MGECOM

Affiliate Management at its Finest

Taking the Advertising Tax Fight to the Governor

Jul 01 2009 by Matt Enders

As an industry, we have been working very hard to fight the “Amazon Tax” which is very close to being implemented in North Carolina.  While we have made headway with numerous NC Legislators, it is time to take the fight to the desk of the Governor, Bev Perdue.

July 1, 2009 was the deadline for the signing of the new NC budget, SB202.  That deadline has passed, and an extension has been granted for lawmakers to come to agreement on the budget by July 15, 2009.  This gives us as the affiliate marketing industry 15 days to make an impact.  Please continue to call and email your local representatives.  It has been working. But we need to step it up and take it to a higher level.  We need to target the Governor herself.  Why?  Because she is uninformed about the advertising tax portion of the budget, and she has the power to veto the bill regardless of what local lawmakers have included.

Luckily, one of our mgecom employees has a direct line to a contact inside Governor Perdue’s administration.  In talking with that political contact, we were informed of the best way to contact Governor Perdue, and the best way to get her attention.

PLEASE TAKE THE FOLLOWING STEPS NOW:

  1. Visit this page: http://www.governor.state.nc.us/eTownhall/suggestionBox.aspx
  2. Fill out ALL of your contact information, especially if you are an NC resident
  3. Choose the subject “Taxes and Revenue” from the dropdown menu
  4. Write a letter to Governor Perdue and tell YOUR story.  Shoot for 250 – 1,000 words.  Most importantly, DO NOT send a template letter.  Take 5 – 10 minutes and share how you, as a NC resident and voter, will be negatively impacted.
  5. Point out our petition in your letter: http://www.petitionspot.com/petitions/ncaffiliatetax/.  Be sure that you have signed it if you haven’t already.

It may seem like we are wasting our time using a contact form from the Governor’s website.  We have been assured from within the administration that all communications through this form are carefully monitored and screened.  So how do we get noticed?

  1. Personal, real feedback
  2. Consistent overall messaging
  3. At least 20 of us send an email.  We should shoot for 200.  Please comment below once you have submitted your letter so we can keep a tally.

If we do this, we will get the Governor’s attention.  Be professional, but be direct.  Let Governor Perdue know that she will hurt your income, and your ability to spend in NC.

Here is a copy of my letter.  Please remember though, write your own.  DO NOT copy and paste or use a template.  Real messages, with real concerns, from real people, with real stories are what get noticed and passed to the Governor’s desk.

Dear Governor Perdue,

My name is Matt Enders and I am writing you today as a concerned individual, business owner, NC resident, and online marketing industry representative.  I have grave concerns over the NC budget, SB202, specifically sections 27C.2(a), 27C.2(b), 27C.2(c), and 27C.2(d), which are found on pages 268 and 269 of the above referenced bill.

I am a business owner who works in the affiliate marketing industry.  The sections of SB202 I mentioned are better known as the “Amazon Tax”.  I have been working very hard within my industry with affiliates across NC to urge legislators to oppose these specific sections of the budget.  I have been interviewed by NBC17, News14 Carolina, WRAL, and the Associated Press regarding this issue.  In fact, the televised report from News14 Carolina featured statements from both you and me.  In that report, you stated, “I will be very surprised if any of the major click through retailers refuse to sell to our state, which is the seventh largest in America” (http://www.news14.com/content/top_stories/611240/amazon-ends-associates-program-in-n-c–due-to-tax/Default.aspx?ap=1&Flash).

Your statement is, unfortunately, at the same time correct and misguided.  You are correct in saying that Amazon.com will not cease to sell to NC residents.  They will.  They WILL NOT, however, continue to generate online sales through the use of Affiliate Marketing, and Affiliates who reside in the state of NC.  Allow me to share a brief and simplified explanation of how the Affiliate Marketing industry functions:

Affiliates from around the world sign up to participate in various affiliate programs (we’ll use Amazon.com as an example).  These individuals generally operate their own websites, which can be focused on any number of topics.  If Amazon.com sells products related to their site content that visitor may want to purchase, the website owner places an affiliate link on their personal site.  When a visitor clicks that link and makes a purchase, the website owner earns a commission for referring the sale.

Hundreds of thousands of people across the country participate in these programs, and thousands of them reside in NC.  When the tax law is passed, merchants from all over the US WILL terminate their affiliates with all NC based partners.  This will result in a direct revenue loss for thousands of NC residents.  Many of these individuals earn a full time living from their affiliate marketing efforts.  This effectively forces them out of business.  Other affiliate marketers rely on their commission earnings for a specific purpose: bills, medication costs, spending money, etc.  When their business is terminated or reduced, so is their ability to spend.  The effects do not end with Amazon.com alone.  Hundreds of online retailers will follow suit, and terminate their affiliations with NC affiliates.  Some companies who have already done so (before the bill has even been signed to law) include: Amazon.com, Overstock.com, MusiciansFriend.com, BlueNile.com, Cabelas.com, and TextBooks.com.  These are all leading online retailers.  Hundreds of others are certain to follow, as they did in New York when the Amazon Tax was initiated.

The negative effects of this tax law are many:

1) Affiliates will lose money and in many cases their entire income stream.
2) NC will not be able to collect as much sales tax as anticipated, since sales which originated in NC from affiliate marketing will no longer exist.
3) Unemployment will increase yet again, as business owners (many affiliates are incorporated) will have to lay themselves off.  This increases the burden on our already over-stretched unemployment system.
4) Affiliates, and their businesses, will still have the option of physically relocating out of state.  Many will be forced to do so.
5) Affiliates who move out of state will no longer remit income tax or property tax to NC.
6) Affiliates who move out of state will no longer spend in our local economy.

While I understand the grave need for NC to overcome its significant budget deficit, the advertising tax portion of SB202 is NOT the answer.  This is the one section of the bill which has the ability to, and will, destroy an entire industry in our state.  Currently, over 800 individuals who will be negatively affected by this law have voiced their opposition here: http://www.petitionspot.com/petitions/ncaffiliatetax/

Governor Perdue, I urge you to veto SB202 when it reaches your desk if it still contains the provisions regarding the online advertising tax.  Please, demand that the bill be rewritten so that it DOES NOT destroy the livelihoods of countless NC residents and voters.

Please contact me with any questions you or your staff may have regarding this devastating tax law.  I look forward to discussing the details further.  Thank you for your time in reading this message.