February 1, 2012

The Honorable Ellyn Bogdanoff Chair, Senate Budget Subcommittee on Finance and Tax 212 Senate Office Building Tallahassee, Florida 32399 Dear Chair Bogdanoff: I am writing you, on behalf of Americans for Prosperity’s 92,000 Florida activists, in opposition of SB 7206, which is scheduled to be considered at the Thursday, February 2nd meeting of the Senate Budget Subcommittee on Finance and Tax. Americans for Prosperity feels that SB 7206 is a prime example of government picking the winners and losers in business. It unfairly changes standards to tax out-of-state companies as though they are in-state. Big-box retailers will try to claim that SB 7206 will “level the playing field” between online and brick-and-mortar stores, however it will actually give in-state stores an unfair advantage by exchanging the internet sales tax for specialized sales tax holidays that apply to chosen retailers and merchants. One must also question the constitutionality of SB 7206. Despite the Supreme Court’s ruling that states cannot tax an entity without a presence in the state, a number of other states have sought to change their nexus standards to include retailers like Amazon that use an affiliated referral structure. In Florida Amazon does not have a physical presence or employees, but relies on in-state websites for referrals to Amazon’s proper website. Some argue that referrals meet the physical presence standard, and therefore should be subject to in-state sales tax collection. However, similar laws have resulted in extensive litigation and been ruled unconstitutional in other states including Colorado and North Carolina. As a result of the passing of a similar law in California, Amazon immediately notified all of their California affiliates that they would no longer be doing business with them. Instead of collecting the increased sales tax, Californians immediately lost income. In other states, affiliates have relocated to non-taxing states (see the attached article from the New York Times). SB 7206 will result in a loss of income for Floridians, and at a time when we are desperately in need of jobs. Americans for Prosperity Florida does not support any new tax exemptions that will give one group of retailers an unfair advantage over another. We also do not support further distorting the free-market by swapping an increased sales tax with sales tax holidays. SB 7206 will not even out the market, but it will likely result in the loss of income for Floridians and, according to the Tax Foundation, other states have collected little, if any, revenue from the change.

Page 2 We ask for your serious reconsideration of SB 7206 and suggest that, at a time when Florida is in need of job creation and economic growth, the Legislature would be better served to promote legislation that will encourage new business in Florida and lessen the tax burden on Floridians. Sincerely,

Slade O’Brien State Director Americans for Prosperity-Florida

Abigail MacIver Director of Policy Americans for Prosperity-Florida

Cc: Governor Rick Scott Senate President Mike Haridopolos House Speaker Dean Cannon Members of the Senate Budget Subcommittee on Finance & Tax

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