Illinois To Get Hit With "Amazon Tax"?

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Illinois Amazon affiliates received an unwelcome email last night. Illinois, it seems, is positioned to pass the so-called "Amazon Tax." And Amazon is holding nothing back in voicing its opinion on the matter. The email begins:

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.

And continued:

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
.

Internet Tax Bill (HB 3659) passed the Illinois Senate on January 5, and the House on January 6. All that's left is for Quinn's signature. In short, this means that websites which have affiliates in Illinois will now be required to pay taxes on every sale that originates from those affiliates. The solution for Amazon is to cut off affiliate relationships in the state to avoid paying the taxes.

But Amazon isn't the only one. CouponCabin.com and FatWallet.com are two others that will be affected. FatWallet.com told the Chicago Tribune that they are "actively looking to leave Illinois."

While legislators aim to shrink the budget gap, opponents believe it will do just the opposite - that companies like Amazon and FatWallet will leave, taking jobs and commissions with them, while the small business affiliates lose income and, therefore, pay less in income taxes to the state.

 
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2 comments

JereM 01-07-2011 5:11 PM

Too many legislators do not know their history.  

As Daniel Webster said in "McCullough v. Maryland" -- a suit that went all the way to the Supreme Court back in the early 19th century, "That the power to tax involves the power to destroy … [is] not to be denied”

This is often quoted as "The power to tax is the the power to destroy."

The Illinois legislature wants to tax Amazon because they see money in it, or because "it's moving", as Reagan famously said.  

Amazon, which is considerably smarter than the Illinois Legislature, simply says, "We're not going to do any affiliate business in Illinois.  Therefore you can't tax us."

And you get a stalemate, in which the loyal Amazon Affiliates of Illinois, get screwed.

Moving to Atlanta 01-07-2011 10:28 PM

Tip of the iceburg here. Anyone who thought that the internet sales taxation issue was never going to surface has their head in a hole.

As every state goes broke, more and more states will look to the easy money, like taxing internet sales.

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