On Thursday, Governor Jerry Brown of California signed ABX1 28, a bill that allows California to collect sales tax from out-of-state, web-based retailers.
But according to the Performance Marketing Association, instead of additional revenue for the state, Brown’s signature led to the immediate loss of income for thousands of California small businesses.
Even before the bill was signed, retailers outside of the State started terminating their advertising agreements with California website owners, knowing that the signature was imminent, according to the association.
While similar legislation has been seen in other States, it was rejected after elected officials agreed that it would not generate any additional sales tax revenue, and could negatively affect small business income.
Even companies as large as Amazon will feel the effects of this bill, The Wall Street Journal reports.
According to The Journal, Amazon stock is down slightly less than 1 percent, and has said it will cut ties with California affiliates, as it has done with States who have passed similar laws.
“This legislation is counterproductive and will not cause our retail business to collect sales tax for the state,” Paul Misener, Amazon’s global-policy vice president, said in a recent statement.