On Thursday, March 10, 2011 Illinois Governor Pat Quinn signed into law a bill that prescribes collection of an Internet sales tax (6.25%) from retailers who have more than $10,000 in annual online sales in the state of Illinois [more on it here].
On the day the bill was signed Chicago Tribune predicted:
The move is expected to have little effect on consumers but deals a blow to small Web businesses that count Internet retail giant Amazon and other online merchants as a major source of ad revenue.
The above is a very accurate prediction. Yes, the “businesses that count Internet retail giant Amazon and other online merchants as a major source of ad revenue” (read: affiliates who get paid a commission of each sale they refer to online merchants) will (and, in fact, already do) suffer from this decision. Several major online retailers — e.g. Amazon, Overstock, Zappos, etc — have already terminated relationships with Illinois-based affiliates. Essentially, a law like this puts thousands of them out of business, “cutting jobs” by killing numerous Illinois-based value-added websites (e.g. comparison shopping platforms, coupon- and rebate-oriented websites, niche/thematic sites that monetize through affiliate links, etc).
Additionally, as larger online retailers terminate their relationships with Illinois affiliates, the chances of collecting considerable amounts (into state budget) with this new Internet sales tax law also become very slim. Yes, “these affiliate laws could capture additional income from Internet sales” but with the $10,000 threshold level “they affect mainly large Internet retailers like Amazon and Overstock.com” [source] who have already made their stance clear.