Everyone is talking about the state's plan to increase the income tax rate from 3% to 5.25% for four years, declining afterward to 3.75%. I think the moderate increase is reasonable to solve our fiscal crisis, though I'm not enamored with the 5.25% part of the deal.
Fewer people are aware of the state's other "revenue enhancement plan," putting a 6.25% tax on online purchases for companies with affiliates in Illinois. As an Amazon.com affiliate, I received a letter from Amazon calling this "an unconstitutional tax collection scheme." Regardless of whether the tax is legal, Amazon will terminate my participation in their Amazon Associates Program. It's just easier for them to dump me than to assume the burden of collecting this tax and lose part of their competitive advantage over brick & mortar retailers like Borders and Barnes & Noble. Illinois businesses like FatWallet.com who depend on referral fees will have to leave the state to stay in business.
I'll admit that Amazon.com has been only an intermittent revenue stream for me over the past five years, but every little bit helps in this economy. Besides, I like to illustrate my book reviews with picture links to Amazon. As I said above, I understand that Illinois has to raise taxes to stay solvent, but to raise my taxes while taking away one of the ways I make money is just wrong.