3 ms·

Illinois State Tax Revenues Drop Following Affiliate Nexus Tax

27 points by kellyhclay 15y ago

warmfuzzykitten 15y ago
Two thoughts: 1. This news makes me very happy. 2. Most states don't have the economic clout that would make a retailer like Amazon hurt more from the loss of their affiliates than they would by charging sales tax. It's not only the potential loss of revenue they might incur if sales taxes were no longer part of the price comparison between local and internet sales, it's the huge, possibly inestimable, cost of complying with the wacky tax codes rates set by random politicians in every dinky municipality, county and state, which change faster than leaves fall in an Autumn windstorm. If Illinois wants to squeeze more tax revenue out of its citizens, let it join with other states and demand a single, uniform, federal sales tax. Until then, lotsa luck.
- pagekalisedown 15y ago
  I would go as far as saying that all form of income tax should be abolished in favor of one large federal sales tax. One that's already included in all advertised prices. I think it would make most people's lives that much simpler.
  - lachyg 15y ago
    Not sure why you're getting downvoted. This is the system that works fantastically in Australia, and I assume other countries in the world.
    - potatolicious 15y ago
      The problem with this idea is that it's a regressive taxation system, as opposed to a progressive tax system. Which is to say, the poor are taxed disproportionately compared to the rich. A person who makes $10M a year spends a much lower percentage of his income than someone who makes $40K a year. So now we're taxing the $40K person heavily, while the $10M person pays comparatively almost nothing, even accounting for lavish and expensive lifestyles. It reinforces a negative cycle - the rich get richer, the poor get poorer, and social mobility is removed. When the poor lose all hope of improving their lot because the system is so stacked against them, instability and unrest results and... well, the rest of this story might get a little violent. This is probably a worse idea than, say, the flat-rate income tax that is practiced in Hong Kong and elsewhere.
      - pagekalisedown 15y ago
        Several states have no income tax. Including Washington, which is fairly progressive. How do they make it work? A sales tax can vary depending on the type of good. Luxury goods can be more taxed than essential goods. Wouldn't this even the playing field?
        aptwebapps 15y ago
        For most taxpayers in the US state taxes make up a much smaller portion of their total tax burden than federal taxes. So, overall, the tax burden in Washington isn't so much more regressive than a state with income tax. You can have luxury taxes, but it's hard to match income tax if your goal is to have a fairly progressive tax.
      - danboarder 15y ago
        Perhaps counter intuitive, but regressive tax scaling provides better incentives: people will want to make _more_ money in order to take advantage of the lower effective tax rates. Tax policy can reward or dissuade achievement.
      - megaman821 15y ago
        If there is a sales tax, an inheritance tax, and a property tax, who cares? If you are a millionaire that lives like you make minimum wage, those are the type of taxes you will pay. The rich secretly like the progressive tax code and all the exemptions. The thicker the tax code the more loop-holes for them.
- jrockway 15y ago
  New York managed to get Amazon to collect taxes.
rsanchez1 15y ago
Does anyone know what Vice President Bush called this in 1980? Anyone? Anyone? Bueller?
- jakeludington 15y ago
  Voodoo economics, I believe.
jakeludington 15y ago
There was at least one more coupon site that also left the state as a result of the tax, so in addition to the 50 jobs cited in the article, Illinois lost more jobs (and presumably additional tax revenue with them).
Urgo 15y ago
My state, North Carolina is one of the states that has this law as well and as a result Amazon pulled out of here too. I hope they take notice of this and get rid of it.
njharman 15y ago
This reminds me of Record/Movie industries' "belief" that piracy robs them of billions of revenue. No. If some magical perfect anti-piracy field was in place the vast majority of people not paying for your crap would still be not paying for your crap. That money doesn't exist. Same here, inventing new taxes doesn't increase taxes (that much). It increases the incentive and energy expended on finding ways to avoid your new tax.
- tzs 15y ago
  > This reminds me of Record/Movie industries' "belief" that piracy robs them of billions of revenue. No. If some magical perfect anti-piracy field was in place the vast majority of people not paying for your crap would still be not paying for your crap. That money doesn't exist The record and movie industries are indeed wrong in their belief that every pirated copy represents a lost sale, but you are erring in the other direction. First, aside from people who are pirating a movie they don't know much about to try it out, generally people aren't pirating movies that they think are crap. It wastes their time, and if they have a bandwidth cap wastes their limited bandwidth. Second, most pirates, at least in the developed world, do have discretionary money for entertainment and other luxuries. If they could not pirate movies, the would most likely not give them up. They would reallocate their discretionary entertainment money so that they could get some movies. If a perfect anti-piracy technology were deployed, there would be two competing effects. 1. Many people would reallocate discretionary spending. The movie industry would gain. Restaurants, game companies, book publishers, fashion, and such would lose. 2. Piracy can serve to raise awareness of a movie, which increases demand among non-pirates. If piracy were stopped, the movie industry might have to raise advertising spends.
saurik 15y ago
This is an apples-to-oranges comparison between use tax collection in Q1/Q2 vs. Q3/Q4 with anecdotes about companies that weren't even paying use tax before leaving the state. Put short, all of the arguments people are making here or are being made in the article need to look at whether the actual "tax revenues" (which the title erroneosly claims to be looking at) dropped due to /income tax/ changes from companies leaving the state and it needs to take into account that different parts of the year are going to have drastically different behaviors. This is especially true given that use tax is almost entirely, without this law, paid by end users as part of income tax collection, and so trying to break revenues down by month is inane: not everyone bothers filing estimated payments, especially if they are part of a payroll system that does withholding for them. They are going to report use tax once during the year, and it is going to be in April.
vannevar 15y ago
Before the tea party goes overboard here, consider in the long run what the implications of Amazon not collecting sales taxes might mean. As ecommerce becomes a greater and greater share of all commerce, states would all collect less sales tax. Which means either less services, or more sales tax on non-ecommerce businesses, or more income taxes. To cheer Amazon for avoiding its fair share is to be just as blind to consequences as the article accuses the legislators of being.

