[Encosia]

Ethics aside, this seems extremely shortsighted on the part of the legislature. Amazon might compete strongly with local big boxes ("Main Street", my foot), but how much shipping business (and resulting jobs and tax revenue) is ultimately created by Amazon's sales in IL?

[A1kmm]

If the shipping is paid for by Amazon out-of-state, I'd be surprised if they see any sales tax from it.

Amazon hasn't stopped shipping to Illinois - they have simply stopped allowing affiliates in Illinois, so the decision is unlikely to change the amount of shipping. If they did manage to force Amazon to collect 10% sales tax, people might spend at most 10% less, because collecting sales taxes reduces their means, but all of that would be captured by the state immediately, rather than more taxation through indirect mechanisms like increasing the number of shipping employees, where they would capture far less of that 10%.

If they did force Amazon to collect the tax, they might also cause some people to buy at retail stores instead of online, but shipping to homes is probably more efficient in terms of labour than shipping to stores and having salespeople employed to sell them - so more tax capture there. People might instead buy from online stores in Illinois, now they no longer have a tax advantage - that would also mean more tax capture because more of the supply chain is in Illinois.

All in all, of all the possible outcomes, it seems very unlikely that tax revenue will be decreased because of this. Amazon is trying to bully the state of Illinois because it is one of many states; if other states follow suit, Amazon will almost certainly have to back down or give up on having affiliates altogether.

[Encosia]

The affiliate program must increase the number of sales that Amazon makes or it wouldn't still exist. Of those additional sales generated by IL affiliates, some portion of them would have been shipped to IL - probably a disproportionate amount due to most IL-local sites being owned/maintained by IL residents.

The local ecosystem that Amazon indirectly supports is difficult to quantify, but I think you're dismissing it too quickly. Everything from the affiliates' state income tax to the tax on the fuel used to deliver the boxes needs to be considered.

We don't tax grocery stores for putting the milk man out of business, computers for eliminating type writer repairmen, nor email for the imminent demise of the USPS. Why Amazon?