Illinois Supreme Court Strikes Down Internet Sales Tax
Eighteen states have instituted an Internet sales tax, the so-called “Amazon tax.” This week the Illinois supreme court struck down the state’s Internet tax. Heartland experts predicted as much back in 2011 saying these taxes, “are in direct conflict with the Supreme Court’s 1992 decision in Quill Corp. v. North Dakota. Under Quill, companies are required to collect sales tax only where they maintain a ‘bricks and mortar’ facility. Supporters of the Amazon tax say contracted, third-party affiliates that earn revenue from linking to these major retailers constitute a physical, in-state presence.”
Illinois-based companies like Coupon Cabin and Fat Wallet had already relocated after the passage of the tax. According to the Performance Marketing Association (PMA), “Illinois-based affiliates numbered at least 9,000 and in 2010 generated $744 million in advertising revenue. When the law took effect in 2011, those affiliates experienced economic devastation when out-of-state retailers, wanting to avoid sales tax collection obligations, simply terminated their relationships with affiliates. In fact, the PMA estimates about 1/3 left the state, 1/3 downsized, and 1/3 went out of business.”
Calls for Congress to take up the Marketplace Fairness Act, which would eliminate the physical presence standard and allow states to collect Internet sales taxes, have continued to increase. Despite these calls by special-interest groups, a Gallup poll conducted earlier this year found 57 percent of respondents opposed enacting a law that would allow states to collect sales taxes on online purchases, as the Marketplace Fairness Act does.
A Policy Tip Sheet from The Heartland Institute succinctly points out, “There are three problems with a destination-based tax on the Internet. Tax competition among the states would be hindered, it would undercut federalism, and it would push tax rates up.”
This week’s edition of The Leaflet features research and commentary addressing Illinois’ “Amazon Tax,” Obamacare, Wisconsin property taxes, universal school lunch, solar forcing of climate, and gold and silver currency.
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Illinois Supreme Court Strikes Down Internet Tax
Heartland Research Fellow Steve Stanek, managing editor of Budget & Tax News examines the recent decision by the Illinois Supreme Court that struck down the state’s “Amazon tax” law in a 6 to 1 ruling. Established in 2011, Illinois’ Amazon tax law required retailers to collect Illinois sales tax on in-state sales, even if the retailer is located in another state, if the retailer has referral contracts with in-state affiliates. This “click-through” nexus law was controversial and resulted in several companies leaving the state.
“The Illinois law is so broadly written that all paid-per-click advertising, also called performance marketing, would result in sales tax being owed,” writes Stanek.
Stanek’s article continues, “‘The ruling is welcome news for Illinois taxpayers and the companies that hope to do business with them. By ruling against the so-called ‘Amazon tax,’ the Illinois Supreme Court reaffirmed that the years-long campaign to extract more taxes from Internet-based businesses is unconstitutional and misguided,’ said Andrew Moylan, a senior fellow and tax policy analyst at the R Street Institute in Washington, D.C. ‘Instead of targeting the Internet, states should pursue broad reforms that make their tax systems simpler and less burdensome.’”
Obamacare Reality Sinks In
Heartland Senior Fellow Jeff Judson explains in an op-ed that because of Obamacare, “Now healthy people will subsidize the unhealthy since insurance companies are prohibited from charging unhealthy people more than the healthy. Those who eat well, exercise, and maintain their weight will pay higher premiums so that those with poor eating and exercise habits, and their chronic diseases, will pay less.
“One of the more popular provisions of the ACA is the requirement that insurers cover people with pre-existing conditions. But if the IRS fines are less than the cost of insurance premiums, people will forgo insurance until they are sick. In the insurance industry, this is called ‘jump and dump’ — jump into the market when you are sick and then dump your insurance when you are well. This is the ultimate nightmare scenario for an insurance company and further increases prices for all other consumers.
“Because of Obamacare and its regulations, some states now only have one or two insurance companies providing health coverage — a competitive market reduced to a monopoly.”
Wisconsin Okays Property Tax Relief Measure
Budget & Tax
In this article from the Heartlander digital magazine, M.D. Kittle of Wisconsin Watchdog writes about the property tax cut proposals being considered in Wisconsin. The bill most likely to be signed by Governor Scott Walker, proposed by Assembly Republicans, creates property tax relief by increasing the amount of general school aid from $40 million in the current fiscal year to $60 million in the next.
Kittle points out the differences between the two main proposals. Under the Republican bill, the property tax relief increases with the value of the property. Under the Democrats’ plan, the tax cut is the same no matter the value of the property and no matter the taxes they pay on their property.
“Walker and crew have righted Wisconsin’s state fiscal ship during the past two and half years, transforming a $3.6 billion budget shortfall in early 2011 into a better-than-expected surplus of $759.2 million at the end of the 2012–13 fiscal year.”
VIDEO: Heartland's Joy Pullmann on 'Fox&Friends' Discussing School Lunch Program Waste
Heartland Research Fellow Joy Pullmann discusses the expansion of the federally funded free school lunch program to families that don’t need it on “Fox and Friends.” This program, which will be implemented nationwide next year, will cost taxpayers in 11 states $16 million. With federal school lunch programs already at an all-time high of $11.6 billion per year, school districts can now enroll all their students if they choose, even though the majority of families can provide lunch for their children.
Pullmann says the reason the federal school lunch program exists (and continues to expand) is because it’s a handout to big agri-business. This, in turn, raises the cost of food for everyone.
Research & Commentary: Solar Forcing of Climate
In its series of assessment reports reviewing the latest climate science, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) has concluded solar forcings (the changes in the average amount of solar energy absorbed per square meter of Earth’s area) are too small to explain twentieth century warming. They infer CO2 must be responsible for the remainder.
However, observations indicate variations occur in total ocean-atmospheric meridional heat transport and that these variations are driven by changes in solar radiation rooted in the intrinsic variability of the Sun’s magnetic activity.
Research & Commentary: Gold and Silver Currency
Finance, Insurance, and Real Estate
In the nineteenth century the U.S. economy was based on currency backed by gold and silver. Any individual could deposit precious metals in private banks, which would then distribute paper bank notes denominated in ounces of gold or silver. Currency was thus a product of the free market and would fluctuate in value according to the supply and demand of its commodity base.
Recently several states have proposed making gold and silver legal tender. In 2011, Utah became the first state to take the leap. Proposals also have been introduced in 16 other states, including Colorado, Georgia, Iowa, South Carolina, and Tennessee.
In this Research & Commentary, Matt Faherty argues that permitting gold and silver to compete with the dollar would enable consumers to choose the best currency for their needs. Faherty argues this would lead to a more stable currency, higher savings, and higher economic growth.
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