27 points by kellyhclay 15y ago

Two thoughts: 1. This news makes me very happy. 2. Most states don't have the economic clout that would make a retailer like Amazon hurt more from the loss of their affiliates than they would by charging sales tax. It's not only the potential loss of revenue they might incur if sales taxes were no longer part of the price comparison between local and internet sales, it's the huge, possibly inestimable, cost of complying with the wacky tax codes rates set by random politicians in every dinky municipality, county and state, which change faster than leaves fall in an Autumn windstorm. If Illinois wants to squeeze more tax revenue out of its citizens, let it join with other states and demand a single, uniform, federal sales tax. Until then, lotsa luck.

pagekalisedown 15y ago
I would go as far as saying that all form of income tax should be abolished in favor of one large federal sales tax. One that's already included in all advertised prices. I think it would make most people's lives that much simpler.
- lachyg 15y ago
  Not sure why you're getting downvoted. This is the system that works fantastically in Australia, and I assume other countries in the world.
  - potatolicious 15y ago
    The problem with this idea is that it's a regressive taxation system, as opposed to a progressive tax system. Which is to say, the poor are taxed disproportionately compared to the rich. A person who makes $10M a year spends a much lower percentage of his income than someone who makes $40K a year. So now we're taxing the $40K person heavily, while the $10M person pays comparatively almost nothing, even accounting for lavish and expensive lifestyles. It reinforces a negative cycle - the rich get richer, the poor get poorer, and social mobility is removed. When the poor lose all hope of improving their lot because the system is so stacked against them, instability and unrest results and... well, the rest of this story might get a little violent. This is probably a worse idea than, say, the flat-rate income tax that is practiced in Hong Kong and elsewhere.
    - pagekalisedown 15y ago
      Several states have no income tax. Including Washington, which is fairly progressive. How do they make it work? A sales tax can vary depending on the type of good. Luxury goods can be more taxed than essential goods. Wouldn't this even the playing field?
      - aptwebapps 15y ago
        For most taxpayers in the US state taxes make up a much smaller portion of their total tax burden than federal taxes. So, overall, the tax burden in Washington isn't so much more regressive than a state with income tax. You can have luxury taxes, but it's hard to match income tax if your goal is to have a fairly progressive tax.
    - danboarder 15y ago
      Perhaps counter intuitive, but regressive tax scaling provides better incentives: people will want to make _more_ money in order to take advantage of the lower effective tax rates. Tax policy can reward or dissuade achievement.
    - megaman821 15y ago
      If there is a sales tax, an inheritance tax, and a property tax, who cares? If you are a millionaire that lives like you make minimum wage, those are the type of taxes you will pay. The rich secretly like the progressive tax code and all the exemptions. The thicker the tax code the more loop-holes for them.
jrockway 15y ago
New York managed to get Amazon to collect taxes.

