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Now, the national Democrats want to tax the internet – just like in California, but now the entire country.

While the nation was captivated by the debt crisis – and whether tax increases would be part of any deal to reduce federal deficits – a group of Democratic senators and congressmen have rolled out legislation that would raise new revenues by targeting online sales from retailers like Wal-Mart and Best Buy.

These lawmakers say that states are losing billions in uncollected state and local sales tax on Internet sales and are touting the support of online retailers like Amazon who say they’re fine with an across-the-board system that would make tax collections simple.

I guess this is payback to Wal-Mart, Best Buy and Target for their advocacy of taxing Amazon in California.

OH! The big retailers turf wars.

A morning collection of links and comments about my home, California.

For Central Coast Democrats, a prize and a problem

Democrats on California’s Central Coast were handed a rare prize last week when the Citizens Redistricting Commission created a Senate district with no incumbent and a 12-percentage point Democratic voter registration edge.

The race is already on to see who gets to claim the prize of becoming the party’s candidate, and it could be run on a track that is crowded, uncertain and potentially dangerous.

Three contestants have either reached or are approaching the starting line:

- Hannah-Beth Jackson of Santa Barbara, a former assemblywoman who lost a Senate race in 2008 by fewer than 900 votes in a district that was much less friendly to a Democrat. She says she’s “seriously considering” becoming a candidate. “I’m very much leaning in that direction.”

- Jason Hodge of Oxnard, a Ventura County firefighter and an elected commissioner of the Oxnard Harbor District. Hodge has been planning a run for the Legislature for months, has formed a campaign committee and begun raising money. He says he’s definitely running and has “a full expectation to raise $1 million for this primary.”

- Pedro Nava of Santa Barbara, a former assemblyman and onetime member of the California Coastal Commission. He says he hasn’t made up his mind, but muses that the Senate district “almost looks like someone drew it for me.” Nava says that by Labor Day, “Everybody should have a sense of what’s real and what’s possible.”

None says he or she would shy away from a primary race in which there are multiple Democratic candidates.

Tea Party picks up steam, demands further cuts

National Tea Party leaders in California were thrilled about one by-product of the political bloodbath over raising the federal debt ceiling: The fight showed that after two years of rabble-rousing from outside the Capitol, the Tea Party has real power to shape the debate in Washington.

Their challenge now that President Obama has signed the debt limit law: Can the Tea Party transform its government-shrinking mantra into long-term power, or will it be a one-hit wonder?

They’re not stopping to think about it. This month, Tea Partiers will storm town hall meetings of Republican and Democratic members of Congress and demand even more cuts. It’s the same strategy Tea Party groups used two years ago to protest – and ultimately water down – the health care reform law when they burst on the national scene.

“You’re going to see a lot of heat at those meetings,” said Mark Meckler, a Grass Valley (Nevada County) resident and co-founder of Tea Party Patriots, a national organization that called House Speaker John Boehner’s plan to lift the ceiling “an embarrassment.”

Tea Partiers say the debt deal didn’t cut enough federal spending, was crafted behind closed doors, and assigned responsibility for further cuts to a small, joint committee of Congress.

That heat will be stoked further on Aug. 27 in Napa, when thousands of supporters and at least two GOP presidential candidates are expected to attend a rally to start a Tea Party Express bus trip across the country. It will end in Tampa, where the group will co-host a Republican presidential debate with CNN.

Two years ago, the idea of the Tea Party co-hosting a debate with the self-proclaimed “most trusted name in news” was unimaginable.

Dan Walters: Remapping of California districts still on a rocky road

So the state’s new redistricting commission, after countless hours of hearings, discussions and mind-numbing exercises in specific line-drawing, has produced its almost-final maps of 177 legislative, congressional and Board of Equalization districts.

What now?

Partisan and independent analysts have cranked up their computers, and their scenarios generally agree that the proposed districts, which need one more commission vote this month, would result in a Democratic gain of congressional seats and give Democrats a strong chance to claim two-thirds majorities in both legislative houses.

