Do Lawmakers Really Know Their Economics regarding the Ad Tax?

Ad Tax mania is sweeping the nation and the cry is "not fair to our brick and mortar stores"! What are they really saying here? What is not fair to the brick and mortar stores? Any brick and mortar store is perfectly free to open and market their own e-commerce web store. They can sell online just like anyone else can, but for some reason lawmakers in state after state are touting their merchants as "victims' of the evil online economy where taxes are not collected by out of state merchants on purchases made by their state residents.

What nonsense this is. The entire argument is false and misleading for many reasons. When we fought the Ad Tax bill here in Colorado I actually felt sorry for the democrat senators who obviously did not comprehend the bogus position they were taking. To them, the internet marketing world was the enemy, and they intended to punish it for taking business away from their little local brick and mortar stores. Why do they think this way?

First off, these people, along with many others from all walks of life, have been very slow in understanding the massive shift in consumer habits that has been taking place for the last 13 years. The reality is that smart store owners are setting up e-commerce web stores all around them, but still selling directly to the walk in customer. If they get a sale from an out of state customer from their website, they also do not collect sales tax for that other state. With very few exceptions, brick and mortar merchants are doing exactly the same thing the big online retailers are doing.

Some are not opening online web stores at all, and they are doing the "least best" in communities where small business stores on the street are dropping like flies. The smart merchants are selling to the people who walk in, and to the visitors who find their websites. In Colorado, I know many such smart merchants who sell both ways. They were very quiet during our debates and meetings. They also belong to the merchant associations who are pushing lawmakers to pass the Ad Tax. We were successful in getting lawmaker's attention here, and the so called "affiliate nexus" language was left out of our bill, which makes Colorado a Pioneer in this push to punish the internet. It is rife with complication and future legal challenges. We will have to wait and see how it turns out.

In all these states where the Ad Tax is being argued, this mantra is being shouted out, with no attention to the fact that their own brick and mortar stores are taking advantage of the internet economy in exactly the same way. Unfortunately the so called "affiliate nexus" named by courts in New York is being used as language in these Ad Tax bills they are trying to ram through with their legislative efforts. By doing this, they are actually punishing their own small business people who run online advertising services with the affiliate marketing model. Big retailers immediately terminate these people's accounts and they are left out in the cold.

Sadly, when such bills pass the state gets no revenue at all. On top of that, they kill their own small businesses working in that space. The states who pass these Ad Tax laws with the so called "affiliate nexus" language are actually wrecking their own state economies. Why are they so willing to do this to themselves? Is it because they do not understand the basic economics of how business operates in their states? Yes, I believe they are ignorant of the facts. States are taking the spirit of the law and our constitution and tossing them out, and replacing these with bad laws based on misconceptions and false economic assumptions. It becomes an emotional issue, not a logical one.

Government has to wake up and see the light before it is too late to save our juggernaut economy from crumbling. It all worked fine until New York took the law into their own hands and began the most destructive wave of business killing ever seen in our history since WWII. New York lawmakers and judges are making a new law unto themselves to smugly say, "we don't care what the Supreme Court of the US said in the past about nexus. We have redefined it for our purposes." (my own version of what their actions indicate)

Now the Ad tax is being actively considered in Connecticut, and our fellow affiliates are there informing the lawmakers of their misdirected folly and hoping to reach them with good and sound knowledge they can use to make a decision that is right for the state. Affiliate Marketers in every state are building their respective economies, not tearing them down. Yet, these affiliates are being targeted in the bills due to the use of the language of the so called "affiliate nexus" from NY. Sad state of affairs for our industry.

More updates are available at Affiliate Advocacy

There are many aspects to the Ad Tax itself, but none more sad and misdirected than the one which seeks to "level the playing field for brick and mortar merchants". It amounts to "sour grapes" in the arena of logic and economics, but it carries weight due to the emotional influences. To sum it all up, "it's the economy stupid"!

Ultimate Press Release System - Big Hitter