Texas House of Representatives devises plan to eliminate affiliate marketing in their state

texasThe 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.



  1. Praxis 2 flashcards on June 13, 2011 at 12:28 am

    The House Bill came before the Senate for a vote and was passed by the Senate last week by a vote of 61 to 38. As with many legislative works, the $30 billion bill contains some valuable changes in the law, but they don’t necessarily …. If you’re a business in Texas, the 35% credit is a welcome step, allowing for federal credits where no direct credits were previously available.

  2. Mads Singers on November 11, 2011 at 11:29 pm

    Doesnt sound good at all, wrong attitude 😉

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