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California Senate Approves Net Tax Bill
Grant Erickson points to this internet.com story, which says "On Thursday, the California state Senate approved a bill that requires businesses with stores in the state to charge their customers sales tax for purchases made over the Internet." The state's huge ($35 billion) budget deficit is named as a driving force for the measure.
I thought it was already the case that businesses who performed business over the Internet (or through catalogues or whatever) had to charge sales-tax as long as their business had a physical presence in the state?
E.g., I live in NJ, I buy from a company that has no physical business presence (i.e. a store-front or hq or warehouse) in NJ. I am not charged sales-tax. Legally, I am required to declare these items when I do my income taxes for the year and pay the sales-tax then. If I buy online from a store that exists in NJ (e.g., Best Buy), then they must charge sales-tax and that amount is included in my bill.
Maybe this is just NJ, or maybe I'm just confused. Any lawyers/accountants who can shed light on the matter?
This is not the greatest sig in the world, no. This is just a tribute.
As the article says, it only changes enforcement of the laws on the books, and maybe broadens existing rules just a bit: service and other facilities within the state now count as brick & mortar to cause you to be responsible for in-state sales tax.
Amazon already keeps its distribution facilities in Oregon and Nevada for just this reason. They might get caught if they have a supply/delivery depot set up for same-day delivery in LA.
This is mainly to put some muscle into collecting from folks like Wal-Mart, Barnes & Noble and Borders, who claimed to have separate businesses running their internet. The new law states that the same 'brand name' is a trigger for tax collection.
Design for Use, not Construction!
Doesn't California have a state income tax? Why isn't it enough that the state makes money on the income of the business that is able to make the sale? I've never understood this. How many different ways does the government have to tax the exact same transaction before it becomes too much?
Kent M Pitman
Philosopher, Technologist, Writer
It's a never ending battle between the republican types (who hate government involvement) and the democratic types who want more centralized/governmental control.
While I think that there is such thing as "too much taxes", I don't think we're there yet. The only problem with this system (IMHO) is that when each state has their own laws, it will become very difficult for small businesses to conform and collect the proper taxes for each state.
If the states want money from online sales, propose a federal tax, whose money would be split between states proportional to the ecomerce that is done in each state.
While the system wouldn't be perfect, it would be a huge step up from 50 separate laws!
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When it comes to the government and collecting
"their" money, they won't let any opportunity pass them by.
Well, it's still *your* money. They either take it this way or another way. The effect is the same. Also, I really don't see how the net is so special that things you buy over it shound't have tax on them. The exception might have been good for a while to promote buying over the net, but I don't think it's necessary anymore.
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Interesting theory about a federal tax distributed proportionately, but the leading aside about Republicans and Democrats distracts from it. Neither party has been discouraging "government involvement" in recent history. Rather, each has just expanded government involvement in different spheres of our lives.
Trouble making decisions? Just flip for it.
"On Thursday, the California state Senate approved a bill that requires businesses with stores in the state to charge their customers sales tax for purchases made over the Internet."
If this goes into effect, what will the effect be? Simple.
California's sales tax is typically over 8%. (It varies by location, because cities and counties are allowed to add on their own small deltas.)
So the result will be that companies which are primarily net retailers will CLOSE ANY STORES THEY HAVE in California. Standalones will move their operations to other states. Even large retail chains with an internet sales outlet may split into subsidiaries.
8ish percent of gross is a LOT in a heavily-competitive market. And the WHOLE POINT of buying something on the Internet is that the price differential must be more of a draw than the lack of a local facility is a repellant. So if a company has to charge an extra 8ish percent if it continues to have a presence in the state, it will, if at all possible, eliminate its presence in the state, rather than watching the bulk of its business switch to its competitors or just go away.
The net effect on California's budget will be negative. It will lose more in taxes, on store sales, employee income taxes, and other taxes on the businesses that fold up and move (or die) than it collects. It will also incur extra costs from the business shutdowns - such as unemployment and/or other social program costs for workers that don't move to follow the business.
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If this also passes the assembly it will almost certainly be signed into law - because Gray Davis is clueless about anything financial. (Witness his reaction to the "electric deregulation" debacle.)
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*applause*
Let's see - we have a two-year boom in capital gains tax collections (oh yeah, you non-Californians probably don't know that we pay an extra 9.3% state tax on top of the 20% federal rate for long term capital gains), so we jack up spending by 40%+ over a term.
