CT Latest To Attack Amazon Through Affiliates

Connecticut is not quite there yet, but they’re considering it. They’re the latest in a growing number of states attempting to force Amazon.com and other large Internet retailers to collect state sales tax due to a “nexus” in their states composed of affiliate marketers.

Connecticut, like several other states, is trying to find its way around a 1992 U.S. Supreme Court decision that held a state cannot force businesses to collect sales taxes unless they have a physical presence within that state.

So, the poor Connectcuttian(?) sitting in his home office that puts an affiliate link on his web site means that Amazon has a physical presence in their state?I wrote about this earlier (Bad News For Some Amazon Affiliates and Affiliate Marketing Trade Firm Helps Amazon) and it appears states just continue to hurt affiliates, their own residents,  in the name of, what… more taxes?

Amazon is threatening to do what it has done in every other state that’s tried this except New York, where it is in a legal battle, and that is fire all of it’s affiliates in that state.

Who does this help? Not the state, which won’t see a penny more of sales tax, not the big retailers who lose affiliate sales, and not the affiliate who loses his/her income from commissions on Internet sales.

All states that I know of that charge sales tax have a law on the books stating that residents who buy products online are still required to pay state sales tax on the purchase (we all do that, right?).  In Connecticut that resulted in one half of one percent of sales tax receipts.

I remember when the federal government levied a 10% surtax on all boats sold for over $100,000. What happened? Boat manufacturers went out of business, laid off employees and the government made less money than before.

The government hasn’t learned what every small business owner learns… if you charge too much you lose money. If you sell 1000 widgets for $3 you make $3000. So hey, if you charge $30 you’ll make $30,000, right? Wrong.

Government is made up of lawmakers who don’t understand the law of unintended consequences.