Monthly Archives: March 2011

Vermont Bill H.143 Will Hurt Vermont Businesses and Reduce Its Tax Base.

I never planned on getting political in this blog, but this deserves special attention.  Below is a copy of an email I sent to my state senators.  If you wish to read the text of the bill you can find it here.

——- Email Dated 3/13/2011 to the Senators of Chittenden County —————————–

I recently became aware that the House had passed and the Senate was considering a law that would eliminate the primary source of revenue for my small business.  The sponsors of this bill (H.143) aim to generate additional revenue by requiring out of state retailers to collect sales tax if they engage with independent affiliates who reside within Vermont.  Being one of those independent affiliates, I can assure you the bill will do nothing of the sort.

  • Major retailers will simply cancel all contracts with Vermont affiliates.  This means that any hoped for tax revenue will not materialize since there will no longer be any “independent contractors, agents, or other representatives” in Vermont doing business with Internet retailers.
  • Small entrepreneurs, such as myself, will no longer be generating income from these affiliate fees, reducing Vermont’s income tax base.  This is an important point.  Internet affiliates, such as myself, make most of their sales to out-of-state residents.  Only 1% of the visitors to my site come from Vermont.  This means that roughly 99% of my affiliate revenue comes from people from other states.  If a person in California buys a pair of running shoes from after clicking on a link on my site, I generate income, and I pay taxes on that income to the state of Vermont.  That Californian has just put money in my pocket that I can then spend locally.  If this bill is enacted, Vermont affiliates, and the Vermont Department of Taxes, will be cut out of that loop.
  • Any hoped for boost to local retailers will not materialize since these Internet retailers will still sell to Vermont residents.

This is a bill that will hurt small, Vermont business while also negatively impacting Vermont’s revenue base.  This bill provides no benefits, certainly none of the benefits intended by its authors, while hurting those entrepreneurial Vermonters trying to leverage the power of the Internet.

For me, personnaly, having to shut down my affiliate programs won’t be the end of my livelihood.  It is a part-time business for me, but it does supplement the income from my “day job” and allow me to spend money in restaurants, on lift tickets, etc., that I might not otherwise spend.  But there are small Vermont business that are solely reliant on affiliate income.  Those entrepreneurs will be faced with the choice of either closing their business or moving it to another state.

I strongly encourage all of you to vote against this bill and thereby block this attempt to reduce Vermont’s tax base.