Fair is… What?: Amazon and California – a blogbate

So… My friend @Conejojoe contends: “Fair is Fair: Amazon Should Collect Sales Taxes From California Customers – Welcome! – Conejo Valley Guide.”


Sales & Use tax is a relatively complex subject. Did you know that if you sell product on eBay in CA you would technically be responsible to pay the Franchise Tax Board sales tax on behalf of your “customer”? They don’t enforce this in any way. Why? Because the administration would be a nightmare. They (state of CA and the franchise tax board) know that collections would be a battle. Why? Because they don’t have you over a barrel. You don’t have a business license. But, what if they required eBay to pay on your behalf? What would happen? I’ll tell you what would happen! Those eBay fees, which seem like a lot now, they would go up; SIGNIFICANTLY!

In steps….Amazon. A company who, while not all the time, can stand for principle. CA has decided that they will create a law to enforce sales & use tax on Amazon for purchases made by residents of California. What did they accomplish? Well, their hope was that Amazon would concede (which they had already foretold them they wouldn’t) and just charge sales tax and become part of the program. They didn’t. They immediately terminated (as they said they would) all affiliate programs in California. What does that mean? Yes, you guessed it. It means less revenue in California. The state is STARVING for revenue; STARVING for jobs; The housing market continues to deteriorate and yet Edmund Jr. decides to create a tariff on internet retailers. Seriously, how does it help? What is the expected outcome? Do you think that the mom & pop bike shop is going to benefit? Do you think that they are going to really be able to collect tax from CRC (Chain Reaction Cycles — in England where I sometimes buy obscure parts with free shipping)? NO! This was created by Edmund and his lobbyist buddies at Walmart and other MAJOR retailers. Those are the companies who will benefit. See, they [MAJOR RETAILERS] have to pay the tax in the states in which they have a physical presence. This is, again, all about big business using the government to create protectionist policies geared at “leveling the playing field”. And, believe me, when you are operating on a 3% margin because your business model is to DRIVE PRICE INTO THE GROUND while providing no better service, that’s an important factor. Mom & pop shops charge a lot more … because you can walk in and ask them a question, touch the product, come back the next day…You pay for what you get. BUT THAT SHOULD ALWAYS BE THE CONSUMER’S CHOICE; not the government’s.

I respect @ConejoJoe’s opinion a great deal. He get’s it. He’s just on the other side on this issue, but we’ll fix that, right?

The issue comes down to states’ rights, and I fully expect that this will end up in the Supreme Court before it’s over. One state has NO RIGHT to tax the conduction of business in another state. If Amazon was conducting business in California (Which they consciously chose not to in order to provide better service to the consumer), then they would be required, under previous law to pay and charge (collect) sales tax. But, they don’t, and are not subject to California law. I would suspect that the next step would be to refuse to sell/ship to California. That would be mine.

One final issue: California continues to make it prohibitive to conduct business within its borders. Some folks are fed up and moving away. Many more will before it’s over. The weather is great, sure, but, not that great that it is worth a 25-50% premium on everything we purchase. Continue to pile it on the cart, Gerry, the mule is blind… But, don’t be surprised when the mule’s back snaps and you no longer have resource to pull the cart.

I, for one, don’t shop at Walmart or the big retailers and will now choose to purchase from Amazon all that more and “ship” to my address in Florida. Thanks California!

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