Jonesboro radio man Paul Harrell sends audio of an interview he conducted with Conway-based affiliate marketer Judi Moore, whom we talked to last week, discussing how Arkansas’ new Amazon sales tax law will crush her online business.
This interview gives a more detailed picture of how the new law is sucking piles of money out of the Arkansas economy, while generating little, if any, new tax revenues for the state:
Worth pointing out about this interview is how the discussion cuts across ideological lines: Harrell, who’s reliably conservative, and Moore, who leans left, find common ground in their critiques of this ill-conceived and pointless law.
“You and I don’t agree on a lot of political things,” Moore tells Harrell. “But the point of this issue, the problem, is that this law is totally incompetent, because it’s not going to do what they want it to do.”
The Arkansas Project first looked into the ramifications of the new law last week as more and more online retailers began terminating their contracts with affiliates in the state.
Transcript of interview at jump.
PH: Judi Moore, are you with us, hello ma’am.
JM: I am here
PH: Thank you so much for being on the program, we really appreciate it….
I was kind of we’re just trying to get you on anyway we could, I was actually talking about something different, but just to kind of educate our viewers a little bit, yesterday we talked about this new Arkansas Amazon sales tax law and how it seems to be affecting online retailers here in the state of Arkansas, now you’re from Conway, is that correct? And you have a business.
Let’s go ahead and tell people the name of your website because I want to be kind there, I’d like for everyone listening to the show to go there. What’s the name of the website? t
JM: Well, the one that is the most public is lunch break shopping dot com, that’s the one where I send everybody to start to get an idea of what affiliate marketing is all about
PH: OK, and what exactly does that sites do for you, I mean, how do you make your income off of that website.
JM: It’s, Lunch Break Shopping is an online mall.
And it had, before the law it had over 600 online merchants so that you could find just about anything in the world you were looking for.
Now it has about 200 online merchants. I lost over 400 immediately. And if you were to click through and buy something from one of those merchants, I would get some small commission. You know,
one or two percent, sometimes ten or fifteen cents a lead. It’s a pay for performance sort of advertising placement.
PH: And so do you feel that this law is… Obviously, the law has hurt your business. I mean, is that safe to say that this has hurt what you do here in Arkansas?
JM: Absolutely. It’s made it harder. It hasn’t completely eliminated my business, but it’s taken away a lot of my tools. It’s taken away
a lot of businesses I can work with, and cut my income by 75%.
PH: Wow. Seventy 75 percent, now are you going to be able to stay afloat, I mean, are you, obviously, you’ve got to be worried
JM: Right, I’ve actually taken on a small part-time job and I’m busy rebuilding sites, I actually have about 60 sites and I’m busy rebuilding them with the few merchants that are left with more information and less shopping. Things like that.
Coming up with a new business plan.
PH: Yeah, a new business plan is right. You’ve taken a 75 percent cut, you’ve got from 200 affiliates, or 600 to 200 affiliates. Are you the only one, I mean, or are there just a plethora of more of you guys here in Arkansas that are suffering here?
JM: You know, I’m sure that there are many affiliates in Arkansas.
I’ve only run into four or five, and that’s after they got hit with this and came looking for help and saw that I have been fighting, and of course, some of the associations that have been trying to help have been steering people my direction, but truthfully, you know, any blogger who has ads on his site even, any mommy blogger at home who is trying to make a few dollars at home to help with the groceries, if they have ads on their site, they’re affected.
PH: Wow. That’s…I just can’t get over this. And what’s interesting is I think they had other examples at the time. I think Rhode Island comes to mind. They had passed something similar. And as a matter of fact, when they passed it, so many of the affiliates, or, excuse me, the retailers like Amazon, Overstock.com, and others…they left as well, and you ended up…the state ended up not getting any money out of this, because that was the goal.
JM: Well, that’s the point. I mean, that is the reason. You know, you and I don’t agree on a lot of political things,
but the point of this issue, the problem, is that this law is totally incompetent.
