Amazon TaxInternet Sales Taxes

California’s Amazon Tax Referendum Faces Epic Legal Battle

Dan Walter’s has the story here of the challenge to the recently enacted California Amazon Internet Sales Tax Legislation.
But will the referendum run afoul of Proposition 25 – the 2010 initiative ballot measure, which public employee unions sponsored, to reduce the legislative vote margin on the budget and its trailer bills from two-thirds to simple majorities?

Before any ballot battle, the rivals are poised for a legal showdown.

The tax measure, Assembly Bill X1 28, appropriates $1,000 to the Board of Equalization for administration.

Democrats placed token appropriations in trailer bills to qualify for simple majority votes under Proposition 25, and one section of the state constitution says appropriations are not subject to referendum.

Two Democratic legislators declared Thursday that the referendum is invalid due to Proposition 25. But Amazon cites multiple declarations by Proposition 25’s supporters that it would not dilute voters’ referendum rights, plus an opinion from the Legislature’s counsel to that effect.

Last August, for instance, Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez issued a statement that, if Proposition 25 passed, it “will not allow a majority of the Legislature to use budget trailer bills to enact new ‘referendum-proof’ programs or requirements,” adding, “Any attempt by this or any future Legislature to circumvent this right would be in clear violation of California’s constitution.”

The Amazon petition is now before Attorney General Kamala Harris. She could conceivably declare it to be invalid under Proposition 25, thereby triggering a legal battle with Amazon’s attorneys attacking Proposition 25’s validity.

Harris is more likely, however, to clear the referendum for signature-gathering. But if and when Amazon submits the signatures for certification, the California Retailers Association is poised to challenge them under Proposition 25.

Either way the entire matter will head to the California Supreme Court where the referendum process will be examined under the precepts of Proposition 25. Then, there will either be an election and/or a federal court challenge.

These taxes will not be collected, nor shall the California treasury be enriched for a long long time.

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