The recession is hitting many of us hard. We look at our retirement accounts and see that they're significantly smaller than they were before. I've got a few years to go before retirement, but many people don't have that luxury. Today, I was at an office furniture store and met a man, Bill, who, after a very successful career, found himself on the sales floor. He had looked at his 401K and there just wasn't enough there. His wife, who retired after a 20+ year career with IBM, found herself in the same position. Bill works for the office furniture store four days each week and then works with his wife at the antique shop where she works another two days each week. He seems happy about it, and some studies say work may help him live longer. That's a choice that we would hope to make freely at that age, not under duress.
While many, like look to traditional brick-and-mortar type businesses to supplement their incomes or retirement funds, others are stepping out onto the digital frontier. Internet based businesses are sprouting up everywhere. People can make a good living online, in part, through affiliate programs. The Associated Press reports on a man who makes $80,000 each year through affiliate marketing. More than half of that is coming from a single affiliate -- Amazon.com.
Individuals are not the only ones who are feeling the pinch of the recession, though. State governments are hurting for money and looking for places to find revenue. For years, online retailers have been exempt from charging sales tax for online purchases, with a few exceptions. Typically, the exception is for states where they have a physical presence.
Now, legislatures are looking to the affiliate programs as a potential cash cow. Several states, like North Carolina, Hawaii, and Rhode Island, are looking to require online retailers to charge sales tax in any state where they have an online affiliate marketer. For retailers like Amazon.com, there are few states where they do not. As a result, these businesses are cutting their losses and ending their affiliate programs in those states. Where they were once looking to increase revenues, they are losing revenues.
One of Aesop's fables was about a dog to whom the butcher had thrown a nice juicy bone. As the dog crossed a bridge over a pond, it looked down to see another dog, with a nice juicy bone. That bone looked even bigger than the one he had, so the dog barked at the other dog and sprang from the foot bridge after the other dog. When the dog made its way back to the shore, he found himself wet, muddy, and without any bone what-so-ever.
Whether you're an Internet entrepreneur or not, watch your state's legislative agenda carefully. Using affiliate marketers as a way of scaring up revenue will undoubtedly backfire. Small businesses will find themselves without affiliate programs. Along with not realizing sales tax revenues, the states that make these moves will lose the business tax revenues on the small businesses that are in the affiliate programs. When all is said and done, we'll all be wet and muddy.
Don't be shy telling your elected officials what you think about this.
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