Wal-Mart is Behind Affiliate Taxes: Hurting Small BusinessesWritten by Pace Lattin
March 14, 2011 # 5:51 pm # Specials # 8 Comments
This past week Illinois became another State signing an “affiliate tax” law. Illinois, like other States who have decided to go this route are brutally honest about the reasoning behind this : that the States are desperate to raise money and are willing to try any method whatsoever to get more taxes, even if it targets mainly small business affiliates. The legislators of those States, in league with the Governors have unfortunately been fooled by a very expensive campaign waged by offline retailers into believing that online sales and affiliates income is somehow hurting the State.
The nasty truth about this campaign is it is less about raising taxes and generating income, but instead about the very powerful lobby of offline stores including Wal-Mart (aka Walmart) attempting to affect the growing competition that is occurring because of online retail. These major corporations have been facing dwindling returns as more and more people turn online to shop for products, and they have been trying for over a decade to find a way “in” to influence legislation that will hurt online retail. These lobbiest have invaded en masse local legislatures claiming that they are supporting an “Amazon” tax, ignoring the facts that the people who are hurt the worse are affiliates and small businesses.
Websites like “standwithmainstreet.com” have been created, making very strange claims that these taxes somehow benefit small business, when Wal-Mart is funding these campaigns. As anyone knows, Wal-Mart is far from small-business friendly and has been behind the pushing out of most small businesses on “main street.” Article after article, documentary after documentary has shown how when Wal-Mart comes to a town, small businesses suffer. Nobody out there actually believes that Wal-Mart is pro small business. (Article: Although the alliance presents itself as looking out for the little guy, trade groups like the Retailer Industry Leaders Association, whose members include Best Buy, Target, Walmart, Dollar General and Home Depot, have worked with the alliance in other states and support its efforts here.)
Wal-Mart and their lobbyist have also attempted to make legislators and voters believe that this has something to do with fair competition: that Wal-Mart pays taxes for purchases, as should online retailers in other states. This fiction conveniently ignores many facts, including that Wal-Mart benefits in almost any community it goes into with substantial tax breaks including in Illinois where they lobbied local governments to give them almost 150M in tax breaks to build new stores.
The second truth that this campaign ignores is that these “Amazon Taxes” are based only and completely on the location of small business within those states that benefit from relationships with online stores. The idea that this is targeting “Amazon” and customers in those states to pay taxes is patently ridiculous, because Amazon and those stores are not mentioned nor are the target of the campaigns — the affiliates are “nexus” that makes the tax. This has nothing whatsoever to do with the customers in those states and the taxes they pay, but the AFFILIATES and SMALL BUSINESSES that do work with online stores. The second thing that this ignores is that CONSUMERS of those States pay the taxes, not AMAZON.com.
Also,The idea that tax money is being “stolen” from the state is fictitious, because those companies which are paid affiliate commissions (often from sales in other states) are not only generating tax revenue from their profits but employing people in those States. The taxable income and job growth within those states easily outweighs sales tax and provides long term small business growth and long term income for the states, while sales taxing of these affiliates is poorly thought out and short term solution. Any expert will tell you that if you have a choice between sales tax and business growth, you will always choose business growth.
Wal-Mart and the lobbyist they employee don’t actually care about the actual taxes or about small businesses in those communities. They are very well aware that when these laws are passed that many merchants, such as Amazon will just drop those affiliates in those states and no new “affiliate tax” income whatsoever will be created. The idea that Amazon will suddenly be paying taxes to those States and their income will grow because of that is pure fiction. There isn’t a single State that has had their income grow because of these laws and not a single State will. The only beneficiary of these laws is Wal-Mart, whose executives see this as a mechanism to hurt online merchants and prevent competition. This has NOTHING whatsoever to do with affiliate taxes, but instead a push by Wal-Mart and their comrades to hurt small businesses online.
The truth continues to be that more and more small businesses are moving online and thriving. The companies are able to provide not only competitive pricing online, choice of products but improve the economy. Every single major economist in the world says that as small businesses grow, so does the economy in general. Online retail allows almost anyone, especially through affiliate and performance based marketing to enter the national and global economy and showcase their product to hundreds of millions of consumers. Wal-Mart executives know that this will eventually threaten their network of stores in the US as consumers realize there is more choice online, more product availability and cheaper prices.
Again, the campaign to institute “affiliate” aka “Amazon” taxes has nothing to do with Amazon, but instead with Wal-Mart’s blatant attack against small businesses online. Legislators, before you vote for these bills, please pay attention to who this benefits and hurts. Wal-Mart doesn’t need anymore income, but small businesses in this Country are not only are future, but are the catalyst to save our Economy.
Did you also know that Wal-Mart attempted to influence that legislators by making them believe that affiliates were actually going to benefit from this and this wasn’t going to hurt IL affiliates? How? They put an advertisement in CapitolFax.com (a publication which IL legislators read) making it seem like Wal-Mart was going to help affiliates. Below is the BS advertisement that seems to target affiliates… but in a legislative newspaper? Why is Wal-Mart even involved? (You now know!)
You gotta love that they work with a grand total of 45 affiliates. Wow, they definitely making a difference.
Interesting press release they issues RIGHT after the bill was passed, claiming they are suddenly pro-small business. Note, again, despite the claims of ” level the playing field for brick and mortar businesses” this has nothing to do with the businesses whatsoever. It is a law aimed at Affiliate Relationships and the only people it hurts are Affiliates and other small businesses.
llinois Main Street Fairness Will Level the Field for All Retailers
SPRINGFIELD, Ill., March 10, 2011 /PRNewswire/ — Walmart praises Illinois Governor Pat Quinn today for signing into law H.B. 3659 known as the Main Street Fairness Act. The Main Street Fairness Act will help create a level playing field between online-only retailers and brick and mortar retailers.
“Gov. Quinn has once again demonstrated he is willing to do what is right for Illinois and its businesses,” said Julie Murphy, Senior Vice President of Operations for Walmart. “During these economic times, it is vital for the state of Illinois to collect the millions of dollars of unpaid sales tax while allowing it to level the playing field for brick and mortar businesses who support our local Illinois communities.”
Earlier this week, Walmart issued an open invitation to any potentially displaced Illinois online business to explore the opportunity to join Walmart.com’s Affiliate Network.
Walmart is committed to supporting the affiliate programs which help to drive Walmart.com’s online business. It currently partners with more than 45 Illinois based affiliates representing millions of dollars in revenue. Walmart will continue to collect and remit all sales taxes due on all Walmart.com sales to alleviate all regulatory burdens from its customers. Any affiliate interested in working with Walmart.com should visit Walmart.com