Earlier today, with breathtaking speed, the Illinois State Legislature approved a measure that will tax online shopping by requiring the in-state affiliates of out-of-state online retailers to collect sales and use tax. The measure is now before Governor Pat Quinn for his signature or veto. If you are opposed to taxing online shopping and you live in Illinois, click here to share your concerns with the Governor.
What surprises me most about the outcome today is that so many politicians ignored reality and basic facts in voting to adopt this measure. The states that have attempted to tax out-of-state online retailers through their affiliates have not raised much, if any, revenue. What these "Amazon tax" schemes have done is invited court challenges, so I hope Illinois has some good laywers ready. North Carolina isn't tracking revenues collected and Rhode Island reports that it actually lost revenue because of an affiliates tax. The reason why is simple: the retailers have shut down their affiliates programs rather than be subject to this ill-conceived, unconstitutional tax. They still make sales, but the states don't get any revenue. But the states actually lose revenue because, without the affiliates, there are no businesses to pay income tax, sales tax, and other taxes they are required to pay. By one account, Illinois has 9,000 affiliates, who earned $116 million and paid $18 million in state income tax in 2009. But now that is likely going to stop flowing into the Illinois Treasury because reailers, like Overstock.com and Amazon.com have told their affiliates they will terminate their relationships because of this bill. There may still be a chance to stop this bad bill, but only if good people like you who are concerned about Illinois speak out; click here to contact Governor Quinn and tell him taxing online shopping is a bad idea.