Here we go. California’s just-passed budget includes the infamous NEXUS tax, which attempts to force online merchants to collect sales tax in any state where a single affiliate marketer — someone who gets a tiny commission for the sale — is present. Supporters of this nose-cutting, face-spiting tax claim it will bring in $200 million dollars in sales tax revenue.
Really? Haven’t they been paying ANY attention at all? Does nobody in Sacramento read the writing on the wall? Whenever a state has passed a law like this, Amazon and other online merchants have had a simple solution: they shut down the affiliate program in that state. Amazon doesn’t really need affiliate marketers that much; it’s making a tidy profit anyway!
The victims of this will be Californians. By throwing down the gauntlet, the state legislature has encouraged Amazon and other online retailers to shut down their affiliate programs. If that happens– and Amazon has indicated it will happen, just as it has in many other states — here’s the fallout:
- No income tax will be collected, so the law’s goal will fail.
- It will kill part-time (or even full-time) jobs for thousands of Californians.
- It will eliminate millions of dollars of income for Californians, who will thus pay less income tax.
- It will eliminate the “buffer funds” of thousands of Californians who were using that money to fund shopping, trips, leisure activities like going to the movies or catching a game, or pay bills. This means less sales tax collected than before, by the way.
- It will put more pressure on one segment of the population: seniors, young people, work at home spouses, and those with health problems which make it difficult to work 9 to 5 jobs. Many of these were finding affiliate marketing an effective way to work and earn money from home.
- It will cut back on sales of products made by Californian businesses selling their products on Amazon and getting the benefit of free marketing.
Way to go, California state legislature! You may have just killed thousands of jobs and lost your state coffers and local businesses millions of dollars!
Recommended Link: Why California’s Nexus Tax is a Lose, Lose, Lose situation for Californians, the state of California, and Amazon (and why the only winner in all this is, basically, Wal-Mart, which lobbied hard for this law)
This is one of the stupidest things the state lawmakers have ever done! And it’s happening all across the USA. I am sorry to say this is typical governmental decision-making — without studying all of the facts.
I feel your pain! Short-sighted Arkansas lawmakers passed the Nexus law this session, too, and I am set to lose my Amazon associate status – and several thousand dollars of earnings per year – next month. I’m working hard to develop new income streams in order to replace that income, but it’s going to take awhile. In the meantime, we will tighten our belts and make do with less, another practice the government seems to just not understand.
Affiliate Marketing Executive Oliver Roup offers an alternative to Nexus Tax:
This is devastating to me. I have probably several hundred links over all of my lenses and on top of that I sold 10 items last night totally $420 and I dont get to earn any commission on them. Im not making a ton as it is, perhaps $100 a month, and so this has just ripped a gaping hole in my tiny income.
I dont mind them wanting to charge taxes on online purchases, but the whole affiliate part of the equation is a bunch of BS.
Still reeling from the aftermath