Losing Internet Tax Break – No Gift for Shoppers

John Wildermuth
Journalist and Political Commentator

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?

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