How's this for stupid? New York state brings in a new tax law that makes out-of-state businesses with New York based-affiliates collect sales tax on Internet purchases made by New York State residents, if the company's affiliate sales in the state exceed $10,000.
By result, merchants that don't want to deal with additional tax collection are dumping their New York-based affiliates.
Overtstock has notified it's 3400 New York based affiliates that they've been dumped effective June 1st, 2008. One New York-based affiliate on Shawn Collin's blog commented that he'd already been dropped by 4 Linkshare merchants.
Amazon, on the other hand, will collect the tax but it is also suing New York state for introducing a law that it deems unconstitutional. Bravo, Amazon!
Brian Littleton of ShareaSale reports on his blog that he is reluctant to give merchants access to information normally considered private and that he'll warn merchants that “that terminating NY is a bad plan – and one that needs rethinking.”
Brook Schaaf of MediaTrust has put out a call to all affiliates proposing a new industry association.
Appears to me to be a lose-lose-lose situation.
Consumers won't be keen to pay the additional tax, so they'll buy less. Merchants that terminate affiliates will earn less. And in a state where more than 1.86 million residents (about 1 in 10) are already food stamp recipients; New York's affiliates will earn less, thereby reducing tax inflow and increasing the size of the breadlines.
This ploy to weasel $50 million bucks more out of New York taxpayers' pockets is especially heinous considering how ordinary citizens are already having a hard time making ends meet with high prices for food, fuel and escalating unemployment.
What a great contribution to an economy already in shambles… not.
Are you an affiliate living and working in New York state? Has your association with some merchants been terminated recently due to this new law? How do you think that will affect your bottom line? Please share your thoughts by leaving a comment below.