

Illinois State Tax Revenues Drop Following Affiliate Nexus Tax - kellyhclay
http://www.hasoffers.com/blog/illinois-state-tax-revenues-drop-affiliate-nexus-tax/

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saurik
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.

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njharman
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.

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tzs
> 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.

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warmfuzzykitten
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.

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pagekalisedown
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.

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lachyg
Not sure why you're getting downvoted. This is the system that works
fantastically in Australia, and I assume other countries in the world.

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potatolicious
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.

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pagekalisedown
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?

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aptwebapps
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.

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vannevar
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.

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Urgo
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.

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jakeludington
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).

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rsanchez1
Does anyone know what Vice President Bush called this in 1980? Anyone? Anyone?
Bueller?

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jakeludington
Voodoo economics, I believe.

