SHOULD AN OUT-OF-STATE CORPORATION DICTATE CALIFORNIA TAX POLICIES THROUGH A REFERENDUM?

Recently, I was food shopping and saw an old friend collecting referendum petition signatures. Her hand-scrawled sign read: “STOP POLITICIANS FROM TAXING US.” Her elderly mother sat nearby holding her granddaughter.

Seeing her was surprising because she “hates” politics.  I discovered that the referendum would repeal the so-called “Amazon tax” statute requiring out-of-state online retailers to collect California sales taxes.  Taxpayers are required to report these purchases and pay sales taxes, but few do. 

Online sales have grown by 496 percent since 2001 because prices are cheaper.  However, in 2010 alone California businesses lost $4.1 billion to online competitors. 

Amazon is suing California and eight other states with similar laws designed to generate new state revenues.  The Legislature estimates that $200 million would be raised annually from online collections. 

The lawsuits argue that a 1992 U.S. Supreme Court decision exempts online stores from collecting state sales taxes unless a “nexus” is proven.  This is defined as a physical presence in the state such as operating stores and facilities. 

Amazon’s business model intentionally avoids establishing any nexus by paying in-state affiliates to handle shipments.  This provides an immediate 11 percent cost advantage that is forcing California business closures and workforce layoffs. 

Their California distribution center has even been established in a city just across the California-Nevada border.  They can both reap Nevada’s corporate tax breaks and serve their largest customer base. 

Many argue it’s hypocritical for Amazon to claim no California nexus and yet spend millions to gather signatures and hire campaign and media consultants.  The disability community must understand that if these revenues are lost, there will be deeper cuts in health and human service programs. 

Democrats passed this year’s budget without Republican votes, but included an automatic “trigger” making $2.5 billion in additional cuts if incoming revenues fall below $87.5 billion.  So far, revenues are lagging far behind.  Our community must mobilize to defeat the referendum because an uninformed electorate may be easily persuaded to repeal the taxes. 

My friend’s Mother is disabled and she and her daughter are enrolled in state assistance programs targeted for cuts.  I told her the referendum also sets a dangerous precedent to repeal appropriations protecting the poor, seniors, and people with disabilities. 

Some bystanders strongly supported internet discounts.  Others argued that it is just corporate greed. 

My friend was upset because she was unaware of these implications.  “It’s a job,” she explained.  “I need the money now.”

I apologized. She is merely a pawn in Amazon’s war to protect guaranteed profiteering.  Yet, it reflects how consumers are being swayed by corporate interests to vote against their economic self-interest and just how deep is the “no tax” outcry. 

How can we justify exempting these internet retailers and allow them to reap massive profits without investing in California?  They seize inordinate shares of the sales market because they pay no local property taxes or wages and benefits to California employees. Our consumer dollars are leaving California, never to return. 

We must stop this out-of-state corporate power grab.

WILL NEW REDISTRICTING MAPS ENABLE THE LEGISLATURE TO PASS TAXES AND CLOSE TAX LOOPHOLES IF DEMOCRATS WIN A TWO-THIRDS MAJORITY?

In 1990, California voters grew weary of “career politicians” in the Legislature who often held office for decades with little competition and enacted the term limits initiative.  Opinions differ about whether it made legislators more or less responsive to the public.  Nevertheless, it radically shifted the balance of power in the legislative process and turned the institution upside down and inside out.

The public will soon learn if another reform empowering a voter-created panel of citizens, instead of the Legislature, to draw new congressional and legislative districts will end partisan gridlock.   After the 2000 census, Republicans and Democrats drew maps creating “safe seats” for incumbents and their party’s successors. 

There were unintended consequences.  The gerrymandering of district lines widened the ideological divisions between the parties.  Safe districts gave Republicans cover to oppose any tax increases in recent budget negotiations without risking re-election.  The disability community knows that hard-line stances led to “cuts only” budgets that are undermining California’s health and human services safety net.

