4 ms·

Best-Selling Author Cancels California Affiliates

25 points by bond 15y ago

maineldc 15y ago
Sounds like someone who is looking to generate PR by coasting on other news and slamming California. As someone who has started a company in CA, I don't find the business climate "repressive".
- GoldenMonkey 15y ago
  As an outsider dealing with CA taxes... due to a previous CA employee, I find CA intrusive and expensive to deal with. More paperwork and fees, and hassles than anything in my own business tax state of Colorado. And, like I've said in other posts, I'm still dealing with CA... 2 years after I let my CA employee go. Don't believe me? Try calling up the Franchise Tax Board... 2 hours of waiting, if you can get thru their automated phone system that is. Yes, there are much better business friendly states... CA is at the bottom of the barrel.
raheemm 15y ago
Im curious - why does California's 'anti-business' culture not interfere with silicon valley startup activity?
- wpietri 15y ago
  As a Silicon Valley entrepreneur, none of what this guy says rings true for me. I'm here because I think California's climate for business is great. What I need is smart, well-educated, creative workers. I need reliable infrastructure. I need great universities. I need a broad-minded culture, so creative oddballs feel comfortable, and talent from overseas feels like they could make a life here. Personally, I'm happy to pay taxes to support education, infrastructure, and a fair bit of regulation, because it directly benefits me and my business. As far as I'm concerned, This guy's whole anti-tax-means-patriotism stuff is just another way of saying "I Got Mine, Fuck You". And since affiliate marketing funds an awful lot of web spam, I am not going to shed too many tears about the end of his affiliate program.
  - yummyfajitas 15y ago
    Strangely, the author's example of a more business friendly state (Texas) seems to beat California on a number of your government-related metrics. Texas schools are better than California schools for all racial categories at grade 4 and 8 (the grades in which comprehensive data is collected). http://nationsreportcard.gov/science_2009/g4_state.asp?subtab_id=Tab_4&tab_id=tab1#tabsContainer http://nationsreportcard.gov/science_2009/g4_state.asp?subta... http://nationsreportcard.gov/science_2009/g8_state.asp?tab_id=tab1&subtab_id=Tab_4#tabsContainer http://nationsreportcard.gov/science_2009/g8_state.asp?tab_i... According to the only ranking I could find, Texas has better infrastructure as well: http://www.cnbc.com/id/41666598 http://www.cnbc.com/id/41666598 So maybe this guy's attitude isn't so much "I got mine, fuck you" as it is "if Texas can do more with less, California should as well."
    - wpietri 15y ago
      As an engineer, I'm naturally fond of doing more with less. And California obviously has substantial problems. But the "tax cuts = patriotism = awesome" meme has nothing to do with efficiency. Indeed, I think it's a big cause of inefficiency. California's biggest structural problem is the insane mess created by Proposition 13, the result of a previous wave of anti-tax fervor. There's also no discernment about what to cut, or how. Every hacker knows that optimization always requires a firm grasp of the details, and that a well-optimized system requires long-term thinking and investment. If this guy were proposing particular fixes, I'd be totally in favor of that. But his only proposed fix is "please allow me to continue taking advantage of a quirky sales tax loophole". While, of course, running his business via a medium created by government-funded research. So no, I'm pretty sure he's in the IGMFY camp.
      - yummyfajitas 15y ago
        California spends 70% more (per capita) than Texas and achieves poorer results. http://www.taxfoundation.org/research/show/287.html http://www.taxfoundation.org/research/show/287.html I can't see how California's inability to raise taxes further is the problem. The author is proposing a fix: move to Texas and avoid creating a nexus in California.
- njl 15y ago
  Momentum, I suspect. At some point, increasing demands from local government are destined to provide a competitive advantage to businesses in other locales. The interesting question is how much of an advantage being located in Silicon Valley is, as compared to the cost. By their nature, bureaucracies tend to ratchet themselves larger and larger. At some point, the balance has to tip.
- pkteison 15y ago
  Startups do well because non competes are not enforceable, so experienced employees can jump ship to a startup at any time.
- xrandr 15y ago
  Actually, in my case, it is interfering. The affiliate tax thing cuts off an important source of revenue for my business. I only recently moved to CA specifically because of the valley's reputation for startups. Now I am doubting that decision. For the record I should state that I am not opposed to taxes at all. But this affiliate tax completely blocks an entire class of income. It is disheartening to think that here in Silicon Valley I am actually disadvantaged in a big way compared to competitors. Still, the real advantage is the talent pool. But you know, the talent pool is around only as long as business can afford to exist.
  - wpietri 15y ago
    There is no "affiliate tax". When people buy things in the US, they are generally supposed to pay sales tax. To make it easy on purchasers, states require businesses to collect the tax. Because of quirks of American law, states can't force out-of-state companies to participate. The tax is still owed; purchasers are just supposed to pay it themselves. The law recently changed so that having affiliates in California means that you have to collect the CA sales tax like any other CA business.
