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Nexus Tax Hurts More Than it Helps

Posted on 9.06.2011

A recent survey confirms that a nexus tax would absolutely harm affiliate marketers and small businesses.

The study was conducted by the Performance Marketing Association, Inc., (PMA) of California’s online Affiliate Marketing industry, with a sample size of 500 affiliate marketers in California.

“Unfortunately the survey results have confirmed what we knew all along; an affiliate nexus tax immediately reduced the income of these small California companies, forcing them to make tough business decisions such as hiring freezes, laying employees off, or moving out-of-state,” says Rebecca Madigan, executive director of the PMA. “The survey uncovered some dire outcomes for these businesses: 37 percent lost over half their income; 22 percent closed their affiliate businesses; almost 32 percent have moved or are planning on moving.”

To further prove that a nexus tax would not generate additional sales tax revenue for California, George Runner, a Board of Equalization member, claims that no online retailers have registered to collect sales tax because of ABX1 28.

“Learning from history, we know ABX1 28 will not persuade out-of-state retailers to start collecting sales tax,” says Madigan. “We know this because other states that attempted to pass similar laws arrived at the same results, no new sales tax revenue materialized. It is our hope that this empirical data will compel members of the Legislature to reflect upon this issue and create a win-win situation for the state. Because right now all we have is a dramatic decline in the incomes of 25,000 small businesses, companies leaving the state, and no additional sales tax being collected.”


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