Two days ago I wrote a lengthy blog post entitled, “Dear Legislators – The Amazon Tax Won’t Raise Tax Revenue.” CLICK HERE if you’d like to read the post in its entirety.
In my post I argue that “Amazon Tax” legislation is unconstitutional and is a desperate measure to raise tax revenue.
I argue that the legislation will fail to produce its intended outcome, which is to generate tax revenue because advertisers that it would effect will simply terminate affiliates from the State where the legislation is passed, thereby avoiding the tax.
While simply terminating affiliates from the State in question seems like an easy solution, the problem is that EVERY ONE INVOLVED LOSES.
The affiliate marketer loses because he or she is terminated from the affiliate marketing program and as a result they either go out of business or move to another State to conduct business. That’s a loss for the State and a loss for the affiliate.
The online business loses because they are deprived of the revenue that was being generated by affiliates within the given State (remember, they will be terminated from the program because they resided in a State where the Amazon tax was passed). In addition, the State loses because the law didn’t work as intended. No affiliates in State = no power to levy sales tax.
The State loses because (1) they don’t collect the revenue they intended to collect, (2) they contribute to the loss of thousands of jobs and potential closure of a similar amount of affiliate marketing businesses, and (3) they lose income tax from the employees and businesses that once conducted business in their State.
Well….today news broke that Amazon has done exactly what I predicted would happen.
In anticipation that North Carolina is going to pass the legislation any day now…Amazon.com took the unprecedented (although not unexpected) step to terminate ALL North Carolina affiliates.
Amazon’s decisive action will allow them to avoid requiring North Carolina residents who shop on Amazon.com to pay sales tax.
I expect other advertisers will follow Amazon’s lead once the law is passed in North Carolina.
Thank you to Marketing Pilgrim (aka, Andy Beal) for breaking this news….apparently he is a victim as he was terminated from the Amazon Affiliate Program since he is a North Carolina resident.
Below is the text of the e-mail Andy was sent from Amazon:
“We are writing from the Amazon Associates Program to notify you that your Associates account has been closed as of June 26, 2009. This is a direct result of the unconstitutional tax collection scheme expected to be passed any day now by the North Carolina state legislature (the General Assembly) and signed by the governor. As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 26. We were forced to take this unfortunate action in anticipation of actual enactment because of uncertainties surrounding the legislation’s effective date.
Please be assured that all qualifying referral fees earned prior to June 26, 2009 will be processed and paid in full in accordance with our regular referral fee schedule. Based on your account closure date of June 26, 2009, any final payments will be paid by September 1, 2009.
In the event that North Carolina repeals this tax collection scheme, we would certainly be happy to re-open our Associates program to North Carolina residents.
The North Carolina General Assembly’s website is http://www.ncleg.net/, and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/.
We have enjoyed working with you and other North Carolina-based participants in the Amazon Associates Program, and wish you all the best in your future.
Best Regards,
The Amazon Associates Team”
Going Green with Danforth Diamond!
