An Arizona Affiliate Nexus law is under consideration in committe. I just read this on another forum. It's password protected so I can't post a link.
"I testified at the House Commerce committee in Phoenix on Wednesday - it isn't good. The committee passed the bill unanimously, but we expected that because the Retail Association is very powerful and helped sponsor the bill initially. There were 2 retail store owners who testified (inaccurately but passionately).
We have some support from legislators, even the bill sponsor, and all they're asking for are some examples of Arizona affiliates. We need to make this personal, we need to give names, faces and websites to legislators."
So you need to contact your legislators and put a human face on the Arizona Affilate. For more help contact the Performance Marketing Association.
Good luck. I hope that plenty of people see this post and contact the appropriate people. Have you considered writing a hub on it?
Wow. Well, as someone who lives in the UK, I find it amazing to see entire states cutting of their noses to spite their face.
Surely they realize that Amazon will simply cut Arizona affiliate marketers out of the loop,but us English and Indian affiliate marketers will take up the slack.
It's quite exciting seeing all the opposition being nobbled by their own country.
Heck, i thought only British people had politicians this dumb.
In Europe Amazon collects and pays VAT. If I buy from Amazon UK - they charge me French VAT and pay it to the French Government Inc. because that is where I live.
In the states - they do not, because what they have is individual state sales taxes. So - you can buy something from Amazon and avoid paying the sales tax.
If you think about it - this is unfair on the bricks and mortar stores, because they have no option but to charge and collect sales taxes. When the tax laws were written - there was no Internet and very little inter-state trade.
Amazon made 9 billion in sales last year - none of which had sales taxes paid. You think the Government Inc is going to let that slide? This is unavoidable. They will cut off their income tax nose to spite their sales tax face. I don't know the total amount of sales across the internet - but it must be huge.
Politicians are not dumb - they are just doing what they have agreed to do - tax their citizenry into oblivion for the benefit of the banks.
Is it short sighted? Oh yes. Will it damage the citizenry in the long and short term? Oh yes. But - the government Inc gets a bigger slice of the pie to pay the bankers.
I think it is unavoidable. Not that it should not be fought against - you never know, but there is too much potential revenue to ignore.
If you buy a low value item from Amazon.co.uk it is shipped from Jersey or Guernsey, where they pay no VAT at all. Also unfair to Bricks and mortar stores. Think it is items under £16.
If you buy several books and dvds in one go from Amazon.co.uk they are all shipped seperately, in order to keep the value of the goods shipped at under £16
One thing you have to realize is that the government is going to take whatever it wants. It doesn't matter if it's a income tax or sales tax or property tax.
Here is one example: They lower the property tax rate then they raise the valuation of the property. They end up with a net tax increase while blowing about how they reduced your property taxes. They are going to get you coming and going. There will never be a "true" tax reduction, til the government goes broke and has to start over.
Nope this is all that I'm doing. Other folks the ones that live in Arizona need to deal with this. States rights are very big in the US.
I just want people to know that they have time to be heard and defeat this.
(I'm busy writing websites that only include merchants who already collect sales tax in Massachusetts to protect myself and my biz.)
Maybe I will write a hub on how I hope to take advantage of the potential for affiliate sales as more and more US affiliates get the boot because of tax laws. It sounds like it could be a fun one to write that good folks like yourself could use when trying to take action to protect your livelihood. I wont turn down a way to create a residual income for myself with someone like amazon when others can't but I don't need others put out of business to do so either. Frankly if I can succeed with lots of affiliates to compete with, while there is a global recession going on then I know I can succeed period. That is what I really want, to be able to succeed in creating a reliable residual income stream
Going to have to wait on the hub tho, might take a bit of time to work out what I want to say exactly and how of course
Good cue Nelle.
Kirsten you can follow Performance Marketing on facebook if you're looking for written articles to share. Texas is the latest state I believe.
I feel truly sorry for any Amazon affiliate who has, or will in the future, lose their accounts.
Although I think that this shows a much wider need for all states in the US to create an entirely level playing feel, equal tax rates throughout.
I read an argument from the "other side" recently from a retailer with both an online and offline physical presence, who used Amazon for his online sales and his stores for offline sales. I forgot to bookmark it, unfortunately.
He supported the tax in his state (think it was Texas) and used Borders and another major struggling corp as an example. Borders are due to file bankruptcy at the expense of 19,000 jobs. Their biggest competitor was Amazon who had a distinct competitive advantage as a result of tax disparities.
Whilst I am not really sitting on any side, I do feel as if the solution is a single central government set tax rate with states effectively working to whatever budget they achieve with the subsequent level of income. If that were the case, Amazon would not pull out of America entirely, they would have to put up with it.
Ryan this is the United States of America. A national sales tax will never happen, nor should it. We believe in local grass roots power and taxation. We have a Constitution that guarantees it.
National control of any sort in this country is nearly impossible. And I for one like it that way.
I don't want people in Arizona or South Carolina telling me how to live and believe me, they don't want me telling them how to live.
These laws are not a done deal. They have been defeated. The Arizon situation sounds like the state lawmakers are begging for affiliates to give them a reason to defeat it.
