- Editor's note: This "Best of Jeff Ward" column was originally published, appropriately, on April 1, 2011, on Geneva Patch. We're republishing it here for the Patch West Region because (a) Jeff's on vacation this week, (b) most of you folks haven't seen it before and (c) it introduces one of Jeff's favorite themes: "the municipal mindset."
Though I refer to it as the “municipal mindset,” that kind of magical money thinking goes far beyond our city limits. Our illustrious Springfield regulars make the most spendthrift Geneva alderman look like a fiscal conservative. What the municipal mindset really describes is any politician that harbors an intense sense of entitlement to our money.
What really frosts my cornflakes is municipal government's attitude toward sales tax. Given the average politician’s random pronouncements on the subject, you’d think, along with the four basic forces of nature, sales tax was a direct result of the Big Bang. As I told the Geneva City Council, the Universe has gotten along for 13.7 billion glorious years without it.
You hear ‘em say it all the time: “We’re losing sales tax to the Internet!” But how can you “lose” something to which you were never entitled in the first place? Ah! But like a True Blood vampire that just won’t die, that entitlement mindset is nearly as impossible to kill.
To wit, our fiscally fractured Illinois Legislature just passed the Main Street Fairness Act. This law means online retailers with no Illinois presence must collect sales tax if they have just one in-state affiliate. This new brand of insanity specifically targets Amazon.com and Overstock.com.
The term affiliate, as it’s used here, refers to a web-based business that, through a link, directs traffic to a site like Amazon. That business then receives a portion of any subsequent sale. Prior to this ludicrous law, Chicago Sun-Times film critic Roger Ebert’s website link made him an Amazon affiliate.
I say prior because Ebert is no longer an affiliate. Despite Gov. Quinn harboring the delusion this move would rake in $170 million in “lost sales tax,” the second it went into effect Amazon and Overstock pulled the plug on every last one of their Illinois affiliates. So in addition to losing out on all that income tax revenue, many of those alienated affiliates are considering moving to a neighboring state. How did that Guinness beer commercial go? “Brilliant!”
Arizona, Rhode Island and Oklahoma have already treaded this thorny path and, faced with declining tax revenues instead, they're all looking to repeal their statutes.
And politicians weren’t the only culprits. The Illinois Retail Merchants Association pressed hard for this law claiming this web merchant sales tax collection “loophole” amounted to an unfair advantage. “We can all rest easier knowing the right policy prevailed and everyone is now on an even playing field,” they said.
Cow cookies! What about the instant gratification of taking the product home with you? What about having to pay for shipping? And don’t give me that bilge about free Super Saver Shipping, either. Try telling a middle schooler he’ll have to wait for his Pokemon video game purchase to arrive. For 10 excruciating days all I heard was, “Is it here yet?”
If brick-and-mortar businesses can’t compete on the basis of that prodigious advantage, then they deserve to go out of business. Because Barnes & Noble was also behind this flagrant money grab, I will be purchasing any future books online.
Now that they’ve foisted this one on us, it’s just one small step toward their ultimate goal of forcing out-of-state retailers to collect sales tax for in-state purchases. Texas, my least favorite state for a variety of reasons, has already done this.
I asked The Comfort Company owner Renee Wood, should that collection requirement eventuality come to pass, how would it affect her Geneva-based Internet business? The Comfort Company sells thoughtful gifts one might give to a friend who’s going through a grieving process.
“It would be a challenge no doubt about it,” Renee said, “It’s not just the time involved, but the logistics and expense as well. We bring in someone once a month just to pay Illinois sales tax. We’ve done better than many during this recession, but sometimes it feels like we’re just treading water.”
Renee continued, “The majority of Net businesses that would be affected by something like this are the small businesses. To undercut us in that way would take the fuel from the car that’s driving the economy forward. They’ve just spent billions bailing out big business. Small businesses need the small advantage of not having to collect sales tax beyond Illinois.”
I couldn’t have said it better myself. If these small Internet businesses were forced to collect sales tax times 50, many of them would be forced to shut down.
I understand government services come at a cost, but that’s completely beside our point. Whether you’re a Geneva alderman, an Illinois Rep or a U.S. Senator, you are not entitled to one dime of my money. And that includes sales tax! You are charged with the solemn responsibility of being the faithful stewards of whatever money we choose to remit via the democratic process.
Sadly, as is too often the case, sticking their collective heads in the sand as Amazon and Overstock affiliates abandon the state in droves shows their penny wise and pound foolish capacity to be far beyond the pale.