Performance Marketing Alliance Challenges New York’s Affiliate Marketing Tax
I always find it funny that many politicians’ belief the way out of a recession is new taxes. You do not have to have a Ph.D. in Economics to realize that people with less money will spend less. As people spend less then less products are sold. When less products are sold, companies begin to layoff workers. Anyway, that is the cycle, whether politicians choose to believe it or not. New York State followed this great tradition by levying new taxes against online affiliate marketers.
Online affiliate marketing was one of the last vestiges of true capitalism. Online affiliate marketers were online salespeople. They made companies (i.e. Amazon, etc.) to advertise their products. In return, the companies would provide the online affiliate marketers with a commission check. Online affiliate marketer commissions were one of the last types of income that government did not directly tax. Do not get me wrong, the government still got part of this money. When online affiliate marketers bought products, put gas in their car, invested the money, or even died then the government got their piece.
Several state legislature was not content with waiting for online affiliate marketers to pay these embedded taxes. These legislatures decided they wanted to tax online affiliate marketers directly. Clickbank reported, “In late June, Amazon terminated its marketing affiliate program in North Carolina after a new law took effect that will tax affiliate sales, and on July 1, Overstock.com notified affiliates in Hawaii, North Carolina and Rhode Island that it would immediately cease doing business with them because of similar new tax laws” (ClickBank Stands by Affiliate Marketers Despite New Tax Laws, 2009).
Amazon was one of the largest retailers to begin cancelling their online affiliate marketers. Amazon decided that it was not worth the hassle to deal with these new taxes. Instead, they just notified their online affiliate marketers that because of their state laws they would not longer be able to work. It makes sense to me. We are in the middle of a recession so pass a tax that costs more jobs. Ok, that logic only makes sense to politicians.
Performance Marketing Alliance is fighting for online affiliate marketers everywhere. In a blow for online affiliate marketers everywhere, Performance Marketing Alliance filed an amicus brief with the New York State Supreme Court. In his Affiliate Marketing Blog, Shawn Collins reports:
“The brief explains that affiliates provide a form of Internet-based advertising that is closely analogous to traditional print advertisements distributed by a catalog retailer, and do not constitute a physical presence for an ecommerce merchant in any state. Affiliates sell no products, collect no payments from buyers and make no deliveries. They have no further involvement in the sales and marketing process beyond posting the advertisement.”
The brief maintains that the statute harms the public interest by punishing performance marketing, a highly efficient approach to advertising which has allowed thousands to make a living through electronic advertising on the Internet. Further, the revenue stream generated from performance marketing has allowed many small businesses and individuals to accelerate the development of their Web sites, facilitating the more rapid diffusion of free information to the public that is the hallmark of the Internet” (Performance Marketing Alliance Files Amicus Brief with New York State Supreme Court, 2009).
The State of New York has until September 16, 2009 to answer this brief. My hope is that legislators, across this country, will come to their senses. Online Affiliate Marketing provides extra or full time income to thousands of people This is not the time to strangle the country’s online affiliate marketers.
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