Distributing the burden

STATE AFFAIRS: Amazon should begin collecting sales tax at the time of purchase as a matter of fairness to the people of California.

California is known for its natural beauty, Hollywood culture and the counter-culture movement of the 1960s, among other things. Unfortunately, it is also known for its dysfunctional politics. California is constantly facing budget cuts that impact social services, particularly higher education. Many complain that taxes are already too high, meaning that even extending previous tax increases is all but impossible. Revenue must be found but is hard to come by.

In recent years, online retail shopping has increased throughout the state and is only expected to continue its rise as the market becomes increasingly globalized. Retailers, particularly Amazon, have long avoided collecting California’s sales tax, along with local taxes, by using a business model that has consumers pay those taxes while filing income taxes. As a result, the taxes have been inconsistently collected and unfairly distributed. Some citizens pay, some do not and some are penalized for their lack of payment. In the name of fairness, this practice must end. The importance of this is compounded by the dire state of California’s budget.

The underlying principle is that everyone should be affected by sales tax equally. In June, Assembly Bill 28X was signed into law, calling for online retailers such as Amazon to collect taxes at the time of purchase. Since then, Amazon has led the repeal effort — one that, if successful, will deny citizens services such as public higher education. This bill does not create a new tax on consumers but mandates the collection of a tax that should have always been paid.

Amazon’s refusal to collect sales tax not only denies the state much-needed revenue but also creates an artificial advantage for Amazon over its competitors (both online and in-person) who do collect sales tax. Such an advantage removes money from local economies and further stifles the slow recovery in California.

While low prices are convenient, dwindling state funds for major institutions like the University of California and the California State University mean that revenue is needed now more than ever. The state cannot afford for this law to be repealed. Amazon should do the right thing and begin collecting taxes at the time of purchase, for the good of all of California.

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  • http://twitter.com/Promontorium Joshua Wise

    While I understand it’s fundamentally unfair that local businesses have to tax, and online businesses don’t bother, I think there is a bigger fiscal reason California is suffering more, even as it taxes more. Businesses are leaving.  Big ones like Google and Microsoft have received special privileges to stay but thousands of smaller companies have fled to Nevada, Texas, Colorado, and Utah.  The issue for them wasn’t too many taxes (that’s for those left to deal with) the issue is too much regulation. California’s government believes it has the right to tell everyone exactly how they must run their business. To the point that there’s no such thing as a “mom and pop” anymore. You need a lawyer and a team of professionals just to get through the red tape to start a business in California, and if you dare hire someone, be prepared for a nightmare. 

     If California wanted to destroy every industry and business in the state, they couldn’t have done much better. Driving out as many as possible, and preventing as many as possible from starting up. Meanwhile anyone who survives this, be prepared for infinite taxes, penalties, fines, filing fees, application fees, oversight fees, and an incomprehensible network of regulation and paperwork. 

     And don’t get me started on corporatism. Businesses and the government work hand in hand to actually stop other businesses from starting. This happens most flagrantly with quotas and permits. A good example,  San Francisco recently made the news in approving a few more taxi permits.  With this increase in permits, not surprisingly came higher per mile charges. That’s right, not only does the city of  San Francisco mandate how much private taxis can charge (eliminating price competition), they control the permit process, and only allow a certain number of taxis (eliminating supply competition). Effectively the city has taken control of this industry. It may strike any of you with even a minute understanding of the supply-demand concept, that if the city increased the number of taxis, presumably supply would increase, thus demand would decrease, and the price should fall. However, because of the corporatism, government and business have fused their interests and they increase the price to offset the increase in supply. It’s exactly the worst thing for customers and anyone who wants to start a new business. This kind of  company/government fusion that is marked by union deals, campaign donations, business leaders in public office, and good old fashioned kickbacks  is not a San Francisco native. It is all over the state, both locally and on a state level. Everywhere in every industry imaginable from haircuts to dog walking, the government is taking over, making backroom deals with a minority of companies, and using the law to eliminate competition, while also using the law to further take from the people.Why is none of this being addressed? Why is it just accepted that this state has eliminated competition by law, that it has over-regulated small businesses into bankruptcy.  Regulations used to be about safety right? No longer, now regulation is about lining the pockets of a small group while sticking it to everyone else. California is 100% responsible for the flight of the companies. While they gave Google special breaks, there was no such thing for thousands of others. 

     It used to be a person could succeed. California has outlawed that. Now amount of taxes will fix this. 

    • Guest

      I think your comments are a bit hyperbolic.  California’s regulation of taxis (for example) is nothing new and nothing unusual.  Fifty years ago, I lived in New York, and taxi medallions were a limited and precious commodity even then.  If the regulations haven’t ruined New York in half a century, they’re probably not a critical problem.  Which state do you think California should model its laws after?

  • Anonymous

    The Lib mantra….we want more taxes.

    Sorry, those few of us paying taxes are tapped out.

    Cut spending.

  • Anonymous

    This article calls it like it is.  Amazon needs to collect the tax and give back to the state.  California is in a world of hurt right now and this would only be a bandaid, but every bit helps.

    • Guest

      California isn’t the only state with a budget in the red.  What about a uniform national sales tax?  It would be a lot simpler and cheaper to implement.

      • Anonymous

        I completely agree with that

  • Guest

    How many mail-order companies outside California collect California sales tax?  Do they collect and disburse the appropriate tax for every state (or metropolitan area) where they ship orders?   This is logistical absurdity.

  • http://redwoodguardian.blogspot.com/ Michael O’Faolain

    Or….

    The State of California could collect the Use Tax on the annual Form 540 income tax return.  For instance, instead of a difficult to relate to blank line, the State could have the form redesigned to have a line with an arbitrary Use Tax Due number like $65 providing a line below for an adjustment up or down based on what the taxpayer thinks is owed.

    Or folks could blame Amazon.

    Guess which option Governor Moonbeam and Legislators picked?

    The problem isn’t just Amazon, by the way. They’re just the easiest to single out. And the new law was written to not offend eBay because it’s a California company with political clout.

    In other words, state funds are dwindling because we are in The Great California Slump and we have gutless Democratic politicians.

  • Guest

    Why is it everyone in this backwards state insists on referring to taxes as “revenue,” as if they were in any sense comparable to money willingly given to businesses by consumers. If you’re going to put a gun in my face and rob me, at least have the courage to call it what it is. 

    • Guest

      Taxation is the citizens’ payment for services the government provides to them.  It would be robbery if government took the money and gave nothing in return.  Most government services have been established by elected officials or direct vote.

      • Anonymous

        By your logic those elected officials can just cut spending.

        • Guest

          Some of them have done just that.

    • Guest

      Tax evasion is robbery.