It’s not going to do what they want it to do, because Amazon and Overstock–And they are those are just two examples–they don’t need me, they don’t need to put an ad on my site to make money in Arkansas.
People are still going to buy from the Amazon. They’re still going to buy from any of these merchants. They’re still going to live in Arkansas. They’re still not going to pay the sales tax or use tax or whatever it is they’re required to pay. Amazon isn’t going to collect it because they just terminated what is called Nexus Now, I’m gone.
JM: So, we’re spending tax dollars to set up a department to enforce this and there’s nothing to enforce.
PH: So it’s just an utter waste. I mean, government has gotten involved here, and its just the wrong place for them to get involved. It would be safe for me to sum that up as your opinion?
JM: Well, let me just expand on it a little bit.
PH: Okay, go for it, yes ma’am.
JM: The legislators, I understand how they got taken in. Okay, this is a domino effect that’s going across the nation, and there are some big box stores that are behind it. Walmart, Target, Best Buy – I love them as a big business. I support business, for crying out loud.
I was part of all their programs. But they’ve decided that one way to make this happen and eliminate Amazon’s advantage online is to convince the small business merchants on Main Street that having Amazon around is unfair. And they tell these legislators that there’s this huge bucket of money that’s got a hole in it that they’re missing and that billions and billions of dollars could be raked in from online sales.
And the legislators believe it because the Walmart lobbyist is sitting in the finance committee meeting waiting for them to vote the way he wants them to vote.
PH: Exactly, exactly. Yeah.
JM: And I am nothing more than a pawn in the game. They don’t think that these affiliates are important enough because we’re invisible.
PH: Yeah. Yeah, you can clearly see, and I’m beginning to read your email that you sent me in more detail you know, this thing is being pushed by the likes of as you said Walmart, Target, Best Buy, I mean these are people that want the legislation passed so that they can crush the competition and it’s really sickening because that’s, that was never the intent of a free market society, when you have the special interests that are participating in our capitalist society but they’re participating in crony capitalism.
And it’s not about who has the best ideas.
It’s not about competing, it’s about, let’s see if we can use the government that can threaten people with fines or jail, to get what we want and survive and make more money, and Judi, it’s absolutely sickening, I feel terrible for you
JM: Well and it’s become, the thing that bothers me is, and the only reason I point it out that you and me might be on opposite sides politically people are telling me that it’s become a part of the issue, and I don’t want to believe that, because it wasn’t just Democrat or just republicans This is true, especially in Arkansas.
JM: In Arkansas specifically, it was a Republican who initiated it Yes it was and it was my Democratic friend who couldn’t help me. I mean its not partisan, it’s ignorance about what was being done in a bill with the name “fairness” on it.
They named it, they named it fairness to mainstream and what they meant was screw over the little guy
PH: Yeah, and do you not feel that the internet is this amazing idea where, maybe even the last bastion of a free market, where you, where it’s kind of untouched right now, and that’s so much of a good thing. I think it’s just a clear example of the government trying, it’s productive, the government wants to get some money out of it, and in this case, the whole thing was just ill-conceived, it’s blowing up in their faces, they’re not gonna have any of this revenue wanted to get, because people want to avoid these burdensome laws and regulations.
JM: And Walmart sits back and laughs.
You know, I want you to think about it for a minute the way I do. You’re right about the Internet and the global energy there. And think back in history to when mail order catalogs were the same thing. Because this is not so different. Websites with advertising are no different than catalogs sent to your mailbox.
It’s just a different delivery system.
JM: And that catalog that you purchase from that comes in your mailbox has been handling sales tax state by state the same way we have in the brick and mortar stores for decades, maybe hundreds of years. If the nexus was there, which, that’s such a silly word but it’s what we’re using nowadays, I guess.
If Montgomery Ward had a store in your state, and you bought stuff, they collected the tax.
