It's AB153. CA affiliates now is the time to get to your state reps and educate them and to join forces with the Performance Marketing Association. You won't just lose your Amazon account if it passes, but probably 90% of all other affiliate programs.
As much as I'd hate to lose my account, I have to assume that Amazon is not going to just give up selling to the 37 million people living in California. The nation's population is like 320 million, so that's turning your back on something close to 12% of your customer base.
And, if they did, well, it would suck, honestly, but someone would come along who was willing to collect the taxes. Frankly, the state is broke, and it does seem an unfair business advantage to be able to compete for business with local retail without having the burden of taxes those local businesses do.
I like my Amazon account, but even I am not so much of a Republican that I don't recognize unfair practices when I see them. I totally understand why people who make bank off of their affiliate programs will react in opposition to AB153, but that reaction is a self-serving one. Affiliates can still make money off of the programs once the big corporations stop dodging paying their dues (they aren't even paying them, just collecting and sending along). Convenience and service will easily outstrip the raise in price, and then everything will be as it was again, with the exception that maybe California will fund it's schools properly. I don't mind paying sales tax on the books and stuff I buy; I already do if I buy at Borders or Barnes and Noble.
If I'm missing some major point, or don't understand it as I think I do, I'm happy to listen and learn from your position.
I guess I would not use the word 'unfair'. Perhaps 'not a level playing field'. You have to admit, you have access to a lot more products on the internet than the local markets in most cases. I personally don't buy things on the internet that I can easily purchase locally, because I can get it sooner and by the time I pay shipping on internet prices, it pretty well evens out most of the time. Besides I need a reason to take a break once in awhile.
The problem I see, is that they are using this to bail out their cowardice, lack of backbone to make the cuts they need to make to become economically viable. Kinda like the lottery. It is used as a crutch as well.
According to uncited statistics from the Wikipedia article on them, affiliate sales worldwide account for 40% of Amazon's sales. Their total number of global affiliates is supposed to be about a million people.
Could they afford to lose California? Yeah, they could and that wouldn't make much of a dent. They'd have to experience the shut down of all US affiliates to really notice anything.
In CA, the state is going to tax everything they can find and/or think of, and there's still going to be a scary deficit.
Amazon will continue to sell in California, they won't have any affiliates in California. So you won't have any affiliate income from them. This is what has happened in North Carolina, Rhode Island and Colorado. Will probably happen in Illinois.
The affiliate is the physical presence in the state - known as affiliate nexus - that triggers the need for Amazon and others to collect the tax. Rather than collect the tax the get rid of affiliates so they have no physical presence.
Ah. Well, then they will lose all those fingers typing madly away to sell for them. Cutting down on the sales force is bound to cut down on the sales. Sounds like a stupid strategy if they actually did it. Easier to just collect the taxes. But then, even big companies can be notoriously short sighted.
John, judging by Amazon being able to survive and prosper under very uneasy circumstances so far, I would have thought they did their math and decided it is cheaper to cut affiliates than to collect taxes.
I imagine they are counting on the fact that most states will still have fingers typing on their behalf. I'm sure they can afford to lose California, albeit I expect they will notice.
But where California goes, others will follow. Giving advantage to some upstart company who finds a way to roll with change rather than fight it.
If California passes this, a whole lot of folks who rely on this income stream for part or all of their income become, essentially, unemployed or underemployed. So....the affiliates lose out. The state loses out. (No affiliates in the state = no taxes collected.) And Amazon walks away the winner.
The last time I looked Hubpages was located in California. So this could affect ALL hubbers who use that program if passed. How I couldn't tell, but it's certainly something to consider when evaluating cash flow sources.
It will certainly send shock waves throughout the internet. Once the taxers get their foot in the door, it will crescendo throughout the globe, and all political entities will rush to get 'their' cut. Always has. Just watch!
This type of tax has been defeated in many states. The Performance Marketing Association works with local affiliates to educate state lawmakers to understand that it won't bring in any revenue.
New York was actually the first state where it passed over 5 years ago. Amazon is fighting it there in the courts. So it's nothing new.
Many of us have spent many hours crafting our businesses to not be affected by this.
Big companies ARE "notoriously short-sighted," else why would they send so many jobs offshore, worrying only about their current bottom line, while failing to realize those folks they put out of jobs will now be unable to buy their products, so the company will go under in the end.
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