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Tuesday, April 10, 2012

Democrats' 'Amazon Tax' Experiment Initial Results: $11 Million Decrease In Use Tax

By Susan Duclos

The results of the Democrats' Amazon Tax in Illinois are in and the experiment failed spectacularly as was predicted at the time.

Red State explains:

Well. The law passed in Illinois and promptly ended its Illinois affiliate program. As expected; and as for more tax revenue… well, Chicagoist somewhat tartly noted that use tax (which is where the supposed tax income would have showed up) actually decreased in the second part of 2011. It did not, in other words, provide the $150 million in new revenue that Illinois Democrats promised their electorate… which leads to Chicagoist to go “I told you so.” Well, I told you so, too… and let’s not forget that this situation is even worse than that, given that the income gotten from affiliate programs is in fact taxable itself. No affiliate program, no taxable income.

Following the links brings us to Chicagoist who says "I told you so"!!! They also provide the amount of the use tax decrease:

The result? An actual decrease in use tax collected of over $11 million. Numbers given to Chicagoist by the Illinois Department of Revenue show that in the period of January 2011 through June 2011, IDOR collected approximately $139 million in use tax. After the law went into effect on July 1, the total amount collected between then and the end of the year was approximately $127 million.

We hate to say we told you so, but we told you so.

Illinois wasn't the only state that conducted this Democratic experiment when three months later, California did the same thing, as did Amazon, when they cancelled their affiliate program in California. (Discussed at Wake up America HERE) That resulted in some fancy footwork and a postponement of collecting those taxes until September 15, 2012.

Senator George Runner, at that time, explained that the compromise was nothing more than a delaying tactic:

George Runner today issued the following statement in response to Governor Jerry Brown’s signature of AB 155:

“I’m glad the Governor signed compromise legislation today to help get some California affiliates back to work and bring thousands of distribution jobs to California. That’s very good news.

“Unfortunately, this legislation is by no means a cure-all. It does nothing to solve the long-term problems created by the Legislature’s botched efforts to compel out-of-state retailers to serve as California’s tax collectors.

“Absent a federal solution, which is highly unlikely in such a short time frame given all of the competing interests, we’ll be right back in the same mess in a year. The State of California will again be killing California jobs, driving away investment and inviting costly litigation.

“Let me be clear: this compromise legislation, while welcome, provides only a short-term delay to a bad law that will never produce the revenues, nor the level-playing field, its proponents imagine.”

California has the benefit of seeing how this failed in Illinois, the question remains though as to whether they will learn from the mistakes of others or continue down the path Illinois traveled and cost Californians the same jobs, income and use tax that Illinois has now suffered.