California budget crisis nearly puts Overstock.com affiliate advertisers out of business
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PrintFollowing the California legislature’s proposal to increase taxes and impose taxes on affiliates, Overstock.com announced that it will pull its affiliate advertising from California. Amazon.com also threatened to follow suit. In response to this, California Governor Arnold Schwarzenegger today reiterated his commitment to not raising taxes to solve the state’s budget deficit. He also announced Overstock.com will reinstate California-based internet affiliate advertisers.
In a statement, Gov. Schwarzenegger said, "After passing the largest tax increase in California history, it makes absolutely no sense to go back to the taxpayers to solve the current shortfall - that’s why yesterday I vetoed the majority vote tax increase passed by the legislature. "
California lawmakers proposed a tax on affiliate advertising and sent legislation to the Governor. In response, Overstock.com sent notices to all of its affiliate advertisers in California, that it is dropping their services owing to eminent passage of laws requiring internet retailers to collect taxes if they have local affiliate advertisers. Overstock also sent similar notices to affiliate advertisers in Hawaii, North Carolina and Rhode Island, which planned to enact similar legislation.
"It's painful to have to terminate these relationships with affiliates, simply because they live in states where counterproductive (and likely unconstitutional) laws are being passed," said Patrick Byrne, Chairman and Chief Executive Officer of Overstock.com, in a statement.
However, because California Governor Schwarzenegger vetoed the legislation, as promised, Overstock.com reinstated its California-based affiliate advertisers.
Overstock.com reported that the California Governor's office spoke directly with Overstock.com's Chairman and CEO regarding the issue. Overstock.com estimates its internet affiliate advertisers in California create millions of dollars in revenue.
