PaddlingLight needs your help!!! Big time.

bwca canoe

I need your help to stop a proposed law in the state that I live that directly affects whether or not I can continue to publish and write on PaddlingLight as it directly impacts PaddlingLight’s primary income source. The law is called an Affiliate Nexus Tax and it’s an attempt to force out-of-state retailers to collect state sales tax. The sad part of this is that Minnesota might sacrifice 4,500 jobs and $300 million in income over a law that has already been struck down as unconstitutional in a circuit court in Illinois. More info below.

What you can do is write the folks listed at the bottom of the article. If you don’t live in the state emphasize how you enjoy this Minnesota-based website, how well it portrays Minnesota as a paddling destination and how it makes you want to paddle Lake Superior in Minnesota or the Boundary Waters Canoe Area Wilderness, and how it would be a loss to the state if PaddlingLight had to close down. Plus, all the other stuff as well.

Anyway, here’s the lowdown:

I live in Minnesota and our governor, Governor Mark Dayton’s new budget includes an Affiliate Nexus Tax, which attempts to force online retails that have representatives in Minnesota to collect MN sales tax. This sounds like a good thing, because residents of Minnesota should pay all the sales tax that they owe on online purchases. The law already requires this. Unfortunately, the Affiliate Nexus Tax is intellectually dishonest, because it attempts to equate performance-based marketing with a retail operation representation. Additionally, one court has already found that this type of law is federally unconstitutional.

Affiliate marketing works this way: the affiliate runs a website and reviews a product and links to an online retailer 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, have nothing to do with the operation of the online retail store and affiliate marketers are never under direct control or employment of an online retailer. They’re independent and act on their own.

So, what is the overall effect on Minnesota where PaddlingLight is based?

There are 4,500 affiliate marketers in Minnesota who bring in an estimated $300 million a year to the state from out-of-state sources. In every state that an Affiliate Nexus Tax passed, the online retailers dropped their affiliates in that state, which means in Minnesota’s case that 4,500 people lose their annual income/jobs and $300 million less is brought into the state. Before Illinois law was struck down as unconstitutional, it actually caused a decline in sales and use tax collected, a sharp decline in employment and several 40+ employee businesses to leave the state. The states that passed the laws didn’t see the expected benefits and instead saw net negative effects.

So, how does this affect Cook County where PaddlingLight is based?

Affiliate marketing is a great way to make income in remote, depressed-wage, seasonal tourist areas such as Cook County, Minnesota. 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 limited investment. 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.

So how does this affect PaddlingLight?

PaddlingLight is in part funded through affiliate marketing. It helps pays the bills and helps compensate me for the time I put into this website, approximately 5 to 10 hours a week, although when I was doing the free kayak plan project it was almost 30 hours a week. Without this income, I’m not sure that PaddlingLight survives as I’ll have to put my personal time into making money elsewhere. There are many other paddling websites based in Minnesota that do the same thing, they may disappear as well.

What can you do?

If you live in Cook County, write Representative David Dill and Senator Tom Bakk. If you live in Minnesota, connect your state legislature and do the same. You can get the contact info on the Minnesota Legislature contact page. If you live outside the state, write Governor Dayton and then Senator Tom Bakk and Representative David Dill.

What to tell them:

  • You oppose the Affiliate Nexus Tax law, because:
    • Affiliate marketers do not establish a nexus in the state because they aren’t directly controlled by an online retailer. Affiliate marketers invest their own time, own effort and own money to get paid only for performance. They don’t represent an online retailer. Affiliate marketers are independent advertising channels.
    • 4,500 jobs are at risk, because once Affiliate Nexus Tax laws are passed all the affiliates are dropped in that state.
    • An estimated $300 million from mainly out-of-state sources is at risk.
    • It was ruled unconstitutional under the Commerce Clause of the US Constitution by Judge Robert Lopez Cepero on April 25, 2012 in an Illinois Circuit Court.
    • In Illinois, before ruled unconstitutional, it caused a decrease in sales and use tax collected,a sharp decline in employment, and caused several small businesses with 40+ employees to leave the state.
    • That you support a national solution that levels the playing field for every online retailer and every brick and mortar store, such as one proposed by U.S. Senator Dick Durbin.
  • They should oppose the Affiliate Nexus Tax law for the same reasons.
  • It would be devastating to your favorite website, PaddlingLight, which is based in Cook County, Minnesota, and PaddlingLight may shut down after affiliates are dropped in Minnesota if they income can’t be replaced.

Here is the contact info:

Representative David Dill

Majority Leader Thomas M. Bakk

Governor Mark Dayton

Contact them now. Thanks!


