California Gov. Jerry Brown reached a budget deal Tuesday night, without Republican support, which forces online retailers, particularly Amazon.com, to collect sales tax on purchases made by California residents. Three sales tax bills, incorporated into AB 28X, were approved Wednesday by Gov. Brown, according to the Los Angeles Times.

On Wednesday, just a few hours before Brown approved the new tax, Amazon issued a notice to all Amazon Associates in California that the company will have to “terminate” their program in the state if AB 28X passes.

Amazon has terminated programs in other states because of similar legislation. Those states include Arkansas, Colorado, Connecticut, Illinois, North Carolina, Rhode Island and Texas.

Amazon Associates participants and other web-based companies are likely to suffer.

The Coalition to Protect Small Business Jobs appealed to Gov. Brown not to sign the bill into law. They argue the new law makes it “harder” to “compete with larger retailers on the web.”

Cal Watchdog reported that 25,000 businesses could find themselves shutting down.

"Supporters of online sales taxes claim the state will earn an additional $150 million in tax revenue. But former state senator and current Board of Equalization member George Runner says that the punitive online tax bills would cut into the $124 million in tax revenue paid last year in by small California business affiliates, and would chase the online affiliate businesses out of California forever."

In an attempt to squeeze more taxes from small businesses, California could wind up killing those same businesses.

Amazon, which has called the tax “unconstitutional,” also pointed out in their message to Associates that similar legislation in other states “has led to job and income losses, and little, if any, new tax revenue.”

What do you think about the tax? Will it help or harm California?

 

Reach Reut Cohen here or follow her on Twitter.