The Washington D.C. based Tax Foundation released this report critiquing the “Amazon Tax,” a tax North Carolina enacted as part of the state budget last summer. Some highlights:
Sponsors have promised that a revenue windfall would follow enactment of an Amazon tax, but no windfalls have been forthcoming so far. This is often because online companies respond to Amazon tax law enactments by ending their affiliate programs.
Similarly, legislative officials estimated that North Carolina’s Amazon tax would raise $13 million in its first year of operation, but the termination of affiliate programs in the state makes this unlikely. Revenue officials have stated that they are not tracking Amazon tax revenues.
North Carolina lawmakers saw the Amazon tax as another revenue stream to help bail them out of a massive budget deficit last summer. It appears those funds won’t materialize. North Carolina’s current fiscal year revenue is already below projections, and may likely fall even further behind as the year unfolds. Additional layoffs and unpaid furloughs for state employees and teachers may well be on the horizon in order for the state to pay its bills. This dire situation can be blamed, in part, on legislators’ misguided belief that the Amazon tax would bring in millions in tax revenue. They can’t claim that they weren’t warned.