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March 1st, 2009, 01:37 PM #1
Which Merchants Will Exclude CA Affiliates? (AB 178)
- Join Date
- January 18th, 2005
FYI, from very quick research, I have compiled a quick list of online retailers who are believed to currently exclude all New York residents from participation in their "affiliate programs," to avoid application of the "Amazon Tax."
These firms are very likely to terminate their "affiliate program" relationships with California web publishers if AB 178 is enacted into law (even if it is amended from its current "overbroad" form to more closely mirror the New York law).
I started this quick research using Kevin's list at http://forum.abestweb.com/showthread.php?t=105869 (and also incorporating some of the more recent comments on that thread). I removed several bankrupt merchants, several firms which were also listed on mellie's list of "NY-affiliate-friendly" merchants, and the five California companies that were on the original list [this required locating each merchant].
Acorn Media [MD]
CSN Stores [MA]
DVD Planet [IL]
Eastwood Company [PA]
Garden's Alive [IN]
Henry Fields [IN]
Home Shopping Network [FL]
J&P Cycles [IA]
Leaps And Bounds [IL]
Michigan Bulb [OH]
Musicians Friend [OR]
Northern Tool [MN]
One Step Ahead [IL]
Oriental Trading [NE]
Palo Alto Software [OR !]
ReStock It [FL]
Spring Hill [TN]
Woodwind & Brasswind [IN]
Like Kevin's original list, this is a list of "examples," and is not intended to be a complete list of all merchants who are likely to exclude California affiliates if AB 178 passes. Certainly, some New York firms which accept New York affiliates may choose to exclude California merchants if AB 178 passes.
If I've listed any firms which now accept New York affiliates, I apologize. In addition, if any of these firms already collect California sales taxes, then the law would not affect their California affiliates. And of course, if AB 178 passes, some of these firms may choose to accept California affiliates (and perhaps reconsider their earlier decision to exclude New York affiliates).
Last edited by markwelch; March 1st, 2009 at 02:00 PM.
March 1st, 2009, 06:07 PM #2
Just a reminder the list of merchants terminating NY Affiliates was no where near a complete list. There were hundreds of merchants (well over 200) who terminated NY Affiliates. Anyone who claims otherwise is not well informed.
March 1st, 2009, 06:18 PM #3
Thanks, Mark, for starting this thread.
Mellie, other NY affiliates - can anyone add additional NY-Unfriendly merchants to this list, that thus appears to be only about 15-20% complete?
March 1st, 2009, 07:02 PM #4
Doing the Math
- Join Date
- January 18th, 2005
This thread can serve two purposes: First, it can alert California-resident web publishers about which merchants may terminate them if this law passes.
But possibly even better, it might help create some factual support for the argument that the potential increase in sales-tax collections will not offset the loss of jobs and income taxes. But that would require some hard numbers from merchants or networks.
Here's a mostly-fabricated example: several web sites report that CSN Stores had more than $200 million in revenue in 2007 (I hope 2008 was even better). I don't know what percentage of CSN's revenue comes from affiliates, nor from orders shipped to California. Assuming that 10% of CSN sales are to California residents, and that CSN affiliates drive 10% of sales, and that California-resident affiliates drive 10% of those, that's would be $200,000 revenue annually brought to CSN by California web publishers/affiliate -- so the law would seem to force CSN to make a choice between the benefits it receives from California affiliates and the burden of California's sales-tax collection.
If CSN were forced to collect California sales taxes, this would bring California hundreds of thousands of dollars in additional sales-tax revenue. But that's not what will happen (if CSN's response to the New York law is any indication).
Instead of collecting any "new" taxes, California would lose thousands of dollars in income-tax when California residents are terminated from CSN's affiliate program. (If my fabricated percentages are correct, and if the average affiliate commission were 5%, then CSN would be paying $10,000 to California residents. I suspect that California residents make up far more than 10% of CSN's customers and affiliates, so the lost income for California residents might be hundreds of thousands of dollars with no offsetting sales taxes collected.)
The problem, of course, is that based on the New York example, Amazon.com will probably begin collecting sales tax on shipments to California, which I assume will generate several million dollars in sales-tax revenue; I suspect that all other "compliant" merchants combined would collect and remit less tax than Amazon.
If AB 178 would, in fact, bring in millions of "new" sales tax dollars, then we're not going to defeat this bill unless we can show that California residents will lose more millions of dollars of income and even that probably won't be enough: we'd need to show that California's income-tax revenue would drop by more millions of dollars than the sales taxes collected.
March 2nd, 2009, 07:22 AM #5
- Join Date
- January 17th, 2005
Duh ... this war was conducted decades ago ... when sales tax was first instituted.
The same thing will happen today as 60 years ago ... merchants/affiliates will be required to pay sales tax ... and they will have to go back to paying CPM like they have done for 100 years.
What irks the merchants is not the sales tax, it's irrelevant, but the fact they cannot get FREE ADVERTISING to people from affiliates and they will have to pay for it IF they have to collect the tax from affiliates.
March 20th, 2009, 01:51 PM #6
I find it amusing that Palo Alto Software is in Oregon!
Anyway, I already posted in the friendly thread that our client will not be affected but if I hear wind of anyone who is contemplating the removal, I'll pass it on here.
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