Until a few days ago, I was an affiliate with Amazon.com. This meant I could advertise books and other products on my websites and if someone purchased one by clicking my link, I got a small commission for the sale.

On Wednesday night, I and 25,000 other affiliates in California received a curt email from Amazon.com that our relationship was hereby terminated.

The reason? Gov. Jerry Brown had signed into law a bill requiring out-of-state online retailers to start charging sales tax to buyers.

Part of the letter from Amazon.com said, "As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com."

The point of this law of course, is to generate revenue for the state. However, those 25,000 affiliates in California paid about $124 million in state income taxes in 2009, which the state may lose because of this new law.

While this won't particularly rock my world, many small businesses who already are struggling because of the economy will be put at risk.

Michele Molitor, an executive coach at Nectar Consulting, Inc. in Hayward, agrees. She said, "While I understand that California is in desperate need of other revenue streams, I think this new bill signed will only hurt small businesses and the state won't gain a significant amount of revenue to make a dent in the budget deficit. The revenues my business generates as an Amazon affiliate aren't huge, but as a small business owner, it all counts."

Oliver Roup, CEO and founder of VigLink, which helps bloggers make money online, was quoted in an article in the San Francisco Business Times on Friday: "A number of merchants have let us know that as long as we remain a California affiliate, they cannot do business with us, so we are looking into alternatives, including moving some or all of our operations out of state and changing the way we do business."

From a buyer's perspective, I, like many of you, I'm sure, look to online retailers to spend my dollars at places that don't collect sales tax. Now this means that we will have less money to spend on purchases, which reduces the amount of sales taxes going to the state.

It's also likely going to mire the state in expensive lawsuits that will cost more than they will help. After all, the U.S. Constitution prohibits states from asserting its taxing authority outside their borders unless the retailer maintains a significant physical presence in the state —which Amazon.com, Overstock.com and the others don't have.

Denise Chambliss, attorney at law at Garcia and Gurney in Pleasanton, said, "While there are ripples caused by the termination of California affiliates by Amazon and Overstock in opposition to the California tax of online purchases, the simple truth is that California needs sales tax revenue to balance the budget. The extent of the loss of the affiliate business just cannot be predicated at this time and it is too early as to whether the revenues from the sales tax revenue will compensate for the loss of income tax from the affiliate operations."

Hmmm... so the jury is still out, I suppose.

I'm not a pundit who has the answers to the state's economic woes, but this law is yet another blow to California small businesses that are struggling to compete in these tough economic times.