Overstock, a Utah based online retailer offering brand-name merchandise at discount prices, is joining Amazon and Diamond retailer, Blue Nile, in the growing list of e-commerce companies who are dropping affiliates in states where internet sales tax legislation is proposed on the New York model.
Overstock said that it will drop its affiliate advertisers in Hawaii, North Carolina and Rhode Island states. Overstock called these state tax laws 'anti-internet advertising laws'. In May 2008, Overstock.com ended its relationship with over 3,400 of its New York advertising affiliates and sued the state, when New York enacted the first of these laws. The suit is still pending along with a sister suit brought by Amazon.com. Overstock stated that it will sever affiliate ad relations in any state that appears to be close to passing 'tax-happy laws'. Overstock president, Jonathan Johnson, said:
"When states unwisely and unconstitutionally pass these laws, their local internet ad business will quickly go dark, and that business will simply migrate to states more friendly to internet commerce. In the end, the only thing to be accomplished by these laws will be to put more local citizens out of work -- exactly the wrong choice in a down economy."
In addition to the states affected by today's action, the Connecticut legislature has considered, but not acted on a bill, and similar initiatives were considered and rejected by the Maryland, Minnesota, and Tennessee legislatures when those bodies foresaw the negative economic consequences. Following a call from Governor of California, Arnold Schwarzenegger's Office, Overstock issued a second statement in which it reversed an earlier intention to take action in California. It quoted the Governor's office as saying that he would "focus on balancing the budget via cost cutting, and not by jamming consumers and small businesses with new taxes". Overstock.com responded by assuring the governor that it would turn back "on" the advertising feeds from its California-based affiliate advertisers, that only the previous night it had announced it would turn off.
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