Driving For the Bottom

Gov. Spitzer isn't satisfied with damaging his reputation. He wants to completely and utterly shred it.

Under a new policy, major electronic retailers, such as Amazon.com, will be required to collect sales tax on all purchases from New York. The policy, based on a novel legal theory, could hasten the end of the Internet's era as a duty-free marketplace if other states follow New York's lead. With the policy, New York immediately took the lead among states that are seeking to tax online commerce.

"I'd say this puts us at the front," one state tax official, who requested anonymity, told The New York Sun.

Having pledged not to raise taxes, Mr. Spitzer is increasingly scrounging for ways to close a projected $4.3 billion deficit next year. State officials estimate that this latest initiative, which goes into effect in December, will bring in about $100 million more each year, split between state and local government tax revenue. Statewide, the sales tax averages about 8%, although in New York City it is 8.375%.

He's driving for the bottom, and wont be satisfied until he's totalled what was once a solid reputation in the national and local media.

He had made campaign promises that he wouldn't raise taxes, and yet he's pushing a tax policy that would soak anyone who seeks to make purchases online in New York State. He wants Amazon.com to collect the state sales tax on purchases made by New Yorkers on the theory that affiliate referrers provide sufficient nexus with the state.

In plain English, Spitzer thinks that because a New Yorker and someone who is not an employee of Amazon.com wants to make a few bucks from referring sales to Amazon.com has a link on their blog or website, it is sufficient for Tax and Finance to hit up Amazon.com for all sales by Amazon.com to New York residents.

The amount of money we're talking about is not insignificant. It could be hundreds of millions of dollars. That's money that the state wants from taxpayers.

As Instapundit points out, the move likely wouldn't survive a dormant Commerce Clause challenge, but that's almost besides the point.

Spitzer is showing how incapable he is of running New York.

The state's budget is a mess, and Spitzer's first and only inclination to fix the problem is to tax and spend. There is no interest in cutting spending or reigning in entitlements.

UPDATE:
Here's the relevant passages of Department of Taxation and Finance's actual position on Internet sales:

Under the New York State Tax Law and the Sales and Use Tax Regulations, the term vendor includes persons who solicit business within the State through employees, independent contractors, agents or other representatives and, by reason thereof, make sales to persons within the state of tangible personal property or services that are subject to sales tax. Accordingly, if a business located outside New York State solicits sales of taxable tangible personal property or services through employees, salespersons, independent agents, or representatives located in New York State, the business must register as a vendor and obtain a Certificate of Authority for New York State sales tax purposes. (Tax Law Section 1101(b)(8) and Sales and Use Tax Regulation Section 526.10(a)(3)).

As illustrated by the examples below, the physical presence in New York State of a representative of an e-commerce retailer soliciting sales or making or maintaining a market in New York on behalf of the e-commerce retailer, for commissions, referral fees or other compensation, is sufficient to require that retailer to register as a sales tax vendor. (See Tax Law Sections 1101(b)(8), 1131(1), 1134(a), Sales and Use Tax Regulations Section 526.10 and Scripto Inc. v. Carson (362 U.S. 207)). As a registered vendor, the e-commerce retailer must collect New York State and local sales taxes on all of its sales of taxable products and services that are delivered within New York State, and must file the appropriate sales tax returns. However, a person is not considered a vendor merely because the person has advertising disseminated or displayed on the Internet. (See Tax Law Section 12 and TSB-M-97(1.1)S).

It would appear that the state is defining representative of an e-commerce retailer so broad that anyone who happens to have a link to such a retailer on their site, that it would be sufficient to establish nexus.

UPDATE:
Hot Air wonders if Spitzer is a Rove plant, because there really can't be any other plausible explanation. Spitzer's latest asinine actions involve increasing the number of violent felons who are paroled over Gov. Pataki's administration figures.

Parole Board spokesman Mark Johnson insisted there is no mandate for commissioners to release more inmates and “no directive to tell anybody to behave any differently.”

Yet state figures show that while Pataki’s parole boards released A-1 felons at a 3% to 5% rate between 2000 and 2005, in the first 10 months of this year the release rate climbed to 10%.

Asked to explain the increase, one Spitzer insider said, “The commissioners may feel freer now to exercise their discretion. The only thing we expect of our agencies and our commissioners is to follow the law.”

Senate GOP leader Joe Bruno said reports of a higher inmate release rate “in the first year of the Spitzer administration are disturbing. We support longer sentences for convicted felons, especially for those who kill police officers.”

You want to turn around the drop in crime in New York City? This is how it's done. Release the violent offenders so that they can go out and commit still more crime. Spitzer further threatens the safety of the citizens and visitors to the State.

What's next?