The state of Texas aims to collect sales tax from businesses who have affiliates operating from their state. To do this Texas House Rep Elliott Naishtat has introduced HB 1317 to collect tax from online purchases by redefining what it means for a business to have a physical presence in the state.
Kudos to the Texas government for finding new and creative ways to kill the goose that lays the golden egg. The most obvious "how can you not see this coming" response is to block affiliates from states with such clueless governments. Companies have already done exactly that to affiliates in other states where such physical presence definitions exist. It’s a double-whammy for the state: they won’t be able to collect sales tax from the business or collect income tax from the affiliate as they drive affiliate marketers to the curb.
I think people like Elliott Naishtat should read Atlas Shrugged, or at least a Cliff Notes version with pop-ups. While Ayn Rand takes an absurdly extremist view in illustrating her view of measures like this, it’s funny to read depictions of similarly clueless government officials as they express surprise towards any resistance to such forms of
highway robbery taxation.
Thanks to Shawn Collins for first reporting on this over at his blog.