I believe eventually Amazon would cease to have an affiliate progam and would move in a different promotion direction, if these taxes become universal.
To be honest, I don't see why the federal government would need to set a national sales tax. Why couldn't they just impose a regulation using the commerce clause to allow states who opt in to require online companies to collect local state sales taxes from their residents even if the company doesn't have a physical presence in that state?
Then again, I don't understand the US political system at all.
I don't think most Europeans understand that we are really 50 independent little countries bound by a weak (by your standards) central government.
In the US constitution there is a clause that says all powers not specifically granted to the federal government revert to the states. That's why the battle over national healthcare regs - among other things.
We rallied round in 1776 and 1787 to unify a litte to defeat the British. Most of our founders did not want the Federal Government to usurp the powers of the states.
You still see the battle today over states rights and Federal intervention in all sorts of issues. We are a young country, still working this out.
But the whole point is - and really what happens in Arizona doesn't really affect me too personally, so my misery is minial - that Arizona affiliates need to organize now. I'm off to work on other projects for the day.
You are right, you all know better than me
I guess that I was just being hypothetical, rather than practical or helpful, I certainly wasn't suggesting that anybody lobbies government for a flat rate national tax as opposed to fighting for their livlyhoods.
I hope that you are right, and that the Arizona officials are looking for a way to reject the tax, particularly as it may help to halt the chain of dominoes.
With a bit of luck it will get rejected by Texas and Arizona and the whole thing will blow over in favour of something entirely different.
Arizona is broke and desperate. This tax could become real. The state is truly in financial despair. I will, for one, look into this and do what I can to defeat the tax. Thank you for your help. If it happens here in Arizona, your state might be next.
@Ryan - I just wanted to comment on something you said about Borders going under because people are flocking to Amazon because there's no sales tax. Unless you're buying a very large-ticket item, you just don't save that much. Think about it -- what you save on sales tax, you pay in shipping charges. Let's say you buy a $20.00 book from Amazon. Sure, you may save a buck or two on sales tax, but you're surely going to spend that much -- if not more -- on shipping charges. Buy a $500 television and you save more on taxes, maybe $30 or $40 bucks, but you spend a lot more on shipping and insurance.
People buy from Amazon for convenience. Full stop.
Do they though? Or do they buy on Amazon for the cost savings? Borders also has an online store, I found the five current bestsellers on Amazon at the moment and recorded the price:
Heaven Is For Real: $8.96
Disciplined Dreaming: $14.82
Unbroken: A World War II.. $13.99
Baseball Prospectus 2011 $12.62
The 4-hour body $13.98
(All eligible for free super-saver delivery over $25 spend)
Then I checked the same on Borders.com (they pay sales tax)
Heaven Is For Real: $9.28
Disciplined Dreaming: $26.95
Unbroken: A World War II.. $13.99
Baseball Prospectus 2011 $12.62
The 4-hour body $14.12
(All eligible for free Bonus Rewards shipping over $25 spend)
Total: $76.96 (2 prices matched)
Borders have a clear competitive disadvantage over Amazon even if you ignore their offline stores, because they pay sales tax. It is clear to most that Amazon is cheaper than most places for almost anything.
If you have a cost that a competitor doesn't have then you are seriously hindered. The same thing happened in the UK, Amazon moved to Jersey to avoid VAT. What happened next? Hundreds of companies did the same thing, because otherwise they simply wouldn't be able to compete with Amazon on price (VAT was 17.5%, that is 17.5% less that they could charge immediately).
Not many people will spend $20 on a book on Amazon without bumping their cart up to $25, as shipping for most things on Amazon can be completely free.
No sales tax & free shipping V those online and offline who pay and subsequently charge sales tax.
Whilst I don't want anything to happen to Amazon, clearly I benefit from their business model, the argument that no sales tax gives them a competitive advantage isn't an entirely unjustified one.
Good points (as always), but we're talking apples and oranges. Does it give them a competitive advantage? In many states, yes. (Although I think their lower prices give them a much bigger advantage than sales tax.) Is that competitive advantage at the forefront of people's thinking when they choose Amazon for their purchases? For the most part, I don't believe so. I think you have to be a very savvy shopper to realize that you can get free shipping from Amazon if you do X, Y and Z and then actually go ahead and do that. I think we're all just so used to paying tax on stuff, we're just kind of used to it. I'll be honest with you -- I never even gave it a second thought until Nelle started talking about these laws a while back.
The reason why I said "in many states" is because when we file our federal income tax return, we can deduct either the amount we paid for our state income tax that year OR the total amount of sales tax we paid throughout the year. I used to live in Florida where there is no state income tax. (I think there are around 10 states that don't have a state tax.) Believe me -- everyone I knew kept every receipt for everything they purchased throughout the year and they deducted the total amount of sales tax paid on their federal tax returns. It wasn't big bucks, but it gave them the feeling of winning one over Uncle Sam.
BTW, it's late there. Are you pulling another all-nighter?
Amazon even undercuts the Apple Store on the Apple MacBook Pro and iPods, as a result of not paying sales tax, their entire business model is built upon achieving a small cost saving.
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