By Greg Mills
Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes.” Margret Mitchell, in her book “Gone with the Wind,” written in 1936, added another given us guys have a pass on: childbirth. She glibly stated, “Death, taxes and childbirth! There’s never any convenient time for any of them.” True and true, do I ever hate April 15!
The Internet has been a boon to the US economy for both giant online stores and the smaller mom and pop e-stores that pop up. E-commerce has become such a factor in the national economy that states that are scraping the bottom of the barrel for money are taking a fresh look to see if they can apply more taxes to the Internet cash flow.
California leads the other state governments in innovative ways to tax the poor chumps who live in their respective states. Having lived in California for a good chunk of my lifetime, I saw for myself the effects of invasive and over-regulated commerce. Pushing the state sales tax into new categories was almost a given due to the serious deficit spending in California. Where else can you get paid over US$100,000 a year by the state or county government to collect the trash? Where else can a jailer get paid almost $250,000 a year?
Gold isn’t prone to rust, but the “Golden State” has been corroding lately. The state population has been shrinking, but for illegal immigration. The tax load and regulation upon regulation has made California a state that is more hostile to business than most. That has had an economic effect that is coming home to roost. Amazon has some of its business associates located in California and that has thrust the giant Internet retailer into the fray over a new application of California sales tax collection.
Within hours of Jerry Brown, (the liberal, gadfly governor of California) signing legislation demanding 7.25% sales tax on all Amazon sales to be delivered to California addresses, Amazon canceled its affiliate program with 10,000 small Californian companies. Hoping to remove the in-state status placed on Amazon by those relationships, Amazon cut off and likely doomed those smaller companies to fail. This will put thousands of people out of work exacerbating the unemployment rate in California. There is always a counter-effect when new taxes are added.
The flap really is due to giant brick and mortar companies like Wal-Mart whining about the advantage on-line stores have in not having to collect sales tax. Sure, you can save the sales tax by buying on-line, but when you have to pay shipping and wait for UPS to do its thing, the playing field seems pretty level to me.
The issue is: does a state have the right to collect taxes on an on-line transaction when the business selling the goods has no presence in the state? The courts have said that the states can’t do that. California and a number of other states have attempted to circumvent that restriction by loosening the definition of what constitutes having a “business presence” in the state. All of this is sure to be worked out in court. In the meanwhile, Amazon affiliates in California are cut off and losing business. Amazon refuses to collect sales tax for California.
The migration of business out of California is bound to increase to a stampede as the state squeezes the corporate world. In California it is virtually a crime to hire someone. The regulations are amazing and reduce the willingness of business owners in California to hire people. There is just too much paperwork and requirements that cost money and time meeting state regulations.
I, personally, was punished some years ago by the state of California for the horrible act of employing people. I repented of my crime; now when I get phone calls from people wanting work I tell them that, “in my experience the government will beat you up for hiring people. I have a Filipino wife, so I get all the beatings I need at home.”
That is Greg’s cynical Bite out of California’s hide for today.
(Greg Mills is currently a graphic and Faux Wall Artist in Kansas City. Formerly a new product R&D man for the paint sundry market, he holds 11 US patents. Greg is an Extra Class Ham Radio Operator, AB6SF, iOS developer and web site designer. He’s also working on a solar energy startup using a patent pending process for turning waste dual pane glass window units into thermal solar panels used to heat water see: www.CottageIndustrySolar.com Married, with one daughter, Greg writes for intellectual property web sites and on Mac/Tech related issues. See Greg’s art web site at http://www.gregmills.info He can be emailed at email@example.com )