    - WettowelReactor 15y ago
      Although not a tax in the traditional sense this added burden to affiliates and out-of-state business is a real additional expense, the effect is the same.
- tsotha 15y ago
  It might be. We won't know for another decade when we can look back and see where dynamism was.
Vivtek 15y ago
Insane entitlements? I just don't get people.
- wpietri 15y ago
  I think this particular facet of human nature was well explained by Upton Sinclair: "It is difficult to get a man to understand something when his job depends on not understanding it."
jdvolz 15y ago
As someone who is living in Las Vegas NV (no state income tax) I am struggling with where I should move. I just checked and the CA state income tax is 10% for my earning bracket. That's a 10% premium (>$10k per year) when compared to Texas, Nevada and Washington. It's also 1% greater than Oregon. It's 5% greater than CO or NM. Add to that the high cost of living in the valley (particularly housing) and it's difficult to justify moving to California vs. getting a remote job working for a company in California at the same salary. I see the economic value of working the valley and that the salaries are higher, but they would have to be 30% higher than what I'm earning in Nevada just to offset the increase in costs. Imagine if I actually wanted a raise. If you tell me that not only is the CA legislature requiring these funds from me, but also requiring corporations with operations in the state to collect sales tax (putting them at a competitive disadvantage to companies that don't have operations there) I'm going to start to wonder about what other anti-business measures might get passed. Anti-business measures are going to cause businesses to move if they can. Less businesses means less chance for jobs which is obviously a negative for someone looking to move to economic opportunity.
- pkteison 15y ago
  For that remote job, just be careful to check the law first. Some states tax telecommuters. I do not believe California is one of them, but I also do not believe that will last forever since lord knows they need revenue. All CA has to do is redefine "source" and poof, free money. http://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf http://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf section 3420 "The critical factor in determining the source of income from personal services is not the residence of the taxpayer, the place where the contract for services is entered into, or the place of payment. It is the place where the services are actually performed" - change that definition, and there goes your sweet telecommuting tax break. http://www.nytimes.com/2008/02/20/business/businessspecial2/20tax.html http://www.nytimes.com/2008/02/20/business/businessspecial2/... is an interesting article about the New York telecommuting tax.
  - ams6110 15y ago
    lord knows they need revenue Or they need to cut spending.
gopi 15y ago
Its amazing how california with all its advantages (climate, tech industry, hollywood etc) can be in such a financial mess...Think how great the state would if its atleast 10% as business friendly as Texas
- hysterix 15y ago
  You do know that california gives more to the federal government than it receives, to keep shit states such as alabama and the like propped up? You do know that if california did not have to pay out to the federal government there would be no financial issues of any kind? Of course you didn't.
  - swaits 15y ago
    Not "California", California residents. You are referring to US income tax, which is the same everywhere. Yes, it bleeds money out of our state. But I don't understand HTF you make the leap that this is the cause of all of our fiscal problems.
  - raheemm 15y ago
    Some data about this - http://www.taxfoundation.org/research/show/266.html http://www.taxfoundation.org/research/show/266.html
deleted 15y ago
[deleted]
saalweachter 15y ago
Places like New York City and San Francisco will always have a strong startup culture regardless of how oppressive the tax culture is. Why? People want to live there. Not all people, of course, but there's a huge number of people who would still live in New York City even if the tax rate of the highest income bracket were twice what it is now. It's New Effin' York. Incidentally, I'm kind of curious how the California/Amazon thing will play out, given that Amazon is currently collecting sales tax in New York. When New York passed their affiliate nexus tax law in 2008, Amazon went the route of collecting the taxes and suing New York to have the law repealed; they are still collecting sales tax in New York 3 years later. I'm guessing their experience in New York has lead them to try the more extreme route in California, of starving the state of more revenue in an attempt to force them to change the law. If California holds firm the way New York has, will Amazon give in?
- tsotha 15y ago
  Amazon won't give in in California because it has no reason to. California can only demand Amazon collect state sales tax if Amazon has a physical presence in California. Once there are no affiliates there isn't anything the state can do. I suspect the reason they're collecting taxes in New York is they have a physical presence there and they don't want to give it up.

