California and Texas look to be headed in different directions on a contentious online sales tax debate, an issue that could have wide-ranging implications for in the two most populous states.

On Tuesday, the California State Assembly voted to approve a measure that would require online retailers, like, to collect sales tax on purchases made by residents in the state. The author of the bill, Charles Calderon, said that the state was losing roughly $1.1 billion per year because of uncollected sales taxes and noted that those who failed to support the measure were “antibusiness.”

Separately, Texas. Gov. Rick Perry vetoed a measure which would have required online businesses with operations in the state to collect sales taxes. The Austin American Statesman reports that the bill still could survive. has pulled out of other states where similar tax measures were instituted, and it has threatened to do so in Texas as well. The SEC is investigating the dispute between Amazon and Texas over $269 million in uncollected taxes.

Steve Bercu, owner of BookPeople in Austin, tells The Statesman that Gov. Perry has “chosen to favor an out-of-state retailer over the thousands of us here who employ millions of Texans.”

Interestingly, Perry inserted himself last year in the I-1098 debate in Washington state, encouraging Washington businesses to move to Texas if the income tax on wealthy individuals passed.

“If Washington doesn’t want your business, Texas does,” said Perry. “Texas has no personal income tax and no interest in getting one.”

Initiative 1098 eventually failed.

The California tax measure comes 17 years after Amazon decided to establish its headquarters in Washington state, in part because it didn’t want to collect sales taxes on customers in the largest state.

But now, if the measure goes through, Amazon may have to start collecting sales taxes in California. A similar measure was vetoed by Governor Arnold Schwarzenegger in 2009, according to Bloomberg News.

Traditional retailers have argued that should have to collect sales taxes in states where it does business, with retail groups saying that the concept levels the playing field between physical and online retailers.

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  • OPAS

    Even if the measure goes through, consumers in California and Texas will still be able to shop tax-free by using a forwarding service from Oregon (where there is no state sales tax). Many Californians already use this strategy to shop online tax-free. You just place your order with an OR address provided by the forwarding company, and then forward your packages to CA or TX or wherever you live. Check out

  • Anonymous

    These states are so desperate for money they will do anything to tax “that guy behind the tree”.  Of course, none of these states do anything to enforce the use tax rules on their own citizens–they just want the big (out of state) companies to do their dirty work for them.  Eventually Congress will overturn the Quill decision that put the physical presence standard into place and Amazon and other online retailers will have to collect and remit sales tax to the states.

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