I copied the title of this post from Ken Rockwell. Speaking of Ken: you might not have him to kick around for much longer.
So let me just ask you: do you think you don't have to pay sales tax on mail-order purchases you make from other states? If so, you're not alone. But it's not true. Actually, the difference is that you—the buyer—are personally responsible for remitting the sales tax on items you buy that way—the seller is not responsible for collecting it from you. The reason nobody actually pays it is because states have no feasible way to track what you owe them and no jurisdiction to punish you if you don't pony up.
And therein lies the rub. A battle is brewing. (Actually it's been brewing for a while now.) California is making a second attempt to force giant internet suppliers like Amazon to collect state sales taxes. Amazon, and other mail-order discounters, are relying on a 1992 Supreme Court decision which held that retailers do not have to collect sales taxes in States where they have no physical presence—stores, warehouses, offices, that sort of thing.
This frustrates California lawmakers, who want the "e-tailers" to collect the state's taxes anyway. So they're trying an end-around: they're saying that the presence of affiliate websites in the state amount to a "physical presence." That means people like Ken, who lives in California...and, over here in Wisconsin, me. Ken puts a link to an Amazon product on his website, a reader of his buys it, and he gets a "commission." The commissions are small, but they add up. That's how websites like his (and mine) provide us with a living, or part of one. It's a nice system for us. And for you, because only sites that attract lots of readers are able to generate appreciable income. So, by definition, it's only the popular sites—the sites lots of readers like—that become effective affiliates.
I don't have any problem with people paying taxes. The problem is how Amazon and other "e-tailers" are intending to fight the battle. If the California legislature passes a law saying affiliates amount to a physical presence in the state, then Amazon is just going to cancel its contracts with all its affiliates in California. No more affiliates, no more "physical presence" under the new law, and Californians can keep ordering from Amazon without Amazon having to collect sales taxes from them. The new law is neutralized.
Trouble is, California affiliate sites would then become "collateral damage." People who previously cracked their personal nut with affiliate income would be out of business. Lots of Californians who have painstakingly built up internet businesses would be suddenly out of work. Bye-bye KenRockwell.com. And, if Wisconsin follows suit and is similarly cut off by Amazon—or if Amazon just decides to stop its affiliate program nationally because of headaches with conforming to a patchwork of state laws—bye-bye TOP.
I'd have to go get a real job. Wouldn't be the worst thing in the world. I'd survive; people survive worse things every day. (To quote Yitta Schwartz, from this rather astonishing article, "When there are so many problems in life, I should put myself on the scale?") The main thing that would make me sad is that I feel I'm kinda good at this job, and probably wouldn't be contributing as much to other peoples' happiness if I were spending forty hours a week selling shoes or used cars. (Not that there's anything wrong with that. I've worked worse jobs.)
Let's just say I'll be watching developments with...interest. Gulp.
(Thanks to Lynn Burdekin)
Featured Comment by Hudson: "Part of the problem is that there are 11,000+- sales taxes in this country. Okay Mike I just bought a thingy from you, I live in State, County, City, School District, Mass Transit District, Billionaire Sports Owner Stadium District, Development District how much sales tax do you collect? In my state we have to only keep track of about 4 sales tax rates, and they do not match up with zip codes (idiots). If there is going to be a tax on internet sales, it needs to be one tax for the whole country, if I had to keep track of 11,000 tax rates, I would just give up and go out of business."
Featured Comment by Patrick Henry: "This push is actually coming from Wal-Mart. Wal-Mart is lobbying heavily for this. You can imagine why. The Wal-Mart lobbying is subtly mentioned here. Yet another reason not to shop at Wal-Mart."