What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz
Amazon and other e-commerce firms are cutting ties with all Minnesotans who earn money by posting links that send traffic to online merchants after lawmakers passed a tweak to state sales tax law.
Minnesota E-Fairness legislation, signed by Gov. Mark Dayton on May 23 and going into effect July 1, classifies independent bloggers and online reviewers as a physical presence of a business in the state. This means online companies who pay these people to generate new sales must collect tax not just on those sales, but on all sales in the state.
The tax on online sales is already due, but the onus has been on consumers, who often never pay the tax. The new law puts the onus on Amazon, as long as they have a single blogger posting links to its products from Minnesota.
The state has estimated the new law will generate $5 million in new revenue, but Amazon is having none of it.
The company sent an email to associates in Minnesota, saying it will close all accounts in the state to avoid the tax.
“This is a direct result of the unconstitutional Minnesota state tax collection legislation passed by the state legislature and signed by Governor Dayton,” the letter said. “We will no longer pay any advertising fees for customers referred to an Amazon Site after June 30 nor will we accept new applications for the Associates Program from Minnesota residents.”
The state Department of Revenue said it is working on this issue today, but was not immediately ready to comment.
Aaron Hall, an attorney in Minneapolis who has clients who will be affected and has written about the new law, said even he will lose a couple hundred dollars a month as Amazon pulls the plug on the Minnesota program.
“A lot of bloggers have been hit,” Hall said.
Amazon, which was not immediately available for further comment, is not the only company cutting off ties with Minnesota bloggers and reviewers. Commission Junction, a California-based firm that handles online marketing and advertising, has also pulled out of the state, Hall said. Commission Junction was not immediately ready to comment.
The people affected are part of a grass-roots, independent e-commerce sales force, creating accounts with these companies and posting special links to blog posts, reviews and display ads that credit them for sales. Sometimes they earn a commission, up to 6 percent, Hall said. Some people make tens of thousands of dollars a year.
Amazon has already pulled out of states like California, North Carolina, Colorado, Connecticut, Arkansas, Illinois and Rhode Island for similar reasons.
The online giant called Minnesota’s E-Fairness legislation “unconstitutional” in its lette, and called for federal lawmakers to pass the Marketplace Fairness Act to resolve the confusion of online sales tax policy from state to state.
“Congressional legislation is the only way to create a simplified, constitutional framework to resolve interstate sales tax issues and it would allow us to re-open our Associates program to Minnesota residents,” Amazon said.
Real per capita income is the federal government's best estimate of a person's wealth based on their income and the prices they must pay where they live.
For instance, $50,000 goes further in Sioux Falls than Miami, so someone with less income in Sioux Falls may have more real income than someone in Miami who earns a larger salary.
The Upper Midwest generally performs well in this measure, since prices are relatively low and personal income is relatively high, according to new data from the Bureau of Economic Analysis. The data also shows that real earning power diminished from 2007 to 2011 for Minnesotans, a fact accentuated by a quicker recovery of real personal income in North Dakota, South Dakota, Nebraska and Iowa since the downturn.
The new data are prototype estimates of real personal income, and the BEA is looking for feedback. You could think of it as a beta product launch, using price data and personal income figures to arrive at a real per capita income estimate in each state and major metro area in the U.S.
In 2007, Minnesota ranked sixth in the country and first in its region according to the measure, with real per capita income estimated at $41,000. It has since sank slightly to $40,600 per year, and has been surpassed by North Dakota, South Dakota and Nebraska. Iowa has nearly caught Minnesota too.
Minnesota, as the chart below shows, is still doing pretty well. It's ranked 9th nationally, and remains stronger than Wisconsin, Illinois, Michigan, and pretty much everyone else in the Midwest.
Wisconsin’s economy is stuck, too dependent on old industries – Milwaukee Journal-Sentinel
Strib polling shows broad support for DFL taxes on wealthy, cigarettes – StarTribune
Mexico’s auto industry outstripped Canada’s in 2012 – Chicago Fed
Enbridge adds 110 more jobs in downtown Duluth – News Tribune
Canada’s tar sands companies fail to meet cleanup standards – Guardian
Bondholders vs. unions in Detroit as bankruptcy looms – NY Times
Chastened Best Buy founder Schulze plans $1b foundation – StarTribune
Yale review suggests Medtronic cooked the books on Infuse study – StarTribune
Minnesota has made a lot of progress spreading broadband availability – FedGazette