rsanchez1 15y ago

Does anyone know what Vice President Bush called this in 1980? Anyone? Anyone? Bueller?

jakeludington 15y ago
Voodoo economics, I believe.

jakeludington 15y ago

There was at least one more coupon site that also left the state as a result of the tax, so in addition to the 50 jobs cited in the article, Illinois lost more jobs (and presumably additional tax revenue with them).

Urgo 15y ago

My state, North Carolina is one of the states that has this law as well and as a result Amazon pulled out of here too. I hope they take notice of this and get rid of it.

njharman 15y ago

This reminds me of Record/Movie industries' "belief" that piracy robs them of billions of revenue. No. If some magical perfect anti-piracy field was in place the vast majority of people not paying for your crap would still be not paying for your crap. That money doesn't exist. Same here, inventing new taxes doesn't increase taxes (that much). It increases the incentive and energy expended on finding ways to avoid your new tax.

tzs 15y ago
> This reminds me of Record/Movie industries' "belief" that piracy robs them of billions of revenue. No. If some magical perfect anti-piracy field was in place the vast majority of people not paying for your crap would still be not paying for your crap. That money doesn't exist The record and movie industries are indeed wrong in their belief that every pirated copy represents a lost sale, but you are erring in the other direction. First, aside from people who are pirating a movie they don't know much about to try it out, generally people aren't pirating movies that they think are crap. It wastes their time, and if they have a bandwidth cap wastes their limited bandwidth. Second, most pirates, at least in the developed world, do have discretionary money for entertainment and other luxuries. If they could not pirate movies, the would most likely not give them up. They would reallocate their discretionary entertainment money so that they could get some movies. If a perfect anti-piracy technology were deployed, there would be two competing effects. 1. Many people would reallocate discretionary spending. The movie industry would gain. Restaurants, game companies, book publishers, fashion, and such would lose. 2. Piracy can serve to raise awareness of a movie, which increases demand among non-pirates. If piracy were stopped, the movie industry might have to raise advertising spends.

saurik 15y ago

This is an apples-to-oranges comparison between use tax collection in Q1/Q2 vs. Q3/Q4 with anecdotes about companies that weren't even paying use tax before leaving the state. Put short, all of the arguments people are making here or are being made in the article need to look at whether the actual "tax revenues" (which the title erroneosly claims to be looking at) dropped due to /income tax/ changes from companies leaving the state and it needs to take into account that different parts of the year are going to have drastically different behaviors. This is especially true given that use tax is almost entirely, without this law, paid by end users as part of income tax collection, and so trying to break revenues down by month is inane: not everyone bothers filing estimated payments, especially if they are part of a payroll system that does withholding for them. They are going to report use tax once during the year, and it is going to be in April.

vannevar 15y ago

Before the tea party goes overboard here, consider in the long run what the implications of Amazon not collecting sales taxes might mean. As ecommerce becomes a greater and greater share of all commerce, states would all collect less sales tax. Which means either less services, or more sales tax on non-ecommerce businesses, or more income taxes. To cheer Amazon for avoiding its fair share is to be just as blind to consequences as the article accuses the legislators of being.