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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."
Can anyone recommend a few states where these taxes are unlikely, preferably also a place where I have multiple choices of ISP?
"We're Broke, what should we do?!"
"Hmm, how about we 'extend' taxes online and piss off silicone valley?"
"OK, we'll extend the taxes, but you are not urinating on my tits!"
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.
"Hmm, how about we 'extend' taxes online and piss off silicone valley?"
Silicon Valley.
Silicone Valley encompasses Hollywood, Beverly Hills, and Orange County.
Charisma is the measure of someone's ability to lie with a straight face.
business would be driven out of the state very soon as investors only care about money.
I'd need to see some data before I'd conclude that was inevitable. There are already higher taxes here, cost of living is higher here and consequently worker salaries have got to be pushed up. It doesn't seem to me that you've done the calculations to where you can conclude that staying in California and paying these taxes would cost the companies more than it would to relocate somewhere else that would likely pass an internet tax sooner or later. Nor do I believe that you have a good reason why these companies wouldn't just pass off the costs to consumers, as they do with any other sales tax.
On the other hand, I'm MORE certain the idiots in Sacramento haven't done a proper analysis of it either...
They might lose that much however, as companies move out of state and leave people unemployed.
Maybe, but there are teachers, school employees, government workers, law enforcement, and a large number of other people working on tax dollars that are definitely facing unemployment too due to the budget shortcomings. The legislature should ideally weigh the harms of that against the potential disadvantages of actually collecting a tax they said they were going to tax and those companies should have been budgeting for in the first place...
But of course I'm not even fooling myself, this WILL BE decided based on lobbyists and how willing we voters are to believe that all taxes are evil things that only hurt us.
I've fallen off your lawn, and I can't get up.
The people of California voted for the representatives who approved this tax.
Palm trees and 8
The internet is the one sphere of human interaction where libertarianism seems to actually work, and I think the only reason it took off was because it's been a lawless free for all. Since the barriers to entry are so low for much of the internet economy, competition is the closest to free and open that humans have ever achieved; nothing like the real world equivalent. We are slowly ruining it with bandwidth caps and shaping, laws to protect imaginary property, and taxation.
If you build it, nerds will come. Soylentnews.org
No, it was the lack of representation that got us a revolution. They didn't have cable news back then: no one was dumb enough to believe that the new country would run without any taxes of any kind.
...that was made in another state? This is unpossible as this is out of their jurisdiction.
California already taxes items purchased out of state, even by non-residents.
I moved to California in January. When I went to register my car, they said I had to pay sales tax on the purchase. "But I bought this car 8 months before I moved to California." Doesn't matter, they still said the tax was owed, about $3K worth.
Clearly illegal, but nobody is going to spend $100K in attorney/court fees to fight $3K worth of taxation. Welcome to the People's Republic of California.
jrjBlog
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."
So instead of California getting something like 8% of the Amazon sales in sales taxes, you'd rather CA got the income tax on the Amazon workers in CA. That would probably be something like 8% of their income. But what Amazon pays its workers is much less than the revenue each gets Amazon; probably a lot less than half. Even if you count the money CA saves in unemployment and related benefits, it's clear that CA's state coffers will fill better with the sales taxes than with income taxes instead.
What you're counting on is the discredited (and aptly named) Laffer curve. Claims that reducing taxes increase state revenue are disproven anywhere you look. Moreover, the tax exemption and other subsidy deals offered corporations to locate in a given place never work to either increase revenue (or thereby decrease the burden on the taxed employees), or even to keep the corporation located there once subsidies drop. Because taxation how we pay for the services consumed by these corporations, and failing to tax them distorts the economy into a game in which the corporation's actual activity is merely a prop for tax evasion.
--
make install -not war
Eh, I think we've got a biased view of how things really went down. The truth is, politics today are very much like politics in the past. It's really just a power/money circle jerk amongst the wealthy.
We all learned about England taxing us and the Boston Tea party. What they didn't tell you in history class is that nobody was upset about 'taxation without representation'. As it turns out, there were some very wealthy people making a fortune 'smuggling' tea. They'd get tea elsewhere and thanks to the high taxes on legit tea, they could sell they bootleg tea for less, and keep a considerable profit.
When the 'Tea Act' came about, it wasn't adding tax. It wasn't even a new tax. It was a SIGNIFICANT REDUCTION to an ALREADY ESTABLISHED TAX.
Stop and think about that for a second. That would be like, tomorrow the US Government announcing they were no longer going to tax gasoline...and then people GETTING UPSET. That doesn't sound right, does it? Nope.
Who *would* be upset by a significant reduction in the cost of tea? Well, people who were getting rich selling smuggled tea. So they got together, and started drumming up the masses (now, like then, the majority of people didn't know or care much for politics) and they got a bunch of 'sheep' angry about their significant tax break.
Really, things have changed much.
They don't need to "extend" anything. CA has laws on the books charging sales tax on anything bought outside of the state since the '30s.
It's called "Use Tax" because the fiction is that they're taxing the use of the item, not the sale. Oddly enough, the Use Tax is identical to your local sales tax rate.
They starting enforcing it for businesses about a year ago. Retroactive to 2007. California is a very business unfriendly state.
Coincidentally enough, I filed my Use Tax online for my corporation today. So if I sound bitter, it's from having to dig through four years of sales receipts to see if they paid CA sales tax or not.
Sorry, but that isn't what this tax is about.
This tax is that if you, the consumer, are living in California and buy anything, anywhere the retailer has to collect California sales tax and submit it. A business located in California that you, a California resident, buy from already has to collect California sales tax and submit it.