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8 Comments

  1. Mark Vincent
    Posted January 22, 2013 at 4:04 pm | Permalink

    Feel your pain. Greed over spending ect. needs to stop. That why some people use sponcership or seek advertising to offset expenses. Tax companys they pass the extra expense to the consumer. I live in WI is there some way to help out. Enjoy your articles. If you are interested join Pure Water Paddlers Facebook Group thanks MV

    • Posted January 22, 2013 at 6:33 pm | Permalink

      Thanks. To help out, please, write the above named people saying that a website you enjoy is in jeopardy over the proposed Affiliate Nexus Tax law. The write about why you oppose it using the bullet points above.

  2. Posted January 22, 2013 at 8:31 pm | Permalink

    Bryan,

    That’s bad news for lots of small-time publishers like you, who rely on that meager affiliate marketing income to stay afloat.

    Besides DIMINISHING tax revenues as you point out, this could also drive into extinction the kind of fresh, innovative, real-world (and free) journalism we’ve come to rely on from PaddlingLight and others for information and inspiration.

    I’ll be sending an email to your representatives, and watching this issue!

    Here’s a bit more info on the detrimental effects of the affiliate nexus tax:

    Jeff

  3. Greg Welker
    Posted January 23, 2013 at 4:46 pm | Permalink

    Sorry, but I think affiliate marketing is often dishonest. If you review a product, and are getting kickbacks from the manufacturer or retailer when a person links through your site and buys the product you are compromising your ability to do a fair product review. In particular, when a reviewer gets a kickback, including getting the product for free, and the reviewer fails to disclose this to readers in a prominent fashion than that reviewer is being unethical. You are being a retailer or promotional agent for the product. You are not being an unbiased product reviewer.

    Greg Welker

    • Posted January 24, 2013 at 10:55 am | Permalink

      Thanks for your opinion. You can read the site disclosure which outlines how PaddlingLight markets and reviews — you won’t see this from a print magazine which does the same thing. Without this source of income, which is pretty much the only way that a website such as this can generate income, then PaddlingLight won’t and couldn’t exist. I put too much of my time into this to do it for free.

      A note on reviews: I only review products that I personally like and use or that I can’t stand so much that I feel I need to get the word out. When I’ve received a product or bought a product that I didn’t like, but didn’t feel strongly about its poor performance, I don’t review it. I always disclose when I’ve received a product for free, which you don’t see in print magazines. If there is no disclosure, then you can assume that I bought it with my own money. I think there is a difference between the way I run this site and sites that are specifically designed to make money on affiliate marketing.

      Just so you know, many reviewers, including those in print magazine and online magazine, are provided with product to test for free. Manufacturers see reviews as a form of promotion and always have.

      If I’m going to take the time to review an item, I put 30 days of use into the product, unless it’s a simple product that I can do a quick review on. After which it often takes hours to write the review, process photos, etc… If I was reviewing an item for a print magazine, which I’ve done, then I’d get paid for producing the review and get to keep the reviewed item for free. The difference on the web is that I don’t get paid, unless I can personally figure out how to make money. Please, take the time to read my reviews, and I think you’ll find them an honest expression of my opinion.

      If I think it’s a good product, why shouldn’t I promote it and receive a performance-based commission to help pay for my time, personal money and hard work?

      I don’t see anything wrong with that. It’s up to the reader to decide if they can trust me based on my disclosures the same way they can decide to trust a print magazine, such as Sea Kayaker, that receives the kayaks for free to use for the review, and receives advertisement revenue from the manufacturer.

      So, back to your first statement that you think affiliate marketing is often dishonest:

      1. It can be, but so can any review/marketing, and just because it can be doesn’t mean my reviews are dishonest.

      2. That opinion doesn’t make it right to pretend that an independent affiliate marketer forms a “nexus” for an online store. An affiliate marketer forms no more of a nexus than a print magazine that accepts out-of-state advertisement, such as the Boundary Waters Journal, which is published in Minnesota.

      Even if you really believe that affiliate marketers or even if you believe that my reviews are dishonest based on the fact that I can make money, you should still oppose Affiliate Nexus Tax laws on the principle.

  4. Bill Hick
    Posted January 31, 2013 at 12:31 am | Permalink

    G’day Bryan,

    There’s not much I can do from over here in sunny Sydney, but I hope you are successful with your campaign.
    I appreciate the time and effort you put into the online magazine and I understand and respect how you do reviews.
    Keep up the good work.

    Bill
    Sydney Australia

    • Posted January 31, 2013 at 1:23 pm | Permalink

      I know it may seem like you can’t do a lot, but an email to Dill, Bakk and Dayton would be appreciated. Let them know that Minnesota websites have an international audience by telling them where you are from and how it would be a shame in the proposed Affiliate Nexus Law put PaddlingLight.com out of business.

      Thanks!