PMA Survey Results Reveal Nexus Tax Hurts Small Business and Does Not Bring Additional Sales Tax Revenue to the State

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Recent survey confirms a nexus tax unquestionably harms Affiliate Marketers

It is our hope this empirical data will compel members of the Legislature to reflect upon this issue and create a win-win situation for the state. Because right now all we have is a dramatic decline in the incomes of 25,000 small businesses.

A recent survey, conducted by the Performance Marketing Association, Inc., of California’s online Affiliate Marketing industry has confirmed what experts have been attempting to convey all along with regard to the implementation of an affiliate nexus tax; a nexus tax unquestionably harms Affiliate Marketers.

Rebecca Madigan, executive director of the Performance Marketing Association, Inc. (PMA) stated, “Unfortunately the survey results have confirmed what we knew all along; an affiliate nexus tax immediately reduced the income of these small California companies, forcing them to make tough business decisions such as hiring freezes, laying employees off, or moving out-of-state. The survey uncovered some dire outcomes for these businesses: 37% lost over half their income; 22% closed their affiliate businesses; almost 32% have moved or are planning on moving.”

Further, proving that such a nexus tax will not generate additional sales tax revenue for the state of California, Board of Equalization Member, George Runner noted last week, “As of today we’re not aware of a single online retailer that has registered with BOE to collect sales tax because of ABX1 28. According to Board of Equalization staff, the number of out-of-state registrations in July 2011 was actually lower than July 2010."

Madigan added, “Learning from history, we know ABX1 28 will not persuade out-of-state retailers to start collecting sales tax. We know this because other states that attempted to pass similar laws arrived at the same results, no new sales tax revenue materialized. It is our hope that this empirical data will compel members of the Legislature to reflect upon this issue and create a win-win situation for the state. Because right now all we have is a dramatic decline in the incomes of 25,000 small businesses, companies leaving the state, and no additional sales tax being collected.”

“As this final week of the legislative session concludes, the PMA is urgently calling on all California Legislators to closely examine the motives behind the recent gut-and-amend of Assembly Bill 155. Enough politicking, let’s concentrate on getting these 25,000 Affiliate Marketers back in business and do what it takes to get California’s job base and economy back on track,” Madigan concluded.

The survey was conducted the week of August 29, 2011 with a sample size of 500 Affiliate Marketers in California, representing about 2% of the entire industry.

The Performance Marketing Association (PMA) is the national trade association representing affiliate marketers. The not-for-profit trade association was founded in 2008 by the leaders of the performance marketing industry. The PMA gives performance marketers a unified voice to address issues and challenges facing the industry, such as the ‘nexus tax’ proposed in some states.

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Shelly Sullivan

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