First, if you’re new to the concept of affiliate advertising, here’s a brief tutorial:

You have a really great web site or blog like Third Pipe. You have server bills, and you spend several hours every week putting up content. To help pay the bills, you put a little Amazon banner somewhere on the site and maybe promote individual items from time to time. If you’re a fairly busy site like Third Pipe, Amazon may get sales of $40 or $50 a month from your referrals and it will pay you a whopping 4% commission on them.

Let me continue by telling you of the greatest single act of stupidity by state pols in recent history. It may even be worthy of a Darwin award:

Amazon.com’s affiliates in North Carolina are reporting that the company will shut them off if legislation passes that would force online retailers to collect the state’s 4.5% sales tax from marketing affiliates. The News & Record newspaper reports that the tax law change is part of an effort to close a $4.7 billion hole in the state budget. “To help bridge that gap, House lawmakers proposed a bevy of tax increases and new taxes to raise about $784 million.” (Auctionbytes)

No doubt feeling like they are being excluded from the internet boom, North Carlina pols think it’’s time for their state’s bloggers to pay a little more for the privilege of toiling from inside that proud state’s boundaries. Since the NC sales tax is 4.5%, and there is no system in place to pass that tax along to people from anywhere in the world who click on an ad on a NC based site, then the blogger will end up .5% in the hole if they are fortunate enough to get an occasional sale. If not stupidity, then this is evidence of extreme arrogance for not bothering to do the research on  how much affiliate programs actually pay before proposing the tax.

Will this new tax earn a single penny for North Carolina? I don’t see how it can. Small bloggers will be forced to drop affiliate ads and many will simply disappear when they lose the subsidy the ads provide. Workarounds will be found. Larger oprations like the struggling local newspaper will simply pack up and move. As a result. less tax will be collected.

The current economic malaise we are in is largely due to the meddling of politicians and the special interests who lobby them.  To survive in these unfortunate conditions the pols created, most  of of us are spending less because we have no choice. It’s high time the politicians learn to do the same.