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  1. #1
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    Beware -- Georgia Tax Law could be an omen for other states
    Some very strange things have been happening over the past several weeks in Georgia. We're now on the eve of the passage of a tax bill that contains a provision to allow the state to tax online merchants who have affiliates in the state. The tax bill passed the Georgia House by 155-9 on Tuesday, and is scheduled to be voted on in the state senate tomorrow or Friday. Below are my comments from a post on the Georgia subsection of this topic:

    "I've been giving this some thought, and there is something that has been bothering me.

    We can mobilize affiliates all we want (and beat ourselves up for not having enough representation), but our voices amount to nothing.

    On one side we have the powerful lobbyists for the brick and mortar stores, and their undue influence over clueless legislators. (And in Georgia, a clueless governor)

    And on the other side ----? Nothing. Where are the lobbyists for amazon.com and the other Internet merchants? Nowhere to be found. That's very interesting, because there is a very powerful story here that's not being told. The supporters of the Internet tax for Georgia say it will bring in $47.7 million per year in ADDITIONAL tax (that's over and above what macy.com, sears.com, nordstrom.com, etc. will be remitting to the state anyway). That additional money will supposedly come from amazon.com etal.

    That, of course, is baloney. After all of the affiliates are terminated, the net increase in sales tax revenues will be $0. And, a key part of the tax bill will collapse. This is what happened in other states, and the template is already set up for our termination.

    Plus, of course, the state will lose the income tax we have been paying as affiliates.

    So why wasn't this covered? Why didn't the online merchants provide this as background info to the state legislators and the press? Why didn't they spend a tiny amount of their revenues and hire a Harvard or Yale economics professor to do a "study" of what happened in other states that have enacted similar legislation? Why indeed? This is a guided missile that was never fired. In fact, not even a toy pistol was fired. Nothing. Nada.

    I think I have it figured out, and we're in the middle. I don't think our merchant "partners" give a flip about us. We're expendable. Maybe this is even good news to some of them, because they can dismantle their affiliate programs slowly, state by state, until they no longer have the expense of administering them.

    So when we get it in the head this week with the passage of the tax bill, I think we have our merchant partners to thank. I know they have a very special place in my heart now (sarcasm intended). "

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  3. #2
    ABW Ambassador simcat's Avatar
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    I think the local legislators have to know (by this point), that these bills/taxes don't create any new revenue.

    IMO what's going on is...

    The "create revenue" angle is just smokescreen. The local govt.'s and big box stores are just teaming up to strike a blow at the online retailers. After all, when people buy from AMZN, the $$$ just goes out of state, goes to a competitor, doesn't support local jobs, etc.

    Of course AMZN won't go out of business, but they end up 'losing' their affiliates. And those do supply a certain % of exposure and sales. Otherwise, why would AMZN have them?

    Also... if AMZN wanted to close their entire aff program, they would just do it, like other co.'s do everyday.

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  5. #3
    OPM/Moderator Hectic GHC's Avatar
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    Quote Originally Posted by simcat View Post
    I think the local legislators have to know (by this point), that these bills/taxes don't create any new revenue.

    IMO what's going on is...

    The "create revenue" angle is just smokescreen. The local govt.'s and big box stores are just teaming up to strike a blow at the online retailers. After all, when people buy from AMZN, the $$$ just goes out of state, goes to a competitor, doesn't support local jobs, etc.

    Of course AMZN won't go out of business, but they end up 'losing' their affiliates. And those do supply a certain % of exposure and sales. Otherwise, why would AMZN have them?

    Also... if AMZN wanted to close their entire aff program, they would just do it, like other co.'s do everyday.
    I will not argue with that, except that the majority of legislators are old farts that have no idea what affiliate marketing is. Even after it's explained to them they say, ok, thank you, I'll take that into consideration.
    Greg Hoffman
    Affiliate Marketing Advocate of the Year 2016; Best OPM/Agency - 2014; Best OPM/Agency, Five Years in a Row - ABestWeb.
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  6. #4
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    Quote Originally Posted by simcat View Post
    I think the local legislators have to know (by this point), that these bills/taxes don't create any new revenue.

    IMO what's going on is...

    The "create revenue" angle is just smokescreen. The local govt.'s and big box stores are just teaming up to strike a blow at the online retailers. After all, when people buy from AMZN, the $$$ just goes out of state, goes to a competitor, doesn't support local jobs, etc.

    Of course AMZN won't go out of business, but they end up 'losing' their affiliates. And those do supply a certain % of exposure and sales. Otherwise, why would AMZN have them?

    Also... if AMZN wanted to close their entire aff program, they would just do it, like other co.'s do everyday.
    Some good points. But what could possibly be the reason for the passive approach amazon.com and other merchants have taken on this issue? I think that's a very important issue, because it sets the stage for what is going to happen in other states this year and next. This isn't a battle anymore -- it's a waltz down victory lane by the brick and mortar merchants and their lobbyists.

    So get ready affiliates in other states -- this scenario could be coming to your state very soon.

  7. #5
    OPM and Moderator Chuck Hamrick's Avatar
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    Amazon is playing the odds that there are still plenty affiliates in other states that will fill the void. The hit to conversion and the competitive advantage that Amazon enjoys is their justification to let state after state force affiliates out. Plus there are two benefits to doing this, both negatives to affiliates. That the loss of income to affiliates as well as loss of state income tax will be felt by the state sooner or later. And that a 1000+ angry affiliates will make some noise.

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