profit model that shares power and profit with the small business owner. The companies appear to help the self-employed run business systems to which they would not otherwise have access.   Now not so much, thanks to a group of people who sought to protect their limited interest but ended up selling out to the very big-box retailers, who now don’t even have Amazon to keep them in check.

When Wal-Mart, Costco, and other big-box retailers saw Amazon and other mega online retailers beating them at their own cost-cutting game, they rallied the small business owners, the very people they pushed out. In turn, the brick-and-mortar shops owners took their tax collecting concerns against Amazon to the state government.

The sad part is those bricks-and-mortar small business owners didn’t see other small business owners and self-employed operating online benefiting from Amazon.com and others such as overstock.com.

Amazon won’t lose here; the small business owners lose. Unfortunately, here in Illinois, the affiliates (sellers & re-sellers) many, of who were profitable, can no longer participate in the Amazon profit-making machine.

Illinois’ also loses because many of us are self-employed. If there is less income, there is less taxable income. (Aside: Many other corporations who have their headquarters here are preparing to leave.)

Further, I don’t see how this is a win for mom and pop bookstores owners. Collecting taxes on discounted merchandise will always be less than collecting taxes on total suggested retail prices. See Wal-Mart’s profit model. It is understandable why Wal-Mart had a dog in that fight – Amazon was their only competition.

Amazon.com will continue to evolve in various ways to make new and improved profit models. A possible back tax collection for the behemoth “Goliath” is legislative legerdemain intended to keep us “Davids” in reactionary mode and off-balance.

As small business owners, our focus should be to participate in the changing business landscape –not tie up our resources in litigation. In fact, small business owners have the advantage over corporations when it comes to flexibility – we should use it.

Unfortunately, there is nothing flexible about shortsightedness.  When confronted, some of these business owners, such as Andy Ross, says

“It seems to me that tax policy should apply to everyone equally. Amazon is big enough that it doesn’t need special tax breaks.”

I agree, but it seems Amazon should qualify for one since they are actually creating jobs where there were none.   Now thanks to this legislation, those jobs and income are gone.   How much?  According to the WSJ

Illinois has about 9,000 affiliates, said Rebecca Madigan, director of an affiliate trade group called the Performance Marketing Association. She said the Illinois affiliates generated $611 million in advertising revenue in 2009 and tax revenue of $18 million.

She estimates that the state will lose 25% to 30% of that tax revenue because the affiliates will lose business, cut jobs or move out of the state

So Northern California Booksellers – I guess those former Amazon affiliates can go get jobs at Wal-Mart, and Sams Club – way to go.

~MH