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.
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