Whether those conclusions become reality, however, would depend on what happens in “swing” districts – those potentially winnable by either party – in the 2012 and 2014 election cycles. And their dynamics would be affected by the new and untested “top two” primary system.

It’s “would” rather than “will” because it’s uncertain whether the Citizens Redistricting Commission’s maps will actually go into effect, since they are subject to attack by those – Republicans, mostly – who believe they got the shaft.

Critics could challenge the maps by referendum – collecting signatures to put them on the 2012 ballot – and if a referendum qualifies, the state Supreme Court would adopt temporary maps for the 2012 elections.

It could simply decree that the commission’s maps be used for 2012 while voters decide their permanent fate.

That’s what the court, headed by Chief Justice Rose Bird, decided when a Republican referendum challenged the 1981 maps adopted by a Democratic Legislature and then-Gov. Jerry Brown – a ruling that fueled a drive to oust Bird in the 1986 election.

Or the Supreme Court could draw its own maps, as it did to break redistricting stalemates after the 1970 and 1990 censuses.

Attorney general, FPPC asked to investigate identity theft ads

The state attorney general and California’s campaign watchdog agency have been asked to investigate a new labor-backed group telling voters that signing initiative petitions increases risk of identity fraud.

Carl DeMaio, a San Diego councilman supporting an effort to qualify a local pension reform measure, filed a complaint over the weekend with the Fair Political Practices Commission alleging that Californians Against Identity Theft is running afoul of state disclosure laws and “knowingly using false information to alarm voters and stifle the constitutionally protected rights of individuals” in the radio spots and website it launched last week.

In a separate letter, DeMaio asked state Attorney General Kamala Harris to investigate the ad and other activities he said are “undermining the initiative process” for San Diego voters.

As The Bee reported Friday, the organization behind the ads has received funding from the California Building and Construction Trades Council. The secretary-treasurer of the group, a retired attorney who formerly represented the union, declined to identify other contributors Friday. He said Californians Against Identity Theft, which has not filed a campaign committee, has been incorporated as a 501(c)4 nonprofit.

Californians Against Identity Theft’s 60-second radio ad, which is airing on stations in Sacramento and Southern California, urges listeners not to sign initiative petitions.Organizers say the effort is intended to educate the public about a need for more regulation of the initiative system, particularly the paid-signature gathering industry. But the ad came under fire Friday from good government and consumer advocates who said its claims were largely unsubstantiated and the timing sparked questions about whether the real goal of the campaign is to derail efforts to qualify measures circulating for local or statewide elections.

Attorneys for a statewide proposal to overturn a new online sales tax collection law have also taken aim at the effort, asking radio stations to stop airing the ad amid concerns that it is “filled with false and misleading statements.” The “Amazon Tax” referendum is one of several high-profile measures currently collecting petition signatures to qualify for the 2012 ballot.

It is just starting.

But for the thousands of affiliates in the state now set adrift by Amazon and Overstock, another major out-of-state player, the law is an unfair and misguided attempt to raise revenues on the backs of struggling mom-and-pop businesses.

Rather than bring in tax dollars, they say, it will instead drive away scores of entrepreneurs California needs to innovate its way out of its economic malaise.

“None of us are against a level playing field,” said Robert Smahl with privately held Ebates, an online shopping site in San Francisco with 50 employees. “But this is not the way to do it. You’ve just penalized a small segment of people who don’t have the money to fight the legislation. I don’t think the lawmakers understand that this won’t change anything and it won’t hurt Amazon at all.”

Many affiliates getting hurt are pint-size, like Silicon Valley mom-blogger Tina Case’s Moms Who Click, a camera-buff site that brings in a few hundred dollars monthly.

Her husband works, so she’ll simply lose “the icing on the cake.” Still, she’s angry.

“The law is ridiculous. If the purpose is to generate tax revenues, then by putting affiliates out of business the state’s losing the income taxes we were paying. This will hurt the economy more than help it.”

More than 70 affiliates have already left California, say fellow site-owners, in some cases after being wooed by states such as Texas and Arizona that are anxious to reel in business-tax revenue to shore up their own battered budgets. Other affiliates are brainstorming new business models that would allow them to keep their sites up and running. And still others are waiting to see if an Amazon-backed initiative to roll back the law makes it onto the ballot early next year.