Is there hope for change?  This week the California Citizens Redistricting Commission released new district maps after the 2010 census.  Some analysts believe Democrats could win two or more seats in both the Assembly and Senate.  If so, they would achieve the two-thirds majority needed to raise revenues and close tax loopholes without Republican votes.

Immediately afterwards, civil rights organizations filed lawsuits alleging that the maps violate Federal law by diluting the minority vote.  Republicans are also seeking a referendum overturning the maps if they gather 505,000 signatures.

However, raising revenues may also be altered by Proposition 14 of 2010 that requires the top two finishers in Primary Elections to compete the General Election, regardless of party. Reformers believe that candidates will be forced to be more moderate to attract voters. 

So, there are uncertainties whether a Democratic super-majority gives the disability community hope that future budgets could include revenues to offset cuts.  Voter initiatives often produce unexpected outcomes, as evidenced by the lack of experienced legislators and cohesive leadership term limits caused. 

It’s likely that Republicans will mobilize their base and entice Independents to support maintaining the same “no taxes” stance.  If both candidates in a runoff are moderates, they could also waver on tax increases out of fear losing votes. 

Moreover, the post-election results of President Obama’s ambitious campaign promises for reform shows that “HOPE” alone does not produce change.  The disability community must launch aggressive voter registration, education, and election day  turnout campaigns. 

We must convince the public that independent living achieves costs savings reducing states costs.  Equally important is the message that protecting the health and well being of our neighbors and communities reflects the best qualities of American society. 

Our fragile economy makes this a challenge.  People still expect government services, but don’t want any more taxes.  Yet, they need to understand it just doesn’t work that way in the real world.

IS PUBLIC OPINION TURNING AGAINST THE TEA PARTY MOVEMENT?

Now that the long, protracted and bitterly partisan battle over the Federal deficit reduction act has been signed into law, it appears that the public has not been fooled by all of the rhetoric that the Tea Party wing has forced upon the Congressional Republicans and the nation as a whole.  Rather than focusing on legislation to create jobs and business opportunities by stimulating our declining economy with programs such as those to repair our crumbling infrastructures, the Republican strategy is to distract public attention by demanding that the nation’s deficit should be the highest priority.

While that message may resonate with their own constituencies, reducing government spending is the last thing leading economists have called for again and again.  The “austerity” message is being seen as a slight of hand maneuver to lock in massive spending reductions and entitlement program cuts with a deficit reduction package that, for the first time in American history, did not include any revenue increases. 

In fact, economists cannot point to a single instance in world history where an austerity program has brought a nation in economic crisis back from a declining economy.  Mostly recently, Great Britain moved in that direction and has suffered through three straight quarters of zero growth—that is how well their austerity program is doing.

The American public has not been fooled.  Shortly after the deficit reduction act was signed into law, a record 82 percent of those surveyed in a New York Times/CBS poll disapproved about how Congress is doing its job.  This is the lowest approval rating since the Times began posing this question in 1977.

More than four out of five of those polled said that the debt ceiling debate was more about gaining political advantage than doing what is best for the nation.  Nearly three-quarters said that the debate has harmed the United States’ image in the world.

The public’s opinion of the Tea Party movement has now soured.  The party is now viewed unfavorably by 40 percent and favorably by just 20 percent.  Forty-three percent now think that the Tea Party has too much influence over the Republican Party, up from 27 percent in mid-April.

The Times speculated that perhaps shortly after the party won congressional seats, many people did not know who they were and what they were all about.  Now, it is clear what they are seeking to do in pushing their agenda forward and it is creating public angst about our nation’s future direction.

As the second phase of the debt reduction process moves forward, the issue will be whether voters, especially Independent voters, want Congress and the President to compromise and find solutions.  The House Republicans may the gloating over the “victory” they achieved in bringing the nation to the precipice of a default, but it is clear that the voters have little respect for Congress and the major influencing factor may be whether the Tea Party will still drive the debate.

As we continue our fight, we need to educate voters about this ugly wedge and motivate them to vote.