Lawmakers in Illinois have voted for a 6.25% tax on online retail purchases. The levy, which still needs the governor's approval, would apply to goods bought through affiliates of online retailers that take in least $10,000 worth of annual sales in the state.Illinois Affiliate Tax Will Harm Small Businesses and Reduce Tax Revenue
Tax Foundation here.
Just got an email from Amazon:
Greetings from the Amazon Associates Program:
This is Illinois. More stuck on stupid.
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. If our records are incorrect, you can manage the details of your Associates account (here).
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.
We thank you for being part of the Amazon Associates Program, and wish you continued success in the future.
More. My friend John Ruberry, Marathon PunditBy 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.
More. Related, from Reason:
To avoid the gritty work of fighting it out in a free market, organized private interests -- such as Louisiana’s licensed funeral directors -- lobby the government for special regulations, preferential tax treatment and laws that keep out competition. They lobby lawmakers to constrain the same free markets in which they originally achieved success.
She got that right, sadly. De Rugy runs through the literature and gives example after appalling example, from coffin cartels to sugar barons to "small" businesses that are able to marshal millions of dollars to lobby the government for protection from competition. She also links to a Reason.tv video about Los Angeles' crackdown on mobile food trucks, which have been instigated by bricks-and-mortar restaurants. Milton Friedman put it this way in Reason in 1974:
The case for free enterprise, for competition, is that it’s the only system that will keep the capitalists from having too much power. There’s the old saying, “If you want to catch a thief, set a thief to catch him.” The virtue of free enterprise capitalism is that it sets one businessman against another and it’s a most effective device for control.
You stink, Illinois. You're eating your seed corn.
More. The Radio Patriot.
UPDATE: Instalanche. Thanks for the link. I dedicate this, my first Instalanche to Milton Friedman. And the Chicago School, not the Chicago Way:)!!!
Crain's: Deal would boost state income tax to 5.25% on individuals, 8.4% on companies
More. Da TechGuy: Imagine the New Hampshire line times 49. Thanks for the link.
And Points and Figures.
More. Power and Control, an Illinois blogger, writes a note to Gov. Quinn.
Related posts: When States Default. Illinois Gets the Fisheye, Vice Tax and Big Bro Backlash, Calling out Collar County Women, The Tobacco Tax Trap