Normally I’m oblivious to advertising. I’m at the computer working away. But a commercial came on the TV (which I keep on for noise) and it so insulted the customer it gave me pause. The “feel good” line from a financial planning company was:
“When the Customer Perceives they’re in control they do amazing things…”
What? The perception of being in control of your own finances is all it takes? Not that really someone else is in control? Just what are these people telling their potential customers? Well, I am in control of my own finances so this company won’t be hearing from me. But the tagline quote got me thinking about all the Affiliate Tax debates happenning in State Legislatures around the country.
The flaw is that State Legislatures Perceive They are in Control of their Citizenry.
Which is myopic to the point of ridiculousness. The factor left out of all of these debates is that transactions are happening across state lines. Sometimes even international lines. And just because your own state may decide that a sales tax nexus exists for them doesn’t mean it’s so. That is to say that things happen outside of a States borders that is actually controlled by another state. For Example:
If a Customer clicks a banner ad is from Colorado, and the banner ad is from a network in New York, with the merchant doing business in Rhode Island, and the product ships from South Carolina… What’s gonna happen? You guessed right. All four states are claiming “Nexus” for sales tax. So either every state collects their full tax, or it’s going to split between the four.
Do you think the various state legislators have thought about this? Do you think their financial projections are taking this into account? What happens to Colorado’s (for example) revenue projections if it’s reduced by 75%? That’s right, the cost to collect those perceived losses in sales taxes becomes higher than the revenue generated. Thus it’s a net loss for the state.
Add in the loss of state income tax revenue to affiliates, networks, OPMs, etc. and you have a big fat loser on your hands. But the Colorado State Senators who are about to decide whether they’re going to go down this road to failure don’t realize just how bad this is. Why? Because they perceive that they are in control of things they’re not in control of! Which is how the Affiliate Tax Drive in this country will be stopped.
Once the various state legislatures are shown (by the Affiliate Marketing Community) that they arn’t making decisions in a constrained environment the drive to levy affiliate taxes will stop.
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