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California, Hawaii Veto “Amazon Tax”; NC & RI Still Plan Affiliate Nexus



It’s somewhat hard to keep up with which state is passing the so called "Amazon Tax," which have vetoed it, and which retailers have pulled the plug on their program–just in anticipation of it.

Let’s start with the good news. Both California and Hawaii look set eject the planned affiliate nexus, with vetoes from their respective governors.

CA’s Arnold Schwarzenegger stated:

"After passing the largest tax increase in California history, it makes absolutely no sense to go back to the taxpayers to solve the current shortfall – that’s why yesterday I vetoed the majority vote tax increase passed by the legislature."

Meanwhile HI’s Governor Linda Lingle says:

“I am vetoing this bill immediately to help ensure Hawai‘i is not economically hurt by legislation that was not well thought-out and would have negative consequences for non-profits such as the University of Hawai‘i bookstore, and businesses throughout our State”

Both actions were enough for Overstock.com to announce the reinstatement of affiliate programs in both California and Hawaii. There’s no news on a reversal from Amazon, but I suspect it will happen this week.

On to the bad news.

North Carolina still seems set to pass its Amazon Tax legislation and Rhode Island looks to be the next state to make the blunderhead move.

So, what exactly is the Amazon Tax? It’s not that these states plan to add new taxes for those affiliates earning income from these online retailers–they already pay their income taxes. Nope. The Amazon Tax effectively claims that, by having affiliates in a state, the retailer has an obligation to collect sales tax on all its online purchases from that state.

When you consider that an affiliate isn’t even close to being a contractor–which employers are not obliged to collect income tax–let alone an employee, you see why this legislation is nothing but a desperate money-raising effort by states that over-spend and can’t otherwise balance their budgets.

  • http://www.marketingdon.com Al Scillitani

    The NC politicians feel they will generate $18 mil a year with this affiliate tax? All merchants are terminating their programs. That means the state will not get this revenue anyway AND less household income (means less income taxes paid) for NC residents. That means LESS tax revenue for NC, not more. http://www.wral.com/news/local/story/5485365/

    Al Scillitani’s last blog post..Increase Your Online Conversions

  • http://www.marketingpilgrim.com Andy Beal

    @Al – true! Unfortunately, Purdue is pushing so hard to get the budget passed, she may not stop to look at this.

  • http://www.dan-london.com Dan London

    Absurd.

    This income is taxed when I fill out my federal and state returns as income. Isn’t this a double tax?

    Dan London’s last blog post..How a Small Business Can Use Twitter Effectively

  • http://www.marketingpilgrim.com Andy Beal

    @Dan – it’s not your earnings they are after. They want Amazon et al to collect NC sales tax on all that they sell in NC.

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  • Dave

    Those proposals suck!

    lets say someone in California has a blog about “California news”.
    And… Someone who lives in Oregon also has a blog about “California news”.

    So… If the law were to pass, The California resident would put at a very real competitive disadvantage versus the “California news” blogger who lives out of state. (???)

    How does this benefit California residents?

    IMO – Its one of those bone-headed “Throw the baby out with the bath water” moves.

  • http://www.govisithawaii.com Sheila

    The boneheads in Raleigh are making it embarrassing for me to be a NC resident.

    Sheila’s last blog post..Hawaii Vacation Deals & News Roundup: July 6, 2009

  • Dave

    The states can tax the webmasters but only if they can earn some money from belonging to these types of affiliate programs.

    If the webmasters get banished from these programs as a direct result of the tax & earnings drop to zero… Then how would that increase tax revenue? Dooohhh!

  • http://www.marketingpilgrim.com Andy Beal

    @Dave – which is why CA and HI have vetoed it–I think they saw the light! ;-)

  • http://www.frankthinking.com Frank Reed

    We in NC have to suffer through possibly the worst governor in the country. Only three other govs in the US have lower approval ratings. This kind of decision is evidence as to why she gets this well deserved attention. Well, while it means nothing in the long run at least I can say that I didn’t vote for her!

    Frank Reed’s last blog post..Happy 4th of July and THANK YOU!

  • http://www.wdors.com Jeff Pickle

    Governor Bev Perdue launched a new YouTube site to help the citizens of North Carolina learn how to file unemployment insurance claims. Way to go Bev!

    I’m sure all of the North Carolina affiliate marketers and webmasters that you have made unemployed will thank you.

    http://www.youtube.com/escofnc

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