That’s the way all the brick-and-mortars do, its the way all the catalog companies still do, and the amazing irony is that with the Internet, we have the software and the digital capability to actually sort this out. So they could leave the tax laws alone and just collect what’s already on the books.
PH: So would you be favor of maybe a national law that just makes it all uniform in the states. Would you be in support of something like that?
JM: Well, I don’t exactly know how they would do it. It would be political suicide.
PH: Right. Yeah.
JM: And it would be a whole another tax.I believe that there must be a solution and I think that part of this chaos I’m caught up in is headed in that direction. I don’t like new taxes and I don’t like federal solutions either, Democrat or not. It’s just that there has to be some sense made of this somehow. Because as far as I’m concerned, Amazon built their corporate structure in a state with no sales tax for a reason.
JM: And that reason is what free markets are about.
PH: Yes, ma’am, that is.
JM: So if Arkansas makes a law, which they did a long time ago, that if I buy from Amazon, I have to self-report and pay the tax myself, that’s our law. Deal with it. But putting the strictures on Amazon and the resulting factor being that Amazon just says, “Well, we know how to play hardball, too. So who needs Judi Moore?”
PH: Yeah, yeah.
JM: What’s happening is your going to still be able to buy from Amazon through a direct type in or a click from Tennessee or a click from Florida or a book review out of Oregon, and that income tax will go somewhere else.
PH: Yeah, I like what you said about…Yeah, it gets going somewhere else. I like what you said about fairness. This bill had the word fairness in it, and I think that’s maybe symptomatic of a lot of the A lot of what seems to happen. It didn’t make it fair at all. All it did was crush your business.
I mean your revenue’s going to go up, what you said 75 percent. If we got people just now joining us that’s about to get in their car and you’ve gone from 600, is it affiliates, down to 200 affiliates.
PH: Merchants, right…
JM: …merchants that will advertise. These merchants just won’t advertise in Arkansas now on websites. And let me take it another direction. This one’s hard to understand. But it’s another way that the same people who made this happen are getting hurt. The Main Street Fairness group that Walmart founded and got all the little brick and mortars to join them and sing what’s fair is fair:
Those little guys now, let’s just pick one, let’s say ABC Wedding store down on you know, Front street. If they want to sell online, they have to be extraordinarily careful now not to bring the wrath of some Rhode Island tax district down on their head because somebody in Oregon clicked a link on a website owned by Rhode Island and bought a wedding veil from a store in Conway, Arkansas.
And now they’ve got some kind of ten thousand dollar tax penalty down the road. Who’s going to do that? Who is going to take that chance?
PH: Yeah, no self thinking, or right thinking business man is going to take that chance, your absolutely right there Judi.
JM: And they might not even know, they might not even know and who can they get help from that all these snake oil salesman now that are jumping up and down to sell nexus information. I’ll tell you what states to be careful of. Well, that’s help.
PH: Oh, my God. I mean, yeah.
Oh, it’s just ridiculous. And I’m reading here a list of these stores that have been, or excuse me, I guess, the retailers that are no longer going to be doing the advertising there, and it just goes on.
JM: Sure, they just automatically cut off any participant any of us that live in a state that signed it. Now Illinois signed it a few weeks before Arkansas.
They lost millions. A friend of mine with company in Rockton, Illinois. He built a multimillion dollar facility in a little town that was withering, hired 56, 59 people. I don’t know. He’s got a multimillion dollar business similar to mine only good, and he just up and moved it to Wisconsin. And so Illinois lost, you know, that income revenue.
They lost 56, 59 jobs. I mean, it was like, ludicrous.
PH: Yeah, and in a time where our economy is so fragile anyway, I mean pushing for any kind of tax increase I think is just in bad taste. Do you think this is kind of like most government plans or tax plans? It just seems like they think it’s a good idea. It’s got the word fairness in it, but the consequences always, or in most cases, especially here of late, they seem to stretch much further than they think or they realize at the time.
Would you agree with that? (snip/recording ends)