This law will move start-ups out of California without raising a single penny in new revenue. It may actually decrease the tax base by moving income out of the state!
So, yes, if you want CA to 'make a stand' to prove a point, fine -- but it makes no pragmatic sense for anyone.
New York, Texas, North Carolina, Colorado, and Illinois are definitely out. And Amazon already collects sales taxes for North Dakota, Kansas, Kentucky, and Washington.
So if your start-up is so sensitive to affiliate revenues you'll avoid all those states, have fun wherever you wind up. I suppose Portland remains a nice spot – no Oregon sales tax at all.
Add in the 5 states that don't charge sales tax, and there are plenty of great options to locate a business.
California and others want that same deal.
In New York, Amazon threatened to pull out but is temporarily paying sales tax (some reports suggest into escrow) and maintaining the affiliate program pending a legal challenge. Amazon may yet wind up losing their challenge, in which case they would have to decide whether to treat NY like other states where they collect sales tax – which would render being an affiliate safe – or to follow through on their affiliate freeze-out.
New York has essentially chosen the same course as California, so it will likely be resolved the same way in both states. Other states, likely including Texas and Massachusetts pending current legislative battles, are following this approach as well.
My point is: this isn't just a California-shooting-itself-in-the-foot situation, and a company can't just jump to anywhere-but-California to get back into the affiliate program. Many states, including many other top tech and business centers, are treating Amazon the same as California.
Simple fact is, affiliates don't meet the definition of a "nexus" in a state, as determined by the Supreme Court in the early 90's. This is just a quick money grab by a lot of bankrupt states, who are counting on Amazon to just bend over and take it. Unfortunately for them, they're actually winding up costing jobs and income tax revenue for their state, instead of increasing sales tax revenue.
New York and Washington AMZN affiliates are fine, because Amazon recognizes that it has what meets the legal definition of a "nexus" in those states, and therefore needs to collect sales tax revenue - affiliates or not.