Then, when boom turns to bust, we're shocked - shocked, I tell you! - that revenues have fallen. But there's an election coming up, so we keep spending.
And taxing. Mandatory health insurance? Sure, why not fuck over the few remaining businesses in the state, they've got money! Jack up the taxes on employers for extension of maternity leave, too! Money grew on trees during the dot-com boom, the private sector obviously has an infinite supply of the stuff, so what's another 1-2% of that infinite supply when there's prole votes to be bought?
In answer to your question, "n+1", where "n" is the number of ways a given transaction is taxed in the preceding election cycle.
In Nevada, there's no state income tax, and there are places where you can walk down the street with a beer in one hand and a cigarette in the other.
In California, you pay the highest taxes in the nation - higher than most of Canada - and soon, you'll need proof of age-21 to purchase dangerous foods like cigarettes, beer, and now Oreo cookies.
Atlas, if you're listening, it's time to shrug.
Comment removed based on user account deletion
Currently , federal trade laws require any 'online' store that has a brick & morter store in a state that an order is taken from [err .. so if you live in CA, and we have a store in CA, and you order off our website in Towson MD] you are charged sales tax.
.. I spent five years of my life running a rather successful game/hobby store in NewEngland. I know how taxes suck, but I also remember how folks used to order crap online (back when the www first started taking off.) at wholesale + 5% with no tax from jerks who simply opened up an account with WOTC or Chessex [or god forbid .. Max at the armoury.] These folks would sell out of their house, and not have to pay sales tax, or operate as a business. [or for that matter, make money.] yet I was expected to compeate with all my overhead, YET pay taxes quarterly. (Which I did, rather well infact.)]
.. LEGITIMATE business taxes. One of the reasons we *HAVE* the law that you have to pay taxes in a state you have brick & morter in .. is *because* of a retail chain in california who would not 'sell' things at their cash register, but instead point the shopper to an internet terminal NEXT to the cash register and have them buy from there (and pick their product up at the end of the counter - thus avoiding sales tax, and keeping the business's bottom line better to boot.)
:) heh.
.. Im sure Wil Wheaton won't agree, damn bleeding heart that he is .. but I still admire the guy's guts. *grin*
No choice in the matter.
So basically, California's Gov isn't making a new law, he is enforcing a federal trade thang-a-mabob. He is ALSO protecting the REAL small business from closet industry. [which is good and bad i suppose.]
Makes sence to me actually, as bad as it sounds, why SHOULDN'T an internet store have to pay sales tax? if you have a physical location where you ship goods from, and ACT like a business (and expect to rake in the $$), you should be expected to have to behave like a business.
[And before all you 'free as in beer' folks start yelling
In the end of the day, business is business. Be it online, or offline - the laws are in place already.
Sure, it would really suck to be selling cold-cast reproductions of klingon's out of my mom's basement and have to *gasp* actually have a merchant ID and pay taxes on sales. [keeping in mind, you don't have to pay INCOME tax unless you make profit, or make over X a year in sales.] But these are not the folks he is going after. $10 in taxes a year from the 3 models this kid sells isn't going to make a big dent in 35 million/billion/whatever.
California is going after the folks who are using the internet as a loophole to avoid business taxes
Not like I begrudge the chain from TRYING:) thats what free market is all about. Use a loophole until it gets plugged
Blarg
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I have to disagree. Fast Food is NOT a cheap way to eat. I have a roommate that only eats fast food and it costs him approximately $15-20 a day to eat. I on the other hand make all my food. I eat granola, apples, bananas, lentil soup, stir-fry, etc... I spend $150 a month on this diet that is very healthy. The only downside is I have to spend time preparing my meals.
I think you're arguement just says that this kind of tax is a tax on stupidity and laziness which I have no problem with.....
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Let's dispute this "fast food is cheaper" myth.
.99)
1 Whopper medium size combo meal with tax: $4.06
Feeds 1. Final price: $4.06 per person
1 pound Barilla spaghetti: $1.29 (when on sale
1 jar Ragu spaghetti sauce: $2.50 (when on sale $2)
Grated cheese and electricity: $1 (overestimate)
Feeds 2-4 people. Final price without sale: $2.40 or $1.20 per person.
That's for name brand stuff, and when it's not on sale. If you make spaghetti on sale, it can cost less than $1 per person, and is more satisfying and healty than fast food.