On Monday, Schwarzenegger spokeswoman Rachel Cameron said, "The governor has been clear that he is not supportive of new tax increases to solving the budget problem."
Other well-known Internet retailers, including Overstock.com Inc., have pledged to take similar actions. The Salt Lake City-based retailer runs an affiliate program that is similar to Amazon's and is preparing to cancel its programs in North Carolina and Rhode Island, Overstock.com President Jonathan Johnson said.
"We turned off over 3,400 affiliates in New York and we're looking at doing it in every state that's got that kind of legislation proposed," Johnson said. "In our view, it's just not worth it to run an affiliate program where the state's going to make us a tax collector."
Supporters of the legislation say the status quo gives out-of-state retailers an unfair advantage over local merchants and argue that the companies' advertising affiliates clearly indicate a connection, or nexus, between the retailers and the states.
"What the affiliate marketing programs are, are people who are under contract through Amazon who are being paid on commission for referring sales to Amazon," said Lenny Goldberg, executive director at the California Tax Reform Assn. in Sacramento, which supports requiring retailers to charge sales taxes.
"That's drop-dead nexus," he said.
Opponents argue that collecting sales taxes would be both burdensome and costly for Internet retailers; for consumers, it would raise the total cost of purchases. Thousands of people who rely on commission fees would be affected by the programs' cancellation.
Fred Nicely, tax counsel with the Washington-based Council on State Taxation, called the states' efforts to tax shoppers based on affiliate programs "constitutionally suspect."
"This is not door-to-door sales, where someone is knocking on your door, showing you the goods, demonstrating the goods," he said. "This is passive advertising, which the U.S. Supreme Court has said is not enough of a presence in the state to require a remote seller to have to collect a state sales tax."
Nicely said many states are pushing Internet retailers to charge sales taxes as a way to help manage significant budget problems.
"I think they're doing everything they can to get revenue because the states are hurting right now," he said. "We're in a down economy and they're thinking of alternative revenue sources, and this is something they see as potentially easy money."
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andrea.chang@latimes.com
