California Tries to Kill Internet Sales

There must be a few businesses still operating in California and the Democrats need to put a stop to that:

In January, Democratic Berkeley Assemblywoman Nancy Skinner introduced a bill to require that all online out-of-state retailers collect state sales taxes for purchases sold in California. Skinner estimates that the tax will generate an extra $300 million for the cash-strapped state.

While the assemblywoman believes the tax will be a boon for government’s coffers, low tax advocates say, “not so fast.” In-state affiliates who receive commissions from sites they link to, like Amazon.com, will likely lose their deals with big merchants.

According to Patrick Gleason of the Americans for Tax Reform and Kelly Cobb of the Digital Liberty Project, states (like North Carolina and Rhode Island) that already have enacted taxes on online “affiliates” have generated no additional revenue

“The affiliate tax has hurt Rhode Island businesses and stifled their growth, as they’ve been shut out of some of the world’s largest marketplaces, and should be repealed immediately,” said former Rhode Island Democratic General Treasurer Frank T. Caprio.

For the last couple of years the California state income tax return has asked taxpayers to voluntarily admit to any online purchases made for which no sales tax was paid. It's probably the most ignored item on the entire tax return since most people either don't keep records of purchases made through Amazon or other out-of-state retailers, or aren't about to give California money it didn't earn.  Adding this requirement to online retailers will ensure many of them will no longer allow California purchases, thus defeating the purpose of the law.

It's happened time-after-time - legislators add new taxes thinking they've hit the Mother Lode only to find that revenues fall when taxpayers find creative ways to avoid paying them...like moving to other states.  This will backfire.