Slashdot Mirror
California Assembly Approves Internet Tax
ClientNine writes "California could collect more than $1 billion a year by taxing Amazon and other online retailers if a bill approved by the Assembly becomes law. Assemblyman Charles Calderon, a Democrat from Whittier, says his legislation doesn't impose a new sales tax, but extends one that California should already have been enforcing. AB155 passed, 47-16, with the support of one GOP lawmaker Tuesday. It now heads to the Senate. Other Republicans rejected the bill because they said it would invite lawsuits, drive business out of California, and get the state entangled in the messy task of regulating the Internet."
So this is effectively the Use Tax which everyone was already supposed to be paying.
The usual suspects up in arms complaining about this are likely doing so because they were previously dodging taxes by not properly including their purchases on their tax returns.
The people of California voted for the representatives who approved this tax.
Palm trees and 8
But what are they supposed to do? They're broke and raising taxes is apparently taboo over there, there's a limit to how much spending you can cut without severely impacting government services. Why should goods purchased over the Internet be exempt from taxes when goods purchased in a brick and mortar shop is not? Within the EU, we pay VAT in the country where the store is based, for goods purchased outside the EU, local VAT is imposed as part of import duties.
If you don't want to be a statist, move to Somalia.
Some of us like the services that the government provides. While I'm generally more in favor of a progressive income, capital gains, or property tax, I'm okay with a sales tax if it means paying for schools, police, and buses.
Why would they leave? Tax is only being collected on purchases of in state companies to in state residents and that's up for debate. Products going out of state from California businesses aren't taxed unless the business has a nexus in the destination state, and that's not up for debate either. Only out of state businesses without a nexus in California are not required to collect sales/use tax for California, and that's the issue.
It's the last sentence that California is trying to change. Amazon for instance says they only have an advertising relationship in the state (e.g. they use a Ca-based marketing agency, buy ads, etc), no actual physical presence. Even if this gets passed and signed into law, it surely will be challenged as being unconstitutional, going against the interstate commerce clause.
Moving out of state really doesn't change anything for existing businesses. The only ones really affected are out of state businesses that feel they don't have an in-state presence, but California feels they do.
This is a requirement to enforce existing sales tax on merchandise shipped in from out of state.
Yes, it will primarily effect internet retailers (but will also affect mail and phone-order.) But it is not a tax on the internet itself, internet access, network traffic, or any other such thing.
I'll not get into a discussion in this comment as to if this is a good thing or not, but it pisses me off to see it referred to as an "internet tax."
And the power they have amassed would just go away if the government did? Fat. Fucking. Chance. Tell you what, go back to the fifteen hundreds and tell the Dutch that corporations are a bad idea.
The thing is, without the government, corporations would have MORE power, as there would be no one to limit their power. Right now, government is a check on corporate power. Get rid of government, and corporations won't go away. Who will make them? Who will say that what they are doing, and the way they are organized, is wrong or illegal? No one. You think it takes a government to make a corporation? How so? Without government, we wouldn't even have the limits that are set by a corporate charter. You don't need a government to have corporations. All governments do is LIMIT corporations, not create them. What do you think corporate law is? You don't get rid of corporations by getting rid of the laws which govern them.
Welcome to the idiocy of libertarianism, where consequences don't matter because we all have free will and personal responsibility and we just need to believe real hard and clap our hands together and tinker bell will come back to life.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
bullshit.
the internet was created as an ARPA then DARPA project, it's current greatest threats are the commercialization of the TLD system and the commercialization of access priority (attacks on network neutrality)
Snowden and Manning are heroes.
I don't have a problem with California collecting sales tax on online purchases, so long as that tax is significantly less than the full sales tax, in light of the fact that they shouldn't pay for services they aren't getting. Of course, it won't be. They'll charge the full tax rate simply because they can. As for shipping, costs offsetting it, Amazon offers free shipping on most orders. In spite of rolling the shipping cost into the purchase price, they still come out cheaper than local merchants most of the time, and that's before you factor in sales tax. So it is leveling the playing field a bit, but it still doesn't compensate for California's exorbitant cost of living, land costs, construction costs, etc.
The bigger problem here is that Amazon only has a legal obligation to pay that tax as long as they have a nexus in California. Amazon has no physical presence in California. California is attempting to extend the definition of nexus to include affiliates.
So here's what will happen: California will pass the law. The day it goes into effect, Amazon will terminate its affiliate relationships with everyone in California, and will continue doing business normally without paying a dime of sales taxes. This is what has happened in every state that has passed similar laws, and there's no reason any sane, intelligent person would believe that Amazon would value California affiliates so highly that they would not cut them off in a heartbeat if it meant not losing a sizable percentage of California sales to other companies that don't have to charge CA sales tax. So basically, when this law is passed (and it almost certainly will be, given that our lawmakers are, by and large, idiots), the result will be a substantial loss to California's economy, which will result in a substantial loss in state tax revenue (all of those affiliates were paying California income tax on their earnings) without bringing in a single penny in sales tax revenue.
That said, it will set a great precedent if California does this. I'd be willing to place a bet that once Amazon shows that it has the stones to scrape off its California affiliates with about as much concern as you or I would scrape gum off of our shoes, no other state will be so stupid as to try this. Then again, there's that Einstein quote....
Only two things are infinite, the universe and human stupidity, and I'm not sure about the former.
—Albert Einstein
Check out my sci-fi/humor trilogy at PatriotsBooks.