In the last Minnesota legislative session, an Affiliate Nexus Tax, aka the Amazon Tax, was passed. Both Senator Bakk and Representative Dill voted yes. The new tax forces out-of-state online retailers who advertise on Minnesota-owned websites to collect Minnesota sales taxes. The tax was estimated to bring $5 million extra into state coffers.
Online marketing in Minnesota was a thriving industry and allowed anyone with an Internet connection and an idea to make money. It was perfect for Cook County residents.
Just after I moved here nine years ago, I started a website now named PaddlingLight.com. I’ve spent thousands of hours developing it, getting it to rank high on Google and building advertising relationships with online retailers and equipment manufacturers. My website was so successful that it provided startup capital for North Shore Expeditions, my kayak guiding company, which now employs myself and two other part-time guides. I was just one of the 5,200 businesses and individuals in the state that did this type of marketing. We brought $500 million into the state and paid $35 million a year in income taxes.
The law kicks in on July 1, and over the last few weeks, thousands of online retailers, including Amazon, have stopped doing business with Minnesota-owned websites, essentially putting them out of business.
In other states that passed these laws, a third of the websites packed up and left, a third went out of business and a third downsized. In Minnesota’s case, Bakk and Dill’s vote is driving 1,700 businesses out of state, and some of those businesses made over $1 million a year. Their vote is forcing another 1,700 to shutter their doors. This will cost the state over $23.3 million in income taxes, which is a loss of over $18.3 million after you factor in the estimated, but unlikely, $5 million gain in sales taxes.
I’m considering selling my website, because I’ve lost most of my advertising clients and almost all my income.
The solution for this problem is the Marketplace Fairness Act (MFA), which is currently in committee in the U.S. House. It passed with overwhelming bipartisan support in the U.S. Senate. Instead of waiting for the MFA to work its way through Congress, our shortsighted legislators voted for and passed this new tax, which directly hurt 5,200 Minnesota businesses and individuals.
I urge you to write Bakk, Dill and Governor Dayton, telling them that it’s time to call a special session in Minnesota to either put this tax on hold until the outcome on the MFA is certain or, even better, to repeal it. If they don’t, Minnesota will continue to bleed businesses to our neighboring states and those businesses won’t come back.
Bryan Hansel
Grand Marais
Leave a Reply