Governor Mark Dayton’s new budget includes an Affiliate Nexus Tax, which purports to force online retailers that have outlets in Minnesota to collect MN sales tax. This sounds like a good thing, because residents of Minnesota should pay the sales tax that they owe on online purchases. The law already requires this. Unfortunately, the Affiliate Nexus Tax is intellectually dishonest, because it equates commission-based marketing with a retail operation.
Affiliate marketing works this way: the affiliate runs a website and recommends a product and links to an online store where the website visitor can purchase the product. If the visitor buys the product, then the affiliate is paid a commission. Retail works this way: the retailer, online or brick and mortar, buys a product at wholesale, marks it up, puts it up for sale and then sells it. Affiliate marketers never process an actual retail transaction.
So, what is the overall effect on Minnesota? There are 4,500 affiliate marketers in Minnesota bringing an estimated $300 million a year to the state from out-ofstate sources. In every state that an Affiliate Nexus Tax passed, online retailers dropped their affiliates, which means in Minnesota’s case that 4,500 people lose their annual income and $300 million less is brought into the state.
On April 25, 2012 in Illinois Circuit Court, a similar Affiliate Nexus Tax law was ruled unconstitutional by Judge Robert Lopez Cepero. It’s a bad idea to pass it in Minnesota as there will be lawsuits.
Affiliate marketing is a great way to make income in remote, depressed-wage areas such as Cook County. If you have an internet connection, the ability to write, and the motivation and time to maintain a website, you can become an affiliate marketer and make money online with little investment, approximately $125 per year for web hosting costs and less if you use a free service. If this passes, it removes a way for Cook County residents to bring steady money into a seasonal economy. I do it, and if I can do it, so can you.
Write Representative David Dill and Senator Tom Bakk and tell them you oppose the Affiliate Nexus Tax because it hurts Cook County and suggest that they oppose it. Their email addresses are: tomba@senate. mn and rep.david.dill@house.mn.
Bryan Hansel
Grand Marais
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