Illinois Gov. taxes online sales- Amazon closes shop= 9,000 small business affiliates

Discussion in 'Economy' started by Trajan, Apr 9, 2011.

  1. Trajan
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    Trajan conscientia mille testes

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    I have always wondered for instance, whats taken congress so long to get in the internet online sale tax train...hummm.... Interesting.




    The Internet Tax Mirage
    Politicians try to drive online commerce—and revenue—out of state.
    • APRIL 8, 2011, 7:10 P.M. ET

    Governor Pat Quinn recently added to his reputation as America's most taxing politician by signing a law applying the state's 6.25% sales tax to Internet purchases made in Illinois. Within hours, Amazon, the online book and merchandise seller, announced it would discontinue using any of its 9,000 Illinois small business affiliates to avoid having to collect the tax. Congratulations, Governor.

    Snip-

    The issue of whether and how states should tax Internet sales is back as one of the hottest in state legislatures. Colorado, New York, North Carolina and Rhode Island already impose some version of what has become known as the "Amazon tax," and at least a dozen other deficit-plagued states are advancing similar bills

    Snip-

    The first issue is whether the Amazon tax is constitutional. New York's law is now being challenged in court as a violation of the Supreme Court's landmark 1992 Quill decision. In that case the High Court ruled that a state cannot impose a tax on a company if it does not have a physical presence in that state.

    This decision originally applied to mail order sales, but the same principle applies to firms that sell over the Internet. If the company does not have an office, store or warehouse inside a state, the state cannot compel the firm to collect sales tax. Illinois and others are trying to broaden the concept of physical presence to include doing business with any affiliate inside the state's borders, such as online advertisers.


    Snip-

    Paul Dion, head of Rhode Island's revenue analysis office, says that "To date nobody has come forward to remit sales tax to us under that [online sales tax] statute." North Carolina's tax office reports that the state had raised all of $4.6 million as of January from the new tax, a small fraction of what legislators predicted. A study by the Tax Foundation has found that because of the retaliatory steps taken by Amazon, Rhode Island and North Carolina may have lost money because online marketing companies have closed down, or relocated outside the state.


    Retailers are understandably worried about competition from online sellers, and there is no doubt that sales taxes influence where and how people make purchases. One irony of this fight is that the same liberals who claim that taxes don't affect behavior are telling state legislators to tax Internet sales or people will buy everything online or outside the state to avoid paying taxes.


    The big retailers say that imposing state sales tax on e-commerce will level the playing field. But Internet firms don't use government services in the way that retailers do. If Amazon's headquarters in Seattle catches fire, no Illinois fire fighter is going to put it out. It also seems an undue burden to require Internet firms to comply with 8,000 separate sales tax jurisdictions around the country. The retailers have tried for years to get Congress to approve a "streamlined sales tax" compact among the states as a way to collect Internet taxes, but this seems unlikely to pass and many states would refuse to join in any case.

    More at-

    Review & Outlook: The Internet Tax Mirage - WSJ.com
     
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  2. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    Evidence which proves what many of us have said all along: tax policy affects behavior.
     
  3. Ragnar
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    Ragnar <--- Pic is not me

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  4. william the wie
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    william the wie Gold Member

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    This stupidity will be continued.
     
  5. LordBrownTrout
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    LordBrownTrout Gold Member

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    I had been mulling an ecommerce venture associated with retail stores but will refrain from it if it involves unnecessary online taxes.
     

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