25 points by bond 15y ago

Sounds like someone who is looking to generate PR by coasting on other news and slamming California. As someone who has started a company in CA, I don't find the business climate "repressive".

GoldenMonkey 15y ago
As an outsider dealing with CA taxes... due to a previous CA employee, I find CA intrusive and expensive to deal with. More paperwork and fees, and hassles than anything in my own business tax state of Colorado. And, like I've said in other posts, I'm still dealing with CA... 2 years after I let my CA employee go. Don't believe me? Try calling up the Franchise Tax Board... 2 hours of waiting, if you can get thru their automated phone system that is. Yes, there are much better business friendly states... CA is at the bottom of the barrel.

raheemm 15y ago

Im curious - why does California's 'anti-business' culture not interfere with silicon valley startup activity?

wpietri 15y ago
As a Silicon Valley entrepreneur, none of what this guy says rings true for me. I'm here because I think California's climate for business is great. What I need is smart, well-educated, creative workers. I need reliable infrastructure. I need great universities. I need a broad-minded culture, so creative oddballs feel comfortable, and talent from overseas feels like they could make a life here. Personally, I'm happy to pay taxes to support education, infrastructure, and a fair bit of regulation, because it directly benefits me and my business. As far as I'm concerned, This guy's whole anti-tax-means-patriotism stuff is just another way of saying "I Got Mine, Fuck You". And since affiliate marketing funds an awful lot of web spam, I am not going to shed too many tears about the end of his affiliate program.
- yummyfajitas 15y ago
  Strangely, the author's example of a more business friendly state (Texas) seems to beat California on a number of your government-related metrics. Texas schools are better than California schools for all racial categories at grade 4 and 8 (the grades in which comprehensive data is collected). http://nationsreportcard.gov/science_2009/g4_state.asp?subtab_id=Tab_4&tab_id=tab1#tabsContainer http://nationsreportcard.gov/science_2009/g4_state.asp?subta... http://nationsreportcard.gov/science_2009/g8_state.asp?tab_id=tab1&subtab_id=Tab_4#tabsContainer http://nationsreportcard.gov/science_2009/g8_state.asp?tab_i... According to the only ranking I could find, Texas has better infrastructure as well: http://www.cnbc.com/id/41666598 http://www.cnbc.com/id/41666598 So maybe this guy's attitude isn't so much "I got mine, fuck you" as it is "if Texas can do more with less, California should as well."
  - wpietri 15y ago
    As an engineer, I'm naturally fond of doing more with less. And California obviously has substantial problems. But the "tax cuts = patriotism = awesome" meme has nothing to do with efficiency. Indeed, I think it's a big cause of inefficiency. California's biggest structural problem is the insane mess created by Proposition 13, the result of a previous wave of anti-tax fervor. There's also no discernment about what to cut, or how. Every hacker knows that optimization always requires a firm grasp of the details, and that a well-optimized system requires long-term thinking and investment. If this guy were proposing particular fixes, I'd be totally in favor of that. But his only proposed fix is "please allow me to continue taking advantage of a quirky sales tax loophole". While, of course, running his business via a medium created by government-funded research. So no, I'm pretty sure he's in the IGMFY camp.
    - yummyfajitas 15y ago
      California spends 70% more (per capita) than Texas and achieves poorer results. http://www.taxfoundation.org/research/show/287.html http://www.taxfoundation.org/research/show/287.html I can't see how California's inability to raise taxes further is the problem. The author is proposing a fix: move to Texas and avoid creating a nexus in California.
njl 15y ago
Momentum, I suspect. At some point, increasing demands from local government are destined to provide a competitive advantage to businesses in other locales. The interesting question is how much of an advantage being located in Silicon Valley is, as compared to the cost. By their nature, bureaucracies tend to ratchet themselves larger and larger. At some point, the balance has to tip.
pkteison 15y ago
Startups do well because non competes are not enforceable, so experienced employees can jump ship to a startup at any time.
xrandr 15y ago
Actually, in my case, it is interfering. The affiliate tax thing cuts off an important source of revenue for my business. I only recently moved to CA specifically because of the valley's reputation for startups. Now I am doubting that decision. For the record I should state that I am not opposed to taxes at all. But this affiliate tax completely blocks an entire class of income. It is disheartening to think that here in Silicon Valley I am actually disadvantaged in a big way compared to competitors. Still, the real advantage is the talent pool. But you know, the talent pool is around only as long as business can afford to exist.
- wpietri 15y ago
  There is no "affiliate tax". When people buy things in the US, they are generally supposed to pay sales tax. To make it easy on purchasers, states require businesses to collect the tax. Because of quirks of American law, states can't force out-of-state companies to participate. The tax is still owed; purchasers are just supposed to pay it themselves. The law recently changed so that having affiliates in California means that you have to collect the CA sales tax like any other CA business.
  - WettowelReactor 15y ago
    Although not a tax in the traditional sense this added burden to affiliates and out-of-state business is a real additional expense, the effect is the same.
tsotha 15y ago
It might be. We won't know for another decade when we can look back and see where dynamism was.

