Profiting Instead of Taxing

Here's a kicker. North Carolina, the state where The BeanCast empire is based, is in trouble. Revenue is down. Spending is up. And they have no idea where the money is going to come from.

But wait!

What about all these nasty, stinking affiliates income makers out there? Sure, they already have to pay income tax on that money, but that's a trust thing. And we don't trust them. So let's go after the companies that are paying the income! That's the ticket! We'll make them pay taxes on referral payouts. It's projected to bring in millions of extra income and help solve our massive deficit. What a great idea! Let's go out and pat ourselves on the back.

But here's the rub. The referral programs don't play that game. In fact, it would cost them less to pull out of the state entirely than to administer tax payouts state to state. So what happens? In the case of the Amazon Associate Program, we received this letter:

So just like that, a source of income for thousands of North Carolina residents has been completely wiped out. Not only is the state not going to achieve its revenue goals, but it has actually reduced the net taxable income of many families.

Now before you start crying, "fat cats," realize that in North Carolina we have a part-time statehouse with some of the lowest salaried representatives in the country. State representatives and senators can only expect to take home $20,659 for their service. So this tale is not muddied by avarice. This is pure and simple about ignorance.

State governments look at the Internet as a threat and as something that steals income and sales tax revenue from the state. We've all heard the tales of convoluted schemes to get this money back. Most times the scheme fail or backfire. Which tells me that state governments still don't have any clue how to survive in an Internet economy.

Instead of looking for ways to tax these companies that are actively contributing to the well-being of the citizens of the state, why is the state not actively trying to benefit from it too? Why isn't every lending library website in the state providing affiliate links to Amazon for every book they have? Why is the state not looking into running AdSense accounts? It would be very easy to turn the pennies they hope to get through complicated tax schemes into simple revenue generation possibilities.

Sometimes people don't think. This is particular true when the people in question band together and call themselves a "government."