Free Markets, Free People

Affiliate Programs

California’s Amazon tax has been successful…

…In encouraging Internet entrepreneurs to leave California. Who saw that coming? Besides, you know, everyone outside of Sacramento.

Last month, news broke of one California-based online entrepreneur who had decided to ditch California and move to Nevada in the aftermath of Gov. Jerry Brown signing the law.  ”I always figured that in California, home to Silicon Valley and a million tech startups, they’d never pass a law like this,” said Nick Loper, who formerly operated ShoesRUs and has now opened a new venture, ShoeSniper.

Per the piece in which Loper is quoted, more than 70 affiliates had at that stage already left California, according to online businesses.

Then, last Thursday, another online entrepreneur, Erica Douglass, posted a mock “It’s Over” letter to California on her blog. Douglass, who sold an internet company she had built for $1.1 million in 2007 when she was just 26, cited multiple reasons for moving to Austin.  Among them were unnecessary paperwork requirements mandated by the state, and high taxes as well as business fees.  However, the straw that broke the camel’s back, was according to Portfolio, Brown signing the Amazon Tax into law.

Apparently, the thinking was that Amazon would never halt its California affiliate program—though they’ve done so in every state that’s passed a similar law—and, Lord, the money, it would start rolling in! And even if Amazon did close down the California affiliate programs, why, the affiliates would simply switch to other affiliate programs, and the state would still get it’s money. It was a win-win for everyone.

Well, Sacramento was right about one thing: The affiliates are switching. To other states.

To be fair, it was slightly more realistic than Sacramento’s other plan, which was that flying unicorns would swoop in to sprinkle magic pixie dust on the state’s economy. Sadly, that plan was tabled in the Assembly’s budget committee. At least if they’d gone with that, I’d still be able to make a little spending money off Amazon.

Is it just me, or is the Tree of Liberty looking a little…parched?

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Dale Franks
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