The keyword today in the mouth’s of many Illinois politicians was the word ‘tax’. Along with proposing an income tax hike from 3% to 5.25% and a $1/pack increase on the cigarette sin tax, Illinois legislature passed a bill to impose what has become known as the “Amazon Tax”. The Amazon Associates program, which has previously disabled accounts in North Carolina, Rhode Island, and Colorado when similar laws were passed in those states warned in an e-mail today that it may do the same thing to Illinois-based Amazon Associates members’ accounts should Governor Quinn sign the legislation.
Greetings from the Amazon Associates Program:
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.
Coming clean, I am an Amazon Associates member. I receive 4% in commission off of purchases that you make from Amazon after landing there through one of my links. It’s a tiny amount that doesn’t amount to a whole lot but it helps keep 404 Tech Support online. It isn’t my sole source of income nor is it a significant percentage, so that isn’t why this legislation angers me. It’s the fact that these laws have proven themselves ineffectual in other states that passed them. The Tax Foundation reported that early adopter states for these types of laws are even starting to abandon them as they signal business unfriendliness, don’t generate additional revenue, and may have actually cost revenue.
The bill, HB3659, wants to define having an “affiliate” in a state to be the equivalent of having a physical presence in the state. For example, we’ll use two computer parts online retailers: NewEgg and TigerDirect. NewEgg doesn’t have a physical presence in Illinois but TigerDirect has a warehouse. That means when I purchase through NewEgg, there is no sales tax on my order but, as an Illinois resident, when I order from TigerDirect, I also have to pay a state sales tax. This law would mean Amazon would be required to collect a state sales tax for any purchases made from the site by Illinois residents. This law doesn’t make sense in the Internet age. As a Illinois Amazon Associate, I’m selling to far more than just Illinois residents. The Internet and physical space are at odds yet again.
What infuriates me most is that Illinois can pass stupid laws like this and others but can’t pass a budget that was due by July 1st. It’s now a week into January. We’re halfway through the fiscal year without a budget. Perhaps with a leaner budget, Illinois wouldn’t keep spending its way into a deficit. Furlough days have been used, unemployment is high, and the state’s credit rating keeps getting down-graded. It’s time to do something that will actually work towards that goal.
If the governor signs this law, Amazon Associates within the state will make less money as Amazon pulls the plug. They’ll have less money to spend in Illinois. With the impending tax increase, citizens will have less take-home pay and less money for discretionary spending. That decrease will negatively affect their spending habits meaning less purchases made from Illinois businesses and less sales tax for the state of Illinois. Less sales in Illinois will lead to more businesses up and leaving the state which increases our unemployment rate and dependency on the government, furthering our deficit. Less folks employed means less income being generated and less income tax being collected by the state. Net gain = negative in this scenario.
Pass a budget. Cut spending. Institute policies that welcome businesses and encourage them to stay. Try to understand this whole Internet thing. Pass a budget for the first time in at least four years before the fiscal year begins. Lather, rinse, repeat.
You can contact the Governor and share with him your opinion on the matter. (You’ll probably have better luck reaching him in his Chicago office.) I, for one, though think tech-minded bills would be a better choice to be looking into rather than greedy new taxes that scare away businesses and reduce incomes.