Tuesday, July 12, 2011

The Effects of Efairness on Arkansas

I posted a couple of months back on how I thought that SB738, the efairness bill aka the Amazon Tax, would hurt the average Arkansan.  You can review that post here: http://davidmeeks.blogspot.com/2011/04/e-fairness-is-killing-arkansas-business.html

As expected, dozens of online affiliate programs have been canceled as a result of the law.  The real question is how many Arkansans will this effect and what is the cost?

I recently contacted the Performance Marketing Association to get what information they had on Arkansas.  This is the reply I received:

Representative Meeks, 
Great speaking with you today. Here are the stats on Arkansas affiliates:
  • There are 2,000 affiliate marketers in Arkansas (or there were before the law passed).
  • Affiliates, by the way, are simply website publishers who earn revenue from running ads on their sites.
  • They earned $157 million in 2010, and paid $11 million in state income tax.
  • By our estimates, affiliates lost 25-35% of their income when this law passed in Arkansas. Losing 1/4 or 1/3 of an income is a devastating event for a person or a business. 

By doing the math, you come out that each affiliate earned on average $78,500.  This seemed a little high so I wrote back asking if I had calculated something wrong.  This is the response I received:

There is a tremendous range of income levels by affiliates. They can be part time, or they can be millionaires, or they can be a company with employees. We estimate that 25%
are full time (quite a few in the 6-7 figure income level) and 5% have four or more employees. We also believe about 90% of that revenue comes from about 10% of the population, sort of an extreme Pareto principal. So that would skew the individual income average up a bit.

I have filed Interim Study Proposal 2011-177 to study more in detail the effects that this law will have.  You can view the ISP here:

For more on the Amazon Tax please check out this post on the Arkansas Project:

So at this point based on the data, the Amazon Tax bill will cost Arkansas jobs, approximately 11 million dollars in state revenue, and most online retailers will still NOT have to collect ANY state sales tax.

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