AMAZON OFFERS A NEW DEAL ON THE SALES TAX ISSUE DISCUSSED LAST WEEK

I now appreciate the power and influence of Blogs, and know that consecutive ones on the same issue are not recommended, but….

In my last one I wrote about a friend being paid to collect referendum signatures to repeal the “Amazon tax.” The Legislature enacted this law requiring the collection of state sales taxes on California resident purchases from out-of-state online retailers like Amazon. 

My friend was unaware it would generate $200 million annually to help offset budget cuts in programs serving seniors, the poor, and people with disabilities, including her and her family.  To her, it was a paycheck.

Amazon was willing to spend millions to sue the state and fund the referendum. Yet, the very next day after my Blog was posted, they offered a deal.  I was amazed that Amazon read it and was convinced to broker a deal.

But seriously, they offered to drop the referendum and create 7,000 California jobs if the law was postponed until July 2014. The deal was quickly rejected by Governor Brown and the Democratic leadership because the state sorely needs the revenue.  A major referendum opponent, the California Retailers Association, asserted it was not a serious, acceptable compromise.

However, another tentative agreement has been reached.  The Legislature is close to accepting a deal delaying the law until July 2012 if the referendum is dropped and  Amazon has time to lobby Congress. 

They will seek a nationwide solution to the contentious issue of how to tax online retailers.  If Congress doesn’t act, the collections would renew September 2012 and provide a steady stream of annual revenues.

To date, Amazon has not complied with the law, so California faces risks if the deal is not accepted.  Legal costs to defend the lawsuit would be expensive and would further delay collections.  There’s also the danger of voters agreeing to repeal the tax. 

The Legislature tried to enact legislation invalidating the referendum, but Republicans failed to vote for it.  Like me, are you sensing a pattern of endless Republican “No” votes?

Governor Brown has not indicated if he will accept the deal.  He’s rightfully leery of losing any revenues in our fragile economy.  After all, the last state budget forecasted the infusion of these revenues. 

The deal needs to be made before the Legislature adjourns this week.  Republican votes are needed, but California retailers are pressuring them to solve what they view as Amazon’s unfair competitive advantage.

Where does this leave the disability community?  We certainly will face more budget cuts next year without those revenues.  How will that $200 million gap be filled and where will cuts be made?  No one knows.

Yet, it can be argued that providing new guaranteed revenues to offset future health and human services budget cuts is a “victory,” although a delayed one.  Reaching compromise often requires painful choices for both sides. 

The disability community has no real say in the deal’s final outcome, but two things are clear:

First, I should have written my Blog sooner.  Second, my friend will probably lose her job.