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New Jersey Hates Affiliates

New Jersey Hates Affiliates

by Pace Lattin2012-03-11

New Jersey had decided to become part of a long line of  States that will try to pass a law that will tax affiliates.  It seems that State Senators Paul A. Sarlo (R) and Raymond J. Lesniak (D) have been watching Jersey Shore to get some of their economic ideas. The have introduced Senate Bill 1305 that will institute a new tax on those who are making a living as affiliates in the Garden State.

The idea behind these affiliate taxes is to impose a tax on online stores in a State, if the retailer has any affiliates in that State. The idea is that an affiliate suddenly becomes a representative of the company and establishes a physical presence in that State. The claim by those making the laws is that it helps the small “brick and motor” companies in those states. However, as I’ve written before, Walmart is behind the Affiliate Taxes

The fact is that for the few states that have passed these laws, the same things happens: companies “fire” all their affiliates in those States, and retailers start to refuse to work with an internet marketing companies on a cost-per-performance out of fear they will have to pay more taxes. Despite overwhelming support from Constitutional scholars that any internet-tax is unconstitutional, politicians who want big donations from Political Action Committees supported by Wal-Mart, introduce these laws even though most are doomed to fail.

Affiliate Taxes do one thing: Drive businesses out of a state, and cause online retailers to stop doing business in that State. There is absolutely no proof whatsoever that in any State that has passed these laws, that any significant taxes have been collected. That’s because all the retailers just cancel any affiliate contracts in those states effective immediately, and the State has nothing to collect.

On the other hand, if NJ would heavily taxes tanning lotion and hair extensions, the State would probably make millions.

About The Author
Pace Lattin
Pace Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.
  • 2012-03-12 at 11:35

    On the other hand, if NJ would heavily taxes tanning lotion and hair extensions, the State would probably make millions.

    LOL, you got that right! 🙂

  • Russ P
    2012-03-12 at 11:48

    So there’s nothing in this article about Snooki other than that it’s about New Jersey?

    That’s like including Mark Zuckerberg in a headline about the affiliate marketing tax since they both involve the internet.

    I get it, you’re trying to attract eyeballs. But it’s annoying to see Snooki and New Jersey be defined as one and the same.

  • Raquel
    2012-03-12 at 11:49

    epic FAIL if they pass this law.

  • Jason
    2012-03-12 at 12:00

    As if anyone needed ANOTHER reason to move out of New Jersey, LOL.

  • Hugh
    2012-03-12 at 13:57

    I have been looking to relocate to South Florida… maybe my wife will bite on this one… hehe

  • 2012-03-12 at 15:01

    Honestly, if I were head of a major online retail company I wouldn’t do business in states imposing those types of laws either. The internet was made to cross boundaries while laws like these keep online retailers bound up in states that they do not physically have a headquarters at. Even Snooki ought to be able to see through this one!

  • 2012-03-13 at 05:08

    This is bad news… Let’s hope this trend doesn’t spread!

  • 2012-03-13 at 14:03

    Why hasn’t there been more coverage of this? Haven’t seen anything on PMA website, and not too much elsewhere either…

  • 2012-03-19 at 03:01

    What a bad news…Hoping that other states/cities will not impose this.. 🙁

  • 2012-04-02 at 08:42

    That is bullying at it’s best by WALMart

  • 2012-06-25 at 14:53

    This is already the case in many countries actually. In Europe, affiliate publishers get taxed on any income. The affiliates themselves have to pay normal taxes, just as if the transaction had been made in a store..

  • 2012-06-27 at 13:49

    Has any stated actually passed the law or is it sill just a suggestion?

What's your opinion?