How to Put Small Business Out of Business
June 30, 2011 by shannon
I just read a bit of legislation signed by Governor Brown of California called the Affiliate Nexus Tax Law. This law forces any out-0f-state company that has affiliates or a physical presence or uses a fulfillment house in California to collect California sales tax on all sales to California residents.
Essentially, every major company has dropped their California affiliates and are moving their fulfillment out of state to avoid the hefty tax penalties. I wonder if Governor Brown thought about all the lost tax income the state would incur when all 25,000+ affiliates no longer made any income from affiliate marketing. Did they really think that the giants like Amazon, Ebay and Google were going to be okay with collecting sales tax on every single sale?
This is one of the worst pieces of legislation I’ve ever seen. We are in a depressed economy and the Governor decides to sign a bill that will:
- Add more bureaucracy;
- Attempt to take more money out of the hands of the people in the form of taxes and put more money in the hands of inept politicians. California is notorious for the mishandling of tax revenues and for ridiculous waste.
- Take away the income potential for tens of thousands of residents who earn full-time or part-time incomes as affiliates essentially eliminating more tax revenue from the state;
- Force companies to not do business with any fulfillment house, shipping center or reseller in the state of California costing business owners potential millions in sales;
- Cause residents and businesses to move out of state;
- Cost business thousands in accounting and programming fees as they scramble to figure out (1) How to collect Ca sales tax; (2) reprogram their shopping carts; (3) pay a bookkeeper and/or accountant to manage California sales tax collections and payments.
This bill obviously was not carefully thought-out. There is a HUGE downside to mandating out-of-state companies to pay sales tax across state lines.
Here’s a comment from AffiliateTips.com: This has been a huge hit to me. I make a lot of money from Amazon and this has had a huge impact on my income and now I must seek out other options. I’ve also had at least ten other affiliates close my accounts. Another hit for California residents… unbelievable! – Candice.












