Amazon Terminates Affiliates In Connecticut and Arkansas Over New Sales Tax Bill

The brawl between Amazon.com and states trying to force it to collect sales tax for online sales took another step. Amazon terminated affiliates in Arkansas and Connecticut after the states passed such bills.

The states are broke and the politicians running them are completely out of any credible ideas on how to deal with the problems they face. Given this, they pass laws that end up hurting them more than helping. This is exactly what Arkansas and Connecticut have done in passing internet sales tax laws even though they result will be the termination of their affiliates in the state. 

The basic idea behind this entire scam is something called nexus. The states cannot directly tax the online entity pursuant to a number of Supreme Court decisions. Given this, they try to get around the issue by arguing that the businesses actually have a presence in the state. How could this be when Amazon.com clearly has no offices or warehouses in Arkansas or Connecticut? The states are arguing that affiliates who reside in the state count as such a presence.

So, what do you think happens when the states pass these laws? The big online retailers like Amazon and Overstock immediately terminate all the affiliates in the state. Instead of raising taxes, the states end up losing tax revenue and putting small businesses in their state out of business. That’s a brilliant move. 

Will this move help raise money for Arkansas or Connecticut? Not a chance. Amazon has already terminated affiliates in the states. Other online companies will follow soon. Given this, it makes one wonder why states continue to take this step instead of teaming up and trying to pass a national sales tax.