In advance of having to collect online state sales tax, Amazon.com said Tuesday that at the end of the month it will sever ties with its Minnesota-based affiliate websites that receive a fee for referring shoppers to the retail giant's online store.Oops. And yes, the Minnesotans who ran affiliated websites are hurt:
The move comes less than a month after Gov. Mark Dayton signed a law requiring certain online businesses with a physical presence or affiliates in Minnesota to charge sales tax on items it sells to the state's residents. The law takes effect July 1, one day after Amazon's move.
There are about 5,200 affiliates in Minnesota that make money from online advertising, said Rebecca Madigan, executive director of the Performance Marketing Association, a trade group that represents the affiliates.Perhaps these folks can recoup their livelihoods by driving around the state to tout electronic pulltabs or something.
Those 5,200 don't just work with Amazon.com. They may be affiliates of Cabela's or Blue Nile or other sizable Internet retailers.
The change in Minnesota's state law affects about 1,000 online retailers -- not just Amazon.com -- Madigan said. The 5,200 affiliates in Minnesota generated a total of about $500 million worth of business in 2012 and paid about $35 million in state income tax, she said.
Because of the new online sales tax law, "the state is actually going to lose money" from the affiliates, Madigan said, "because they'll lose that income tax revenue." About three-quarters of the businesses have fewer than four employees.
On the other hand, we're told that Mark Dayton has a 57% approval rating, so perhaps Minnesotans are cool with ham-handed regulatory adventures that cost people jobs.