California Studies New Affiliate Tax
February 22, 2010 by Jim Hedger
Filed under WMR Blog
The state of California is again studying the implementation of a tax on sales of goods or services at Amazon.com and other affiliate programs. A similar measure passed by the state house and senate was vetoed by Governor Arnold Schwarzenegger in the autumn of 2009.
As it stands today, California residents are supposed to declare the value of all online purchases. The effect of this legislation transfers responsibility for paying taxes on online purchases from consumer to seller. Naturally, online merchants are reluctant to visibly increase prices by 8.25%. Affiliate programs are also reluctant to assume the costs of calculating, tracing and paying sales taxes in differing jurisdictions.
Facing an estimated $20Billion budgetary deficit, the state government is believes it can reap over $175million from a California affiliate tax. Unfortunately, the state legislators might not have thought this plan fully through.
The introduction of similar taxation programs by other state governments have resulted in affiliate networks abandoning those states. When affiliate programs leave a state, they also leave all affiliate marketers in that state. Ultimately, the effect of affiliate taxation tends to be a reduction of realized revenues as the state loses taxes on the incomes of those affiliates.
Recently, a coordinated effort in Colorado led to the alteration of a tax on online sales to exempt affiliates. WebmasterRadio.FM will watch the California situation and inform readers and listeners on how they can participate in opposing California’s latest efforts to impose such a tax.
