Governor Jerry Brown of California has signed his budget into law, which includes the affiliate nexus tax.
The affiliate nexus portion of the budget forces out-of-state retailers to collect California state sales tax for Internet sales, based on the view that affiliate marketers constitute a tax nexus for the retailers.
The immediate reaction by countless online retailers, in what promises to be a huge list, is that they will remove the affiliates of California from their affiliate programs, so they still do not assume a tax nexus.
Simple summary for California politicians: no additional tax revenue will be collected.
Amazon already informed their affiliates that they’re out on the street.
And with scores of affiliate marketers fired by these retailers, California is going to lose a big chunk of income and income tax.
Congratulations to the CA lawmakers and Governor Brown: you’ve managed to deepen your huge deficits through some misguided bureaucracy.
Back in the spring, the state of Illinois passed a similar law, which forced super affiliate FatWallet.com to move from Illinois to Wisconsin, so they could remain in business.
How many companies in California will now be leaving the state like FatWallet for places that are not hostile to economic growth and job creation?
More details on the California affiliate nexus tax from the Performance Marketing Association.