Keith Posehn, a San Diego marketer who’s considering leaving the state after losing 30 percent of his revenue, says the new law complicates an already cutthroat business.

The largest of online marketers will leave California and set up across the border in Nevada or Arizona. Others will just absorbed reduced earning capacity and spend less and hope the law changes.

In the meantime, the “little guy” gets hurt while the Big Box Brick and Mortar stores duke it out with Amazon in the political arena.

But, don’t say I didn’t tell you so months ago.

By the way, this issue of internet sales taxation will not be settled until there is some federal legislation or a decision by a federal appellate court on the nexus issue.

The California Legislature and Democrat Governor Jerry Brown REALLY think they will be able to capture additional state revenue with the Amazon tax?

Their track record with the California “Mary Kay Tax” is not so good, as exposed in this piece over at Cal Watchdog.

Call it the Mary Kay Tax. It hits small businesses —  such as Mary Kay and Avon distributors — with heavy administrative costs, while bringing a pittance to the state treasury.

It’s a tax program the Legislature passed in 2009 to help balance the budget. Then it was signed into law by then-Gov. Arnold Schwarzenegger. But it has been a colossal failure as well as absurdly expensive. Despite the failure and added expense, the program is not getting the ax.

AB X4-18 created the Board of Equalization’s Qualified Purchaser Program
to collect use taxes from the smallest business owners who were not usually registered for sales and use-tax purposes.

But the taxes collected in the ensuing two years are 80 percent below projections. Adding insult to injury, the program is costing taxpayers an additional $10 million a year to administer, while adding 137 state employees.

I remember that this tax when it was passed created quite a bit of buzz in the dental community since all dental offices were required to file additional forms and paper work. As if dentists did not have enough compliance to navigate in California.

But, like everything the Democrat dominated California Legislature seems to touch there are many unintended consequences, including compliance costing almost as much as the tax revenue gain. How smart?

Despite the dismal collection numbers and the expansion of a state agency during the worst economic crisis in state history, the program is not being shelved. Because the tax was passed by the Legislature, only the Legislature can repeal it. But all is not lost. The BOE can make changes to the program.

The 2009 law requires business owners who receive only $100,000 in gross annual receipts to register with the State Board of Equalization to remit a “use tax.” But the $100,000 threshold is not the amount of income going into the business owner’s pocket. That $100,000 is the total amount of money earned by the business. Owners say that most of that money goes right back into the business to pay expenses, employees and vendors.

The motive for the tax was typical of the California Legislature. It was created to help balance the state’s budget. In these inflationary days in this expensive state, a $100,000-a-year business could be just one or two people.

The program has registered 500,000 California small business owners, targeting sole practitioners such as doctors and dentists, tax preparers and CPA’s, as well as contractors, lawyers, real estate agents and even Avon and Mary Kay cosmetics representatives.

Most of the BOE registrations have been “involuntary.” According to BOE Board Member George Runner, a former Republican state senator, this means that if BOE employees determine that an individual meets the definition of a “qualified purchaser,” the business owner is automatically registered to pay the tax.

Runner held a press conference Monday at the offices of the National Federation of Independent Business. He said that, because so few qualified purchasers have filed use tax returns with the BOE, the agency staff decided to send out 305,000 “delinquent” notices. The notices identified the small business owners as “tax delinquents,” and threatening them with “estimated use tax determinations.” According to Runner, this was done by BOE staff, without the knowledge of BOE board members.

Board members found out about the delinquent-notice mailings when more than 175,000 angry small business owners immediately flooded the agency with phone calls. The BOE legal department was consulted and quickly determined that there was no way to estimate use taxes. According to Runner, this was ample proof that the program should be drastically modified.

Runner said that most people are understandably confused about the use tax. Many area small business owners have had to hire CPAs just to navigate through the new tax process. Most small businesses do not have accounting departments. Even those with accounting departments say that accounting staff is spending far too much time on the cumbersome and confusing tax reporting.

