The recent editorial “?for e-tailers, too” (Jan. 24) misunderstood and misstated information about House Bill 3659 that should be clarified.
Supporters of this legislation seem to be suggesting that it will suddenly allow the state to collect sales tax on all purchases from Amazon and other online retailers who do not have a physical presence in Illinois.
In actuality, this legislation is intended to tax purchases facilitated through affiliate marketers (a segment of online advertisers) who are based in Illinois.
The truth is that this will not actually generate any additional sales-tax revenue for Illinois. North Carolina passed similar legislation in 2009 and has not collected a penny from the likes of Amazon or its online counterparts.
Why? Rather than see their affiliate transactions subjected to a tax, most online retailers will instead choose to terminate their relationships with Illinois businesses. This has already happened to affiliate businesses in North Carolina and Rhode Island (another state with a similar law).
And it’s not just the Amazons of the Web that will sever all ties with Illinois businesses. Our business works closely with a small electronics store in New York — they have already notified us of their intention to end our partnership if this legislation is passed. There are hundreds of other small online retailers that will follow suit.
Why should we care about affiliate marketers and their businesses? There are 9,000 of us in Illinois and countless other Illinois jobs created by and tied to this industry. By discouraging online retailers from working with Illinois affiliates we will effectively cripple these businesses (many of which are small businesses).
Affiliate business owners are not anti-sales tax. We understand the role and need for additional tax revenue in this state. However, this legislation will not assist with tax collection or increase sales tax revenue. It will not level the playing field for Illinois retailers. It will only serve to decrease revenue and eliminate jobs at the many Illinois businesses that work in affiliate marketing.
Affiliate business owners are simply asking for the ability to continue their work with online retailers. This legislation will destroy those relationships while also decreasing the personal income tax paid by affiliates. With the state in a serious budget crisis, is this really the right time to cut off an entire industry and their resulting tax contributions?
— Matt Kraft, president/CEO, Apple Sliced, Chicago
