Support House Bill 867/Senate Bill 715, Affiliate Nexus Tax Repeal ...

May 4, 2011 North Carolina General Assembly RE: Support House Bill 867/Senate Bill 715, Affiliate Nexus Tax Repeal Dear Legislator, I write in strong support for House Bill 867 and Senate Bill 715, which will repeal the state’s ill-conceived and ineffective tax on Internet purchases. Since its enactment, the tax has failed to collect any additional revenue for the state, instead simply costing North Carolina advertisers their jobs. Included as part of the state’s 2009 budget, the Internet tax measure sought to force out-of-state online retailers to collect and remit sales taxes on North Carolina consumers if the retailer solicited business through in-state advertising affiliates. As widely predicted, the “Affiliate Nexus Tax” has done North Carolina significantly more harm than good. Though initially sold as way to raise revenue and level the playing field with brick-and-mortar retailers, the Affiliate Nexus Tax has predictably achieved neither goal. Once advertising created a nexus for out-of-state retailers, Internet businesses immediately severed their advertising agreements with North Carolinians to avoid collecting the likely unconstitutional tax. As such, no effective nexus was ever established for tax purposes. North Carolina failed to raise additional revenue or level the playing field with in-state retailers. The one outcome the Affiliate Nexus Tax has accomplished is the loss of jobs in North Carolina. Once the law passed, out-of-state retailers severed advertising contracts to avoid an unconstitutional sales tax collection obligation. This meant affiliate advertisers in North Carolina lost their jobs or at least a substantial portion of their income. Passing HB 867/SB 715 cannot undo the harm already caused by the Affiliate Nexus Internet tax. However, the two repeal measures will help advertisers to bring back their businesses. I urge you to pass these much-needed bills. If you have any questions, please contact Kelly William Cobb or Patrick Gleason at (202) 785-0266. Onward, Grover Norquist President, Americans for Tax Reform