I love it. The Sacramento Board of Equalization staffers on their own decided to call 305,000 business owners tax delinquents. Yeah, that will really help compliance. People will simply go even more underground and avoid paying any taxes.

Or, better yet, leave California for Nevada and Colorado.

Then, there is the cost of compliance to the small businesses that do remain in California. Costs that will be passed along to consumers.

“The average qualified purchaser pays almost as much to their accountant to comply with this program as they pay in use tax, resulting in much more of a burden upon businesses than benefit to the state,” Runner said. “It costs taxpayers an average of $75 for their accountant to prepare the BOE return, even though many owe far less than this amount.”

Expected to generate $264 million in the two years since the law was passed, instead the program has collected only $56 million in taxes. But it has cost a total of $23 million in additional BOE administrative costs. Add in businesses’ tax-preparation costs, which are tax-deductible, and the state well could be losing more in revenue than it gains from this program.

NFIB Executive Director John Kabateck said that his organization represents 20,000 small California businesses and 350,000 across the country. As anti-business laws continue to be imposed on California’s businesses by government bureaucracies, the game of “gotcha” government policies are fast becoming “we’re going to get you,” Kabateck said.

“Small businesses have been closing at a clip,” said Kabateck. “And there are now 2.2 million Californians unemployed.”

Kabateck said that the average small business owner spends countless hours doing paperwork costing at least $48.72 per hour, $400.00 per day and $2,000.00 per week, thanks to taxing agencies like the BOE.

And, the POLS wonder why many businesses, especially small ones, have closed up shop and moved to other states. California Legislators ponder why there are more than two million unemployed Californians.

Me thinks they should look at themselves.

Why the Board is proceeding and wasting taxpayers money on a law that will face a referendum is pure Democratic politics.

But, oh well.

Debate over the 90-day interim period during which Amazon gathers signatures for the voter referendum to repeal the law was a hot issue today between board members. Because the office of legislative counsel issued a recent opinion which said the law would be suspended the minute Amazon qualifies the issue for the ballot, Republican board members George Runner and Michelle Steele
said the BOE should not implement the tax yet.

At issue was whether the new law would or should even take effect.

However, board members Betty Yee and Jerome Horton, Democrats, insisted that because ABx1 28 was already signed into law, it needs to be upheld by the board unless and until it is repealed either by the voters, or in a court of law.

Yee wanted to abandon discussion of the interim period, and instead pushed ahead for implementation of the tax, beginning with an “interested parties” process discussing the need for rule making to implement and clarify the provisions of the bill.

The Board voted 3-2, siding with Yee and Horton to have obtain an opinion from the Attorney General explaining how the referendum process will affect the tax, and to begin the meetings to discuss implementation.

This move is just the beginning of a long litigious process.

Signature gathering is on-going and it is just a matter of time before the referendum folks and the California Attorney General are sued to try to remove the referendum from the ballot -  before and then after it qualifies.

The campaign consultants, communications strategists and the lawyers are all going to get rich while I no longer earn a few bucks from selling Amazon books and media on flapsblog.com.

Wonderful…..

Today the California State Board of Equalization will meet at 10 AM.

The state Board of Equalization will start to tackle how to implement a new law requiring major online retailers to collect sales tax on purchases made by Californians at its Sacramento meeting today.

But any solution for applying the so-called “Amazon Tax,” which was approved last month as part of the budget package backed by Democratic lawmakers, could be short lived. Opponents of the change have filed referendum papers to ask voters to overturn ABX1 28 in the next statewide election, a move that could pull the plug on the plan to generate revenue much sooner than 2012.

A Legislative Counsel opinion sought by Sen. Joel Anderson, R-Alpine, concluded that the law would be suspended once the challenge qualifies for the ballot, even though the majority-vote measure took effect immediately as a result of Proposition 25. That scenario would put the Amazon Tax on hold until the next statewide election, which will likely be held in June 2012.

The meeting will be webcast this morning here and the full agenda in Pdf format is here.

In the meantime, the signature gatherers are proceeding and the television ad mavens are busy.