Today we published our March 2011 “iAWFUL” list of bad Internet laws.  We identified a surge in state and federal online privacy legislation that is threatening to tie the hands of online innovators.   (iAWFUL was already picked-up in CNET, Politico, The Hill, and Siliconvalley.com)

Our Internet Advocates’ Watchlist for Ugly Laws (iAWFUL) tracks the 10 pieces of state and federal  legislation that pose the greatest threat to the Internet and e-commerce. 

Sometimes in politics calmer heads and common sense prevail, and red and blue partisans merge into purple. Protecting and encouraging Internet entrepreneurs has been known to move Congress in this way.

Today, a House Resolution offered by Representatives Dan Lungren (R-CA) and Zoe Lofgren (D-CA) will put States on notice that this Congress won’t impose any new tax collection burdens on the nation’s small online businesses.

Their west coast, bi-partisan resolution picks up on a similar resolution by Rep. Paul Hodes (D-NH) in the last Congress. Rep. Hodes hailed from a small, east coast state with no sales tax, while Reps. Lungren and Lofgren come from California, a state with a high sales tax and a huge budget shortfall. Yet all of them see the risks of forcing new tax collection burdens on the smallest of businesses that use catalogs or websites to serve their customers.

Long-suffering fans of the Chicago Cubs often find themselves needing that last-minute ticket to a ballgame or find themselves looking to unload a couple of tickets. For example, let’s say Bob has family  coming to Chicago and needs tickets to the Cubs.  Meanwhile, Sam’s son made the soccer finals and Sam can’t use his Cubs tickets. Historically, Sam would waste his tickets and Bob would have to watch from the couch.

All that changed when online auction sites like eBay and StubHub came into the market and began matching-up all the Bobs and Sams of the world. Suddenly, more families were making it to Cubs games while others had more money in their pockets.

In their race to raise taxes for a cash-strapped state government, Illinois legislators are pursuing a mirage that other states have already discovered was a dry and dusty disappointment.   Yesterday, the General Assembly approved a version of the “Amazon Tax” that would actually reduce tax revenue while harming Illinoisans who make a living through online advertising.

As in other states, this tax scheme will once again backfire to the detriment of Illinois’ entrepreneurs and state tax coffers.  HB 3659 is supposed to force an out-of-state retailer to collect Illinois sales tax if they use in-state ‘affiliates’ – Illinois websites that earn revenue by showing ads for the out-of-state retailer.