Overstock Terminates Arkansas Affiliates Per New Sales Tax Law
When will states ever learn? Arkansas has passed a new sales tax law for internet retailers and the reactions are coming in. Overstock has reacted by terminating all its Arkansas affiliates.
State politicians are a dull minded group as a whole. They are the type of people who will burn their fingers on a stove burner and then do it again a minute later. Homer Simpson is practically Einstein compared to these people. Never has this been more evident then in the bizarre decision by Arkansas to pass its own internet sales tax law.
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In a case of the dumb leading the dumb, Arkansas has pretty much copied what other states are doing. The state government is arguing that any retailer with the affiliates in the state has submitted to jurisdiction. It has taken this approach despite knowing that all the big retailers that would be hamstrung by such a law have continually terminated all their affiliates in the past.
So, what has the dimwitted Governor and Legislature gained by this act? Well, let’s tally it up. They will pick up a nominal amount of increased revenues from the few online businesses that keep their Arkansas affiliates. In exchange, the government has put thousands of its small businesses who were affiliates of online companies out of business. This means a loss in business tax revenues and income tax revenues not to mention the loss of jobs. Yeah, that sounds like a good move. Well done Arkansas!
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The simple fact of the matter is the state by state approach is never going to work in this country when it comes to sales tax. First, it is illegal and violates a host of legal precedent not to mention the commerce clause as well. Second, the states are just going to see affiliates terminated and gain nothing practical. The only way for their to be an internet sales tax is for the federal government to pass an all encompassing one and then share it with the states. Until then, states like Arkansas are hurting their small businesses and spitting in the wind.
What a mistake.