Remember the oldadage: “When the cat’s away, the mice will play”? In Illinois, it shouldprobably go something like, “When the House of Representatives is out ofsession, the legislators will push tax hikes.”
On Wednesday, I testifiedat a hearing of the House Revenue & Finance Committee in Chicago. Thesubject of the hearing was SB 3353,a bill that would establish sales tax liability for out-of-state onlineretailers through their in-state affiliates.
As I told the Committee, the states that have attempted to prey upononline retailers beyond their borders through “affiliate nexus” tax schemeshave not raised the desired revenues. In fact, Rhode Island has reported thatis has raised no revenue from this tax and North Carolina officials have stoppedtracking revenues from the tax. Now New York is mired in litigation over theconstitutionality of its tax and Rhode Island is considering repeal.
In practice, these tax schemes force higher prices on consumers, or evenprecipitate business closures. A loss of business activity is the last thingany state, especially Illinois, needs during this time of economic uncertainty.Let’s hope that the legislators got the message.