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More States Veto The Affiliate “Amazon Tax” Increases


Andy Beal Posted by

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.

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About the Author: Andy Beal is an internet marketing consultant and considered one of the world's most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian. You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.