Losing Internet Tax Break – No Gift for Shoppers

For Californians, this week’s Cyber Monday online shopping fest marked the end of an era of cheap, sales-tax-free goods over the Internet.

Come next September, online retailers like Amazon will start collecting sales tax on purchases made by California shoppers, bringing a gleam to the eye of both government officials anxious for more revenue, and brick and mortar retailers convinced that Internet businesses are stealing bread out of their children’s mouths.

“It will level the field,” said Loni Hancock, the Berkeley state senator who wrote the law requiring the tax collections. “You will no longer get a 10 percent discount if you buy over the Internet.”

Well congratulations and all that, but Hancock shouldn’t expect a loud round of applause from California shoppers, who were quite fond of that 10 percent discount she so breezily dismisses.

Sure, state law has always required California residents to pay sales tax on online purchases, even if it meant totaling it up and sending a personal check to the state Board of Equalization. Although the guy who processes those checks probably has the softest job in Sacramento.

And it’s not fair that merchants spending money to rent storefronts, buy fixtures and pay local taxes should watch would-be customers wander in, check out their wares and then buy the same goods cheaper online.

The state also could really use the $200 million in Internet sales tax revenue that financial mavens expected when they put together the 2011-12 budget.

But while it’s easy to make a strong intellectual case for the Internet taxes, that argument doesn’t reflect two important parts of human nature.

First, people love a bargain. Second, they hate paying taxes.

It’s not that folks are opposed to taxes, which pay for government programs voters love. It’s just that they think other people should pay those taxes.

That well-known bit of nonsense verse, “Don’t tax you, don’t tax me, tax the fellow behind the tree,” is way more accurate than politicians would like to believe.

Which brings us to Gov. Jerry Brown’s anticipated plan to raise $7 billion a year by boosting the tax rate on people making more than $250,000 a year and tacking a half-cent on the sales tax.

Most Californians who aren’t Republican legislators are willing to admit the state needs more revenue to bring the budget back into an honest balance. And polls show a majority of them would vote for new taxes.

But while taxes on the wealthy hit “the fellow behind the tree,” the sales tax hike is aimed directly at you and me, which makes the governor’s plan a tough sell.

There’s a reason sin taxes are a hardy perennial, especially if they don’t target our sins. One well-known Sacramento journalist, for example, used to lament that he’d be the last smoker in California, paying $10,000 a pack.

So it’s no surprise that the targets for a variety of tax measures proposed for the 2012 ballot are such unpopular “other guys” as tobacco companies, oil and gas firms, corporations and big businesses. And while Jon Coupal of the Howard Jarvis Taxpayers Association suggested in this space the other day that voters would crush any effort to revise Prop. 13 and let commercial property be reassessed more frequently, if that went on the ballot as an  “us vs. them” measure, the result could be a toss-up.

For Brown, the first trick will be to convince labor, environmentalists, teachers and others to abandon their plans for tax initiatives boosting their pet projects and get them behind his budget-balancing effort. Good luck with that.

Even if he clears the field and gets his tax measure on the ballot, the governor still has to convince people to vote for it. And like it or not, Brown will have to answer the single most important question voters have in any tax election: What’s in it for me?

(John Wildermuth is a Journalist and Political Commentator. This piece was first featured in Fox & Hounds.)


  1. Lionell Griffith says

    Wrong! It is not that the citizens of California are under taxed, it is the State of California that spends way too much. If the state would trim its programs to just the necessary government functions rather than trying to give a free lunch to everyone by picking the pockets of anyone who works for a living, the cost of government would be a minute fraction of what it is. To do that, you would have to close about 80% of state agencies and unload a similar fraction of political appointees and union workers(!?). They would actually have to get a real job and EARN their paychecks like the rest of we taxpayers.

    I don’t expect this to happen in my life time but it will happen eventually. In part because the people paying for the extravagant party will have left the state but mostly because all Ponzi schemes collapse – legal or not. The parasites who remain will have to get along on the garbage dump they have made of a once very golden state.

  2. “For Brown, the first trick will be to convince labor, environmentalists, teachers and others to abandon their plans for tax initiatives boosting their pet projects and get them behind his budget-balancing effort. Good luck with that.”

    Good God Jerry, just have these tax and spenders certified and sign the committal papers!

    Lookit, if you want to buy from a California ‘brick-and-mortar’, then understand that the state wants a sales tax. It is current law (we could change it!!!). But the Commerce Clause of the federal Constitution says all states are BANNED from taxing or interfering with legal out-of-state commerce in any way. If any totally out-of-state business attempts to collects sales tax from me, then they do not need or get my business. I am not a cash cow (though you wouldnt know it the way Sacramento treated taxpayers for over 50 years).

  3. Citizens of California are overtaxed by the greedy unions and corrupted sold-out legislators – they squeeze from us every penny they can put their claws on, started to sales-tax even Internet transactions from other states! We have to send all of them packing before it’s too late!

  4. Our state’s lawmakers are so money hungry they would tax the air we breathe if they could figure out a way! They need to go!!

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