Governor Gerry Brown received a bill from the business-destroying Democrat-infested California state legislature that, like alligators snapping wildly at any possible opportunity, has a 99% chance of destroying thousands of small businesses.
The governor signed the bill into law, so starting tomorrow, those businesses will lose some or all of their source of income. California will not only lose that inflow, it will lose a lot more.
The smaller business may just die. The larger ones may only survive by moving out of state.
The big retailers affected by the legislation have two options.
1. Comply with the California law and spend hundreds of thousands or millions of dollars to adjust their payment systems and add more staff or;
2. Disassociate with 30,000 affiliates based in California and turn that business over to affiliates based in other states.
Amazon has already issued NewsBlaze with the affiliate termination notice. Thank you Governor Brown. Thank you California legislators. Thank you Californians, who voted in this business-killing governor and legislature.
Amazon is only one of thousands of businesses that use the very effective “affiliate” advertising model.
California voters can congratulate their politicians for immediately digging the deficit hole much larger and for putting thousands of small businesses out of business. I know some of those small businesses that employ many Californians and turn over millions of dollars each year. They also pay state taxes. Well, it’s goodbye to all of that state tax now.
Those Californians and California businesses put that money back into the state – where else could they live, eat and buy household goods and clothing? Not only that, but the businesses buy computers, office supplies and furniture. They have telephones and internet and so they support other California businesses.
It doesn’t take a brain the size of a planet to guess what would happen if all these businesses die or move to another state. Apparently, the legislators and governor couldn’t imagine what might happen next, they were blinded by the inflated numbers the lobbyists gave them.
What Governor Brown and the democrat legislators have done is to pass on income that was coming in to California businesses and the money collected by California, to states such our neighbors in Nevada and Oregon. I’m sure those states and the affiliates there, will be pleased.
Senator George Runner, a Republican, knows exactly what the impact of this is. He said today “Even as Governor Jerry Brown lifted his pen to sign this legislation, thousands of affiliates across California were losing their jobs.”
“Major out-of-state retailers like Amazon.com and Overstock.com are terminating their California affiliate advertising programs in response to this legislation. I’ve been warning for months that this would happen, but apparently these warnings fell on deaf ears.”
“The so-called ‘Amazon tax’ is truly a lose-lose proposition for California. Not only won’t we see the promised revenues, we’ll actually lose income tax revenue as affiliates move to other states.”
NewsBlaze and many other California affiliates have been talking to legislators over the past three years, wasting a lot of time that we could have used to expand our businesses. All we managed to do was to stall them. Thankfully, Governor Schwarzenegger knew what the impact would be, and each time it came up, he vetoed the bill. Governor Brown didn’t heed the warnings about what happened in New York and other places this legislation came in.
Here is the termination letter from Amazon, delivered to NewsBlaze today:
Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective, 29 June, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.
You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.
To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.
We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.
The Amazon Associates Team
Governor Gerry Brown and the democrat-controlled legislature must be really pleased with themselves right about now, almost as pleased at the bookstore lobbyists that convinced them this was a good idea.
Hopefully, it will only take us a couple of months to move our businesses from California to another state, that doesn’t have legislators that think they can fill the large hole they created by digging a larger hole and burying small businesses in it.
The one upside is that it should only take about three months for the devastating effects of this to show up in California’s book-keeping.
I’m just trying to imagine what excuse Governor Brown and the legislators will use, at the end of next quarter, when the number of California businesses has decreased, sales tax income has decreased, employment has decreased and state employment tax has decreased. The only things that will rise are unemployment and the deficit.
This is the video we made in 2010 to explain what would happen.