Many state lawmakers seem to be willing to do anything these days to rake in bigger bucks from the private sector – no matter what might be the impact on the economy. I believe it’s called “cutting off your nose to spite your face.”
Consider what’s become known as the “Amazon Tax.”
North Carolina is poised to force out-of-state online retailers to collect sales taxes if they have in-state online marketing affiliates. What is an in-state online marketing affiliate? Quite simply, if you have a website and happened to be an Amazon.com affiliate – that is, run Amazon.com ads on your site – then you are a marketing affiliate. That means Amazon.com would have to collect sales taxes on any purchases made through those links.
In reaction to this looming tax increase, Amazon.com eliminated its affiliate program in North Carolina on June 26. Amazon.com also announced it was ending its relationship with affiliates in Rhode Island on June 29 and with affilitates in Hawaii on June 30, due to similar forced tax collections.
And according to the Wall Street Journal, Maryland, Minnesota and Tennessee have rejected such laws.
New York passed an Internet sales tax law that is being challenged in the courts.
Based on the U.S. Supreme Court’s 1992 Quill decision, any sales tax imposed on out-of-state retailers without a nexus in state does not pass constitutional muster. And the idea that individuals and businesses setting up ad links with Amazon.com qualify as in-state operations is preposterous.
In the end, guess who gets hurt most? That’s right – entrepreneurs and small businesses. As the June 27-28 Wall Street Journal reported: “‘The sad irony of this issue is that the “Amazon Tax,” as the North Carolina General Assembly calls it, will not collect any taxes – it will only cause lost revenue for North Carolina businesses,’ said Bob Butler, the chief executive of BestThinking.com, a former Amazon Affiliate based in Cary, N.C.”
The small businesses that earned revenue from Amazon.com’s advertising affiliates program will lose those earnings.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
No comments:
Post a Comment