The problem with this idea is that any operation much smaller than Amazon now has to (a) register to collect California sales taxes and (b) start collecting them. Step A is relatively painless but it means that if you sell one item once in California you now have to submit a report every month regardless of any sales activity in California. Failure to submit a report means you are subject to fines.
Simple solution for small and medium size retailers on the Internet is to simply change their process a little bit so that when you pick CA as the state you get a message that says "Sorry, we don't sell to California" and redirects you to Amazon. Longer term, this is probably going to happen everywhere so the small retailer is just going to have to hire some outside processing company to handle it. Dealing with sales tax nationwide is a pain and very compilcated because of state, county, municipal, township, city and village taxes. It means you need a complicated system that is kept up to date which has all of the tax information nearly by zip code - worse, I'm not sure zip codes do not cross taxing authority boundaries. There are such companies now that provide this service, so they are just going to (eventually) get a lot more customers.
For the short term, I am going to guess that it gets a lot harder to buy certain things over the Internet in California.
And do business in a more business friendly state. Texas with its low income taxes and growing hiteck industry sounds pretty good. Politicans need to think more about the consequences of their actions.
http://saveie6.com/
The universal answer is the only thing that counts is where the item is being shipped. Taxes have to be paid for that locality.
Unfortunately, it isn't just at a state level.
Once you figure out which state gets the money, it would help to have some sort of file or server that sites can check to figure out how much tax to charge- sites shouldn't have to expend resources to stay on top of tax rates in all 50 states.
If it was just 50 states it would be simple. It isn't. There is a separate tax rate for every state, county, township, city, and village. This means you have to have an exact address - zip code doesn't really cut it I don't believe. There are several services that are available today that will compute tax for you, but they are expensive services that you have to pay for. Or, you can just turn all your sales processing over to Amazon who can obviously do it all now. Once you get to a certain size it makes more sense to just have your own files and staff to maintain them rather than paying someone else to do it at a higher cost.
But there is no mistaking that it is a huge problem. I know there are city/county overlaps where within a single city there are two different tax rates depending on which county you are in. Buffalo Grove, IL (used to live there) is split in two different counties (Lake and Cook) which have different tax rates. I seem to recall there being even worse problems in Ohio with townships, villages and counties all having their own tax rates and the final answer was the sum of the three for a particular address. No, there is no central authority for this - everyone that is doing nationwide sales tax collection today is either paying for a very expensive service or is doing it themselves. And it changes constantly.
My guess is that this will be a huge windfall for Amazon and a few other very large retailers that are able to offer shopping cart/purchasing services to other retailers that can't afford the services to compute the tax.
"I just hope Jerry Brown is smart enough not to sign this." Do you really expect Jerry "Moon Beam" Brown not to sign this? The guy is desperate to raise revenue anyway he can. He knows that any tax increase he presents to the voters will go down in flames. I still can not believe that he got elected 30 + years after he was Governor twice. As far as term limits are concerned, they have been around for over 20 years. They kind of work. The scumbags serve two terms in the assembly and then two terms in the senate. Then they go back to the local (city/county) government and get elected there. They then continue to run for office until they have their fully vested pension to collect. I have seen a number of these guys along the central coast do this. It makes me sick. My tax dollars hard at work supporting these scum bags that I would not have voted for if they were the ONLY one running. PoliTICKS= sucking the blood out of the voters anyway they can.
Even simpler: Don't change their process at all. Continue to sell to California residents without collecting sales tax, based on the established Supreme Court precedent.
The idea of multiple taxing districts is INSANE. Instead, the feds should get an agreement out of ALL states that one rate is applied to all internet sales. And in that agreement, it should also say how much the feds will take, AS A PERCENTAGE, with the rest going to the state. Then each state can decide how to split the tax.
I prefer the "u" in honour as it seems to be missing these days.
Logically, if all the voters who normally vote for taxes, just volunteered, then they would raise a bunch of money, right? Unless the people who vote for more taxes tend not to be the ones who expect to pay for them...
People keep saying things like this and thinking they're clever... It's a pretty stupid argument. Tragedy of the commons, perception of fairness, and all that. There's a difference between being willing to pay more taxes if everyone else at a similar income level is going to do the same, and volunteering to do it by oneself.
I don't have any ideological opposition to a government/welfare system run entirely by voluntary contributions, it just doesn't seem remotely practical at present. This makes me a dirty statist sheep by Libertariandot standards, no doubt.
Also as a minor note, you can already give money directly to help pay down the debt (http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm), and I believe the IRS accepts intentional overpayments as well. The former program usually gets a couple million per year at best, thus demonstrating both our points to some extent.
Well what I'm saying government should do (not that I expect they will) is that they have to make that central authority at no cost to the businesses (so government better make sure organizing this information costs less than the tax revenues generated). It really shouldn't be very expensive once a system is set up, especially if the data is collected by state. As I wrote in another post, the idea should be that businesses get the tax information from this database, and instead of the business being responsible for doing the legwork, it's on the government to make sure the database is correct. At that point all you need is to tell customers how to find their ZIP+4.
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Could someone please require legislators to take a freshman level economics class?
This WILL drive business out of California. Amazon will pick the fuck up and move out of the state. The companies that don't move will be driven out of business because they can't compete with the ones who do. The SCOTUS has held that individual states don't have the right to tax entities that don't have a physical presence in that state.
This is about some know-nothing asscock wanting to stick it to "the corporations". It completely misses the fact that it will hurt people in their state.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano