It's not unusual to see a Republican politician promise not to raise taxes. But California Governor Arnold Schwarzenegger's recent promise not to sign any legislation that would force internet retailers to collect sales tax was designed specifically to keep companies like Overstock.com and Amazon doing business with affiliates in California.

In recent weeks, Amazon and Overstock have shut down affiliate stores in a handful of states that have passed such laws. Basically, the way things work right now is that online stores don't have to collect sales tax in a US state unless the store has a physical presence in that state. A handful of states including New York, North Carolina, Rhode Island, and Hawaii either have, or are expected to adopt policies that consider affiliates to fit the bill.

What's an affiliate? It's a person or business that has signed up with a web retailer to post links to the online store in exchange for a commission. Basically, it can be some guy who runs a web site that only his grandmother reads or a newspaper web site. Either way, it's not exactly a local store branch or distribution center. But I can certainly see how a state could decide affiliates constitute physical presence in a state. But I can also see how retailers would decide it's easier to pull out of that state altogether rather than have a competitive disadvantage with retailers that don't have affiliates and therefore don't have to charge sales tax.

[via Techdirt]