Posted on 03/20/2011 9:18:07 AM PDT by SmithL
California's severe budget squeeze and a stagnant economy have rekindled a political war over how Internet purchases should be taxed – if, indeed, they could be taxed.
California already has one of the nation's highest sales tax rates, approaching 10 percent in some communities. But it's applied only to transactions inside the state or to mail order and Internet sales when the seller has a "physical presence" in the state.
The latter condition – decreed by the U.S. Supreme Court in 1992 – is the rub.
Technically, Californians who buy from distant sellers are supposed to pay an equivalent "use tax" on state income tax returns. Few do, and enforcement is virtually impossible.
That would seem to be that, but the potential revenue gain – officially at least a few hundred million dollars a year – and pressure from brick-and-mortar merchants about untaxed competition have sparked efforts to mine the Internet and mail sales vein.
The situation's bête noire is Amazon, the huge Internet seller of almost everything. New York seized upon Amazon's use of affiliated sellers as the "physical presence" or "nexus" that would require it to collect sales taxes. But the New York law is tied up in the courts, and Amazon has threatened to cancel affiliate relations in any state that follows suit.
(Excerpt) Read more at sacbee.com ...
Once again California is killing the capitalism goose that lays golden eggs of prosperity.
I have friends whose businesses sell wholesale in Kalefornya and they have to pay state business income taxes there based off the business they do there. I also heard of other states that are looking at adopting the same.
Can anyone imagine the clerical nightmare of having to file 51 business income tax reports each year?
http://www.jckonline.com/2011/03/11/illinois-passes-internet-sales-tax-law
Under it, the state is now demanding online retailers who have no presence in the state, but do have affiliates in it, collect and report sales tax on all purchases by Illinois residents.
Illinois passed a law saying taxpayers were required to declare the internet sales tax they owed on their tax returns but, unless Amazon is forced to give them the info, I’m not sure they can find out. Can they?
It is perfectly predictable where this headed. States with sales taxes will continue to attempt to tax Internet sales, companies like Amazon will pull out of those states and end affiliate relationships, affiliates in sales tax free states will prosper and grow and Internet commerce and jobs will slowly but surely migrate to the sales tax free states.
Capitalism 1. Socialism 0.
Great, tax and ruin the internet to maintain insane levels of liberalism!
I have a better idea. Close the worthless California Air Resources Board (CARB) and the budget problems will instantly begin to turn around. FYI - Manufacturing is leaving California over these overpaid government gorebots.
Repurpose the CARB skyscraper into a world trade center of the west.
This is not a revenue problem, it is a spending problem.
It would be unworkable, cost a bunch, and kill businesses all over the place.
If the business pays tax in the state they are located in, that should be enough. If the state business tax rate happens to be zero, so be it. The state should be happy someone still lives in California and pays personal income, local sales, and property taxes.
They have to realize a person running an Internet business can move anywhere. Kill their business with taxes and they WILL move out.
Their solution: steal even more of your money.
Part of the joy of buying online is knowing that the sales taxed save will NOT be going to the parasite class. Each dollar denied government, weakens the power of the parasite class, thereby enhancing Freedom.
What froths me the most is that some Freepers advocate that online taxes from Amazon and such should be collected because it "levels" the playing field. These Freepers are naive because they are incapable of seeing the true evil of the parasite class. The don't see that the parasite class is about to destroy our Republic.
If CA pols could just find a way to get enough money from us, they could solve all our problems.
Easy to see that they have run out of other people’s money...
But you can ignore the affiliate and still buy directly from Amazon. Illinois wants those people to voluntarily declare what they owe tax wise- or face a penalty. I want to know if there’s a way for Illinois to find out when Illinois people buy directly from Amazon
The problem is bureaucrats and politicians don't think like you or I. Where you see 51 different forms and an accounting nightmare they only see their little fiefdom and what they require of you, maybe 1 or two forms. You get 25 of these same little fiefdoms all with taxing or regulating authority and anyone thinking of starting a business throws up his hands and says "screw it". Now expand this to the state and federal level on top of the local and its no wonder the private sector is being strangled in this country and business moves offshore.
Try explaining this concept to a leftist. GOOD LUCK.
Illinois doesn’t have the jurisdiction to compel Amazon, so Not without Amazon’s cooperation.
If, however, California deems itself to possess some putative interstate taxing authority in order to force individuals and companies with no connection to California whatsoever to levy taxes for the state and to force these individuals and companies to submit these taxes to the state, they are wrong.
The law has been settled on the matter for nearly twenty years.
Oh, IANAL. There may be some way to bring amazon into Illinois’ jurisdiction, but you’ll likely see news of it when it happens.
The Affiliate program is one sign of a “nexus”, but Amazon fired all Illinois affiliates.
In Maine [stops and adds the Howie Carr voice changer] "it was an on your honor kind of thing where you received a letter; however, I figured once you opened the flood gates..I never responded and don't receive them anymore."
If he stopped doing so, how could California enforce the state business income tax on your friend?
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