Illinois has about 9,000 affiliates, according to Rebecca Madigan, director of an affiliate trade group called the Performance Marketing Association. She said the Illinois affiliates generated $611 million in advertising revenue in 2009 and tax revenue of $18 million. She estimates that the state will lose 25% to 30% of that tax revenue because the affiliates will lose business, cut jobs or move out of the state.
“It has a devastating impact,” Ms. Madigan said of the new Illinois law to the Wall Steet Journal.
This economic impact does not register with Illinois state leaders, who have gone so far as to post a web page with a tagline “working to close the anti-small business online tax loophole.” This is completely wrong, as the only businesses that could possibly benefit from this tax would be big box realtors. Governor Quinn has gone so far as to encourage affiliate marketers and Internet partners to drive traffic to Sears, Wal-Mart, and Best Buy online.
Noted “Mom & Pop” advocate Walmart applauded Pat Quinn’s move to close scores of IL entrepreneurs, which are true small business owners and the risk takers that make our state great.
Here is how similar legislation has played out in other states… Amazon removes the affiliates of that state from their affiliate program, so they still do not assume a tax nexus, which means no additional tax revenue collected.
Can we be realistic? If OverStock and Amazon chose to leave our state, or even our country, they could still sell, well. We have thousands of Internet marketing companies that are legitimate small businesses, that actually do make a living promoting great American companies, like Amazon and OverStock.
In response to the Governor’s approval of HB 3659, Scott Kluth, CEO of CouponCabin.com, issued the following statement:
“The Governor’s approval of HB 3659 is deeply disappointing. As a result, Illinois will lose jobs, many thriving businesses like CouponCabin and other affiliate marketing firms will be forced to move to other states, and most important, this law will not generate the tax revenue Illinois thinks it will collect.
“In the meantime, CouponCabin is actively exploring moving to Indiana. It’s a shame we have to consider leaving our longtime home in Illinois, but we will do what is best for our business.”
Who is CouponCabin? CouponCabin.com offers online coupon codes, printable coupons, grocery coupons and local coupons without requiring its users to share any personal information. The site has grown from 150 stores and 1,000 offers in 2003 to 3,000+ online stores with more than 150,000 offers. CouponCabin.com offers live chat help and a weekly newsletter highlighting the latest top deals.
So, while our state government in Illinois, as well as other states continue to create more ways to tax the last person, we drive small businesses, like CouponCabin away. We make beautiful brown UPS box trucks that right now are carrying packages from Amazon, to extremely satisfied customers, lose business.
When we consider ways to generate more revenue for government, it should be based on wealth creation and opportunity, rather then taxing the residents and citizens until taxation without representation eliminate’s the American middle class. Even before we eliminate the middle class, our system of sales tax will force all American’s to spend less. When we as a nation stop spending, more economic damage is done, then if we were to encourage and promote a low tax environment.
Our government should add value to everyone. Tighten the belt of government before creating new taxes. Why do politician’s raise and spend millions of dollars to win positions like Mayor of Chicago and Governor of Illinois? Governor Quinn spent over $5 million to win the position of Governor. Rahm Emanuel has spent over $12 million to become the next Mayor of Chicago? I think we all know why. If we answer this question honestly, we will also be able to begin to put an end to corruption and influence which is the true reason we are operating government at budget deficits.
“Just… follow the money”. All the President’s Men