Vivtek 15y ago

Insane entitlements? I just don't get people.

wpietri 15y ago
I think this particular facet of human nature was well explained by Upton Sinclair: "It is difficult to get a man to understand something when his job depends on not understanding it."

jdvolz 15y ago

As someone who is living in Las Vegas NV (no state income tax) I am struggling with where I should move. I just checked and the CA state income tax is 10% for my earning bracket. That's a 10% premium (>$10k per year) when compared to Texas, Nevada and Washington. It's also 1% greater than Oregon. It's 5% greater than CO or NM. Add to that the high cost of living in the valley (particularly housing) and it's difficult to justify moving to California vs. getting a remote job working for a company in California at the same salary. I see the economic value of working the valley and that the salaries are higher, but they would have to be 30% higher than what I'm earning in Nevada just to offset the increase in costs. Imagine if I actually wanted a raise. If you tell me that not only is the CA legislature requiring these funds from me, but also requiring corporations with operations in the state to collect sales tax (putting them at a competitive disadvantage to companies that don't have operations there) I'm going to start to wonder about what other anti-business measures might get passed. Anti-business measures are going to cause businesses to move if they can. Less businesses means less chance for jobs which is obviously a negative for someone looking to move to economic opportunity.

pkteison 15y ago
For that remote job, just be careful to check the law first. Some states tax telecommuters. I do not believe California is one of them, but I also do not believe that will last forever since lord knows they need revenue. All CA has to do is redefine "source" and poof, free money. http://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf http://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf section 3420 "The critical factor in determining the source of income from personal services is not the residence of the taxpayer, the place where the contract for services is entered into, or the place of payment. It is the place where the services are actually performed" - change that definition, and there goes your sweet telecommuting tax break. http://www.nytimes.com/2008/02/20/business/businessspecial2/20tax.html http://www.nytimes.com/2008/02/20/business/businessspecial2/... is an interesting article about the New York telecommuting tax.
- ams6110 15y ago
  lord knows they need revenue Or they need to cut spending.

gopi 15y ago

Its amazing how california with all its advantages (climate, tech industry, hollywood etc) can be in such a financial mess...Think how great the state would if its atleast 10% as business friendly as Texas

hysterix 15y ago
You do know that california gives more to the federal government than it receives, to keep shit states such as alabama and the like propped up? You do know that if california did not have to pay out to the federal government there would be no financial issues of any kind? Of course you didn't.
- swaits 15y ago
  Not "California", California residents. You are referring to US income tax, which is the same everywhere. Yes, it bleeds money out of our state. But I don't understand HTF you make the leap that this is the cause of all of our fiscal problems.
- raheemm 15y ago
  Some data about this - http://www.taxfoundation.org/research/show/266.html http://www.taxfoundation.org/research/show/266.html

deleted 15y ago

[deleted]

saalweachter 15y ago

Places like New York City and San Francisco will always have a strong startup culture regardless of how oppressive the tax culture is. Why? People want to live there. Not all people, of course, but there's a huge number of people who would still live in New York City even if the tax rate of the highest income bracket were twice what it is now. It's New Effin' York. Incidentally, I'm kind of curious how the California/Amazon thing will play out, given that Amazon is currently collecting sales tax in New York. When New York passed their affiliate nexus tax law in 2008, Amazon went the route of collecting the taxes and suing New York to have the law repealed; they are still collecting sales tax in New York 3 years later. I'm guessing their experience in New York has lead them to try the more extreme route in California, of starving the state of more revenue in an attempt to force them to change the law. If California holds firm the way New York has, will Amazon give in?

tsotha 15y ago
Amazon won't give in in California because it has no reason to. California can only demand Amazon collect state sales tax if Amazon has a physical presence in California. Once there are no affiliates there isn't anything the state can do. I suspect the reason they're collecting taxes in New York is they have a physical presence there and they don't want to give it up.