eBay Says Let’s Make a Deal to California’s Internet Sales Tax Legislation – Part Two

Posted Posted in Amazon Tax, Internet Sales Taxes

As I said before eBay doesn’t care much for Amazon.com but business is business.

Unsurprisingly, eBay has not been enamored with such efforts which would hit eBay sellers, and has been seeking to work into legislation a threshold designed to ensure that at least some of its out-of-state sellers will not be subject to California sales/use tax collection and remittance obligations where they sell to customers in the Golden State (California-based sellers who sell to Californians are already on the hook).

A possible threshold of $10,000 a year or less in sales to Californians has been reported, but sources say that eBay and/or some of its sellers want that limit raised higher– potentially up to $2 million per year.

EBay has its California sellers engaged in a grassroots lobbying effort aimed at forcing amendments to the legislation, which would  defang it.  No doubt eBay sellers located outside of California, who are currently not obliged to collect and remit sales tax on purchases made by Californians, are ecstatic about this. California-based sellers would not benefit from building in a sales threshold, though, especially a high one that could tilt the eBay marketplace distinctly to the advantage of out-of-state sellers. However, their legislators are being urged to make amendments that, if put through, could seriously reduce the already rather pitiful revenues that backers of the legislation claim they would obtain by ramming it through.

The very best case scenario, according to a Board of Equalization staff analysis produced earlier this year, was that this “revenue
enhancement” measure would bring in a measly $200-or-so million maximum in 2012-13.

Let’s see as we repeat – no real, substantive tax revenue for California, a loss of California jobs and a costly litigation. The Skinner Bill (AB 153) et. al is a loser all around.

But, it WILL proceed because the POLS will milk those who have a stake in the legislation for campaign contributions.

Eventually, this will die a quiet, but expensive death.

Previous:

An Amazon Tax Lesson for California Legislators – Businesses Move and Job Loss Occurs

eBay Says Let’s Make a Deal to California’s Internet Sales Tax Legislation

Democrat Senator Dick Duban to Introduce Bill to Tax Internet Sales

Poll Watch: 63 Per Cent Oppose Taxing Online Transactions

Video: California and the Amazon Internet Sales Tax

Video: How Amazon Internet Sales Tax Legislation Hurts California Small Business

Overstock.Com Threatens to Terminate California-Based Affiliates Should Internet Tax Legislation – AB 153 Passes

Amazon Internet Sales Tax WILL Require Super Majority in California Legislature

Video: California Board of Equalization Casts Doubt on Amazon Internet Sales Tax Legislation

The Amazon Tax Returns to California

Video: California and the Amazon Internet Sales Tax

Posted Posted in Amazon Tax, Internet Sales Taxes

Here is a good video that summarizes the conundrum facing the California Legislature when considering the Amazon internet sales tax – the loss of revenue and California jobs.

I have written more about this issue:

Video: How Amazon Internet Sales Tax Legislation Hurts California Small Business

Overstock.Com Threatens to Terminate California-Based Affiliates Should Internet Tax Legislation – AB 153 Passes

Amazon Internet Sales Tax WILL Require Super Majority in California Legislature

Video: California Board of Equalization Casts Doubt on Amazon Internet Sales Tax Legislation

The Amazon Tax Returns to California

Overstock.Com Threatens to Terminate California-Based Affiliates Should Internet Tax Legislation – AB 153 Passes

Posted 3 CommentsPosted in Amazon Tax, Internet Sales Taxes
First, it was Amazon.com which said that should AB 153 which imposes internet sales taxes passes they would terminate their California-based affiliates. Now, Overstock.com has weighed into the flap.
Board of Equalization Member Senator George Runner today released a letter from Overstock.com indicating that it will terminate its California affiliates should pending affiliate nexus tax legislation become law.

“This issue is much, much bigger than one company,” said Runner. “A law requiring outof-state retailers to collect sales tax from California consumers could force thousands of online retailers to terminate their relationships with California-based affiliate businesses. This hurts California jobs and revenues.”

In his letter, Mark J. Griffin, general counsel for Overstock.com, writes that his company has terminated affiliate relationships “in every state where this legislation has passed” and “will do so in California.”

According to Griffin, in 2009 Overstock terminated 3,200 California affiliates after the Legislature passed a similar measure. When the legislation was vetoed by the governor, Overstock attempted to reinstate those affiliates with marginal success. Griffin estimates the current number of Overstock affiliates in California is approximately 600.

George Runner is contacting leading online retailers with California-based affiliates in an effort to quantify the potential impact their response to an affiliate nexus law could have on jobs and revenues.

Runner said, “Taxes have consequences. Too often we assume companies and individuals will keep acting the same after new tax laws are passed. That is simply false. Businesses change their behavior as tax laws change.”

“Supporters of this proposed policy claim that they want to create a level playing field for businesses that have retail presence in California and are required to collect sales tax. Unfortunately, none of the bills under consideration will level the playing field because out-of-state online retailers will simply modify their business model to avoid collecting California’s sales tax.”

Runner added, “There are 25,000 Internet affiliates in California who are at risk of being wiped out by this attempted sales tax grab. This law will kill jobs and cost the state revenue as these individuals and businesses close up shop in California.”

Well, there you go. In the attempt to unconstitutionally grab some additional tax revenue, California Democrats are proposing legislation that will not only increase taxes for California consumers but also cost California thousands of jobs.

This idea of internet sales taxes for out of state retailers sounds like a “LOSE – LOSE” to me.

Amazon Internet Sales Tax WILL Require Super Majority in California Legislature

Posted Posted in Amazon Tax, California, Internet Sales Taxes, Proposition 26
Robert Ingenito, Chief of Revenue Estimates, California State Board of Equalization

While the Amazon Online Sales Tax legislation is in “suspense,” Americans for Tax Reform make this point – the legislation will require a 2/3’rds super majority in the California Legislature.

As it would happen, proponents of AB 153 are operating under the faulty assumption that approval can be had with a simple majority vote of the legislature. Not so fast. As a result of Proposition 26, which California voters approved with over 52% of the vote just last November, lawmakers can no longer get around the two-thirds majority vote requirement to raise taxes simply by denying that what they are imposing is, in fact, a tax increase. Yet that is precisely what Skinner and company are doing in attempting to pass AB 153 with a simple majority vote. Skinner herself claims that AB 153 will yield an additional $250-500 million in taxpayer dollars for state coffers in year one. Objective analysis can only conclude that Rep. Skinner would ultimately find her simple majority assumption to be as valid her assertion that her bill wouldn’t cost jobs.

Proposition 26 amended the California constitution so that – according to the language of the law – “Any change in state statute which results in a taxpayer paying a higher tax,” which is the goal and purpose of AB 153, is subject to a two-thirds vote requirement. Online sales tax proponents might have had a shot at getting a simple majority, not so with a two-thirds threshold.

Yes, this is my reading of the law. A two-thirds vote will be required for passage in the Assembly and State Senate. This means there will have to be some Republican votes – a highly unlikely occurrence.

And, the passage of Proposition 26 was a little heralded silver-lining in the GOP wipe out in last November’s California election. This little proposition will have long-lasting impacts on the growth of California government.