-By Warner Todd Huston
Illinois’ Democrat Governor Pat Quinn has signed the so-called Mainstreet Fairness Bill brought to him by the Illinois General Assembly. The bill forces all Internet companies to charge Illinois’ 6.25% sales tax whether they are based in the state or not.
Quinn signed the bill in the last few days before it would have gone into force anyway.
The nation’s largest Internet-based business, Amazon,com, said it would cut ties with all its affiliates in Illinois if the bill became law. And, as the morning of March 11 dawned, Amazon has indeed cut ties with it’s Illinois partners via an early morning email notifying Illinois affiliates that their contracts were terminated. The Internet giant has also done the same in some states that have instituted similar laws — though it has stayed in other states that have done so, New York in particular. Several Illinois-based Internet companies have warned the state that if the bill became law they would pull up stakes and leave the state.
supporters of the bill claim that local, bricks and mortar businesses are at a disadvantage with Internet companies because the traditional businesses are forced to collect the sales tax while Internet-based businesses have not been. This makes the prices of traditional businesses higher than those of Internet-based businesses.
Previously, Internet-based businesses could avoid collecting the Illinois sales tax unless they had their main real-world facilities based in the state. If the only connection to business in Illinois that these companies had was over the Internet that was not enough to establish an Illinois “nexus,” or a business based in all or part inside the state. This law changes that status.
Illinois joins a growing list of states forcing Internet-based businesses to collect state sales tax.
So, what does this mean to a conservative? It is a mixed bag. On one hand basic fairness might lean toward the feeling that real-world businesses had, that Internet-based businesses have an unfair advantage over them. On the other hand, any more moves that stifles new business is a bad thing.
The state’s taxes are high enough and the state assembly doesn’t deserve more tax money with all its waste and graft, either.
So, the only thing one can do as a conservative is fall back on the no-tax pledge. This new tax is a bad idea and will eliminate jobs in a state that already has one of the worst business climates in the nation, a state hemorrhaging jobs, and losing companies to neighboring states.
This is the worst time to do this sort of thing, for sure.