Pixelrage.net

Another month goes by, and another victory for the cancer known as the “Nexus Law” as it prevails once again over affiliate marketers in yet another American state – this time, Pennsylvania.

In what appears to some as the beginning of the end of affiliate marketing, the counter-productive Nexus Law claims yet another state, and yet another victory for the tax whose sole purpose is to combat what Big Business claims to be “unfair advantages” that online businesses have over brick-and-mortar. The victim: none other than the little guy…affiliate marketers.

We’ve seen this in several other states: NY, CO, IL, and almost California (thankfully common sense prevailed, there) with devastating consequences. Well over a dozen more states are up on the cutting block. Many of us even remember an affiliate-based company, FatWallet.com, getting media attention as it simply moves a few miles over the border of Illinois into Wisconsin to escape fallout from the Nexus Tax enactment.

Unfortunately, the veil of “unfairness” pitched to government coupled with the all-powerful allure of “greed” enabled lawmakers to take the side of Big Business in their pursuit to regain “a fair balance” in what was perceived to be an imbalance. Back on planet Earth, though, what we saw as a result are thousands of small businesses either going under, or migrating nomad-style across the border into another state to avoid the backlash of a law that punishes them for no wrongdoing on their part.

The law itself, although cruel on most who make a living from affiliate marketing revenue, wouldn’t have been so devastating if scores of Commission Junction and other affiliate systems (including Amazon) hadn’t responded by pulling out of entire states to avoid collecting tax on a state-by-state basis for each purchase. However, the law equally hurts these advertisers, as well. Well, except for the fact that they make far more than affiliate marketers, and control the on/off switch to the fate of their affiliate counterparts.

According to the Performance Marketing Association’s acknowledgement of Pennsylvania nexus tax, some 800-900 retailers immediately pulled out of Pennsylvania just in the first couple days of Nexus passing, alone. That was back in December 2nd. Check out your favorite internet marketing forum, and you’ll undoubtedly read about a new wave of CJ.com-based bannings that have just taken place during this next-to-last week of December 2011. Considering that Nexus Tax will be mandatory for collection in February 1, 2012, we will undoubtedly see that “900″ number increasing dramatically. Happy New Year!

Until some big non-profit organization or major Fortune 500 affiliate program successfully steps up to the government, the risk of Nexus Law passing in additional states marches on.

The point of the matter is that the fundamentals of Nexus Tax is a failure: collect tax for individual purchases from individual states = more money (yayyy! says the local government), resulting in massive companies like Amazon dropping programs that provide taxable income streams, the fallout being the loss of hundreds [thousands] of small businesses going under as a result, ex-business owners hitting the unemployment line, or simply moving out of state and taking their LLC’s earnings and taxpayer money with them to a neighboring state (those effects won’t be felt so quickly, but give it time).

Unfortunately, when we live in a society where our lawmakers are from generations who don’t understand how the internet works, ignorance and greed leads to tragedies like these. What I continually fail to understand is how these laws come to pass – there must be one hell of a one-sided argument being fed to politicians for such a terrible blunder to happen.

I truly feel for any PA state affiliate marketer who has already lost the opportunities that have been awarding them with the means of making a living as a decent tax-paying citizen.