There are A LOT of people who make money through affiliate marketing in California as it is one of the biggest states in the nation. Unfortunately, it is also a bankrupt state run by politicians who believe taxation is the way out of their mess.
Yesterday, anyone who lives in California and makes money with the Amazon affiliate program got their account closed as Governor Jerry Brown signed a bill requiring all Internet companies that sell to people in California to collect tax for the state.
This is a battle that is being waged state to state now with Illinois, Colorado, Rhode Island, North Carolina, Connecticut, New York, and Arkansas having passed similar laws and bills being pending in about 8 other states for the same thing. Bloggers and affiliate marketers living in those states are caught in the crosshairs of this big tax battle between states that think they can make more money by taxing all online purchases and Amazon who is the lone eRetailer fighting back.
Right now Amazon.com is the biggest pure online retailer and they are countering these bills by terminating all affiliate accounts of people who reside in those states. By doing that, they will avoid having to collect tax for those states because they won’t have a physical presence in the state. These bills that are being passed say that any company that has affiliates in their state have a physical presence and thus have to collect the tax. Amazon is suing saying this is unconstitutional but more importantly in the meantime, they are immediately shutting down all affiliates in each state that passes this type of legislation.
Taxing purchases on the Internet has been talked about and fought over for many years but it is really picking up a head of steam now that our country is in such a recession and states need more money. This is something that is most likely going to be litigated for years and eventually it will have to be addressed on a national level. But until everything gets figured out (and that might be many years from now) affiliate marketers in California and other states are having their businesses yanked right out from under them. All they can do is move to another state which is of course not practical for most people.
People living in the United States Of America are no longer free, that is clear. We have just had the online poker industry decimated by politicians and with it went thousands of jobs up in smoke. Now we have the assault on Internet marketers who make their living through the Amazon.com affiliate program. Clearly, making your living online these days is a risky endeavor.