Tax Zealots – Amazon vs. Illinois

Amazon just emailed me:

We regret to inform you that the Illinois state legislature has passed an unconstitutional tax collection scheme that, if signed by Governor Quinn, would leave Amazon.com little choice but to end its relationships with Illinois-based Associates. You are receiving this email because our records indicate that you are a resident of Illinois. …

Please note that this not an immediate termination notice and you are still a valued participant in the Amazon Associates Program. But if the governor signs this bill, we will need to terminate the participation of all Illinois residents in the Associates Program. After that point, we will no longer pay any advertising fees for sales referred to amazon.com, endless.com and smallparts.com nor will we accept new applications for the Associates Program from Illinois residents.

The unfortunate consequences of this legislation on Illinois residents like you were explained to the legislature, including Senate and House leadership, as well as to the governor’s staff.

Over a dozen other states have considered essentially identical legislation but have rejected these proposals largely because of the adverse impact on their states’ residents.

Governor Quinn’s office may be reached here.

I had heard of this happening in other states, but this is the first mention I’ve heard about it happening in Illinois. Frack. I don’t make thousands of simolians using Amazon links¹, but I do make enough to pay for the hosting of this blog.

I guess it’s happening though:

A bill seemingly being fast-tracked by the Illinois General Assembly would add a new tax…

Beginning July 1, 2011, a retailer having a contract with a person located in this State under which the person, for a commission or other consideration based upon the sale of tangible personal property by the retailer, directly or indirectly refers potential customers to the retailer by a link on the person’s Internet website.

This is widely known as the Amazon Tax. Supporters include the state’s retail merchants. They claim it will raise $150 million a year in revenues. But the Tax Foundation begs to differ…

Word is that Illinois legislators are considering click-through nexus, also known as an “Amazon tax,” pushed by revenue officials who claim that it would raise $150 million a year in revenue. Such laws, nicknamed after their most visible target, require retailers that have contracts with “affiliates”-independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business-to collect the state’s sales tax. They exist in New York, Rhode Island, North Carolina, and Colorado. […]

Illinois’s version is a traditional first-generation “Amazon” tax that targets affiliates. Contrary to the claims of supporters, Amazon taxes do not provide easy revenue. In fact, the nation’s first few Amazon taxes have not produced any revenue at all, and there is some evidence of lost revenue. For instance, Rhode Island has seen no additional sales tax revenue from its Amazon tax, and because Amazon reacted by discontinuing its affiliate program, Rhode Islanders are earning less income and paying less income tax. There’s no reason why Illinois wouldn’t suffer the same fate.

(click to continue reading Capitol Fax.com » Today’s lessons.)

What bullshit. Utter bullshit. Amazon isn’t going to pay the tax, and I’m not going to report the income anymore, because there won’t be any. How does this help close the monstrous budget gap in Illinois? It doesn’t.

Bill Status of HB3659  96th General Assembly   Full Text Votes  View All Actions  Printer-Friendly Version

Short Description:  PROP TAX-PUBLICATION FEES

House Sponsors Rep. Patrick J. Verschoore – Dan Reitz – Brandon W. Phelps – Linda Chapa LaVia – Frank J. Mautino, Roger L. Eddy, Mark H. Beaubien, Jr., Michael K. Smith, Daniel V. Beiser, Harry Osterman, Mary E. Flowers, Greg Harris, Sara Feigenholtz, Lisa M. Dugan and Naomi D. Jakobsson

Senate Sponsors (Sen. John J. Cullerton – Christine Radogno – Jeffrey M. Schoenberg)

(click to continue reading Illinois General Assembly – Bill Status for HB3659.)

Idiots, all of them.

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I was going to make this into an info-graphic, but never got around to it. Anyway, here’s the text-only version:

Old system:
1. I see a film I like (or book, or musical instrument, or whatever), write about it, post a link to Amazon’s DVD, partially because they host an image of the DVD cover, partially because I want other people to watch the film too.
2. My aunt in California sees my post, clicks the link, and buys the DVD
3. Amazon (in Seattle) sends her the disc via UPS
4. I get a 3% commission
5. I report this income in my yearly federal and state taxes (and I do)
6. State of IL makes a little bit of tax revenue

New proposed system
1. I see a film I like, write about it.
2. my aunt in CA sees my post, goes to Amazon and looks for the DVD, buys it.
3. Amazon sends her the DVD
4. I get zero commission in IL
5. I don’t have this income to report on my taxes, so I don’t.
6. State of IL gets zero

Why is the proposed system better for the State of IL?

Footnotes:

1. if you click a link I put up, and purchase an item from Amazon in the same web session, I get around 3-5% of the purchase price as commission [↩]