The following is cross-posted at
Great news for Hawaii and California consumers! Governors Linda Lingle (R) and Arnold Schwarzenegger (R) yesterday vetoed legislation in Hawaii and California that would have required consumers to pay tax on purchases made over the internet.
The "affiliate nexus tax" has caused a storm of attention in recent days after a number of retailers, including and, rightly took steps to end advertising agreements to avoid collecting the tax, arguing that it is blantantly unconstitutional and violates the U.S. Supreme Court decision Quill v. North Dakota.  That court case determined states cannot force businesses to collect taxes if they have no physical presence in the state.  The nexus tax requires out-of-state retailers to collect and remit taxes if they advertise through in-state websites.
In her Statement of Objections, Gov. Lingle highlighted these very legal concerns.  She also noted that the bill violates Article III, Section 14 of the Hawaii Constitution, as it is overly broad in its subject.  In California, Gov. Schwarzenegger noted that it makes "absolutely no sense to go back to the taxpayers to solve the current shortfall."
A similar measure is still pending in North Carolina and the nexus tax was approved as part of Rhode Island‘s budget this week.
NORTH CAROLINA RESIDENTS: Click here now to write your legislators and Governor in opposition to the eTax!
Also, Click here for ATR’s letter to Governor Lingle urging her to veto the nexus tax.
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