In the Star Trek original series episode "A
Piece of the Action," Captain Kirk invents a complicated and confusing card
game, which he calls Fizbin. The rules are depressingly similar to
California’s sales tax code.
An excerpt from Wikipedia: "Each
player gets six cards, except for the player on the dealer’s right, who gets
seven. The second card is turned up, except on Tuesdays. Kirk deals one player
two jacks, which are a ‘half-fizbin.’ When the player says he needs another
jack, Kirk warns that a third jack is a "shralk" and is grounds for
disqualification. With two jacks, one wants a king and a deuce, except at
night, when one wants a queen and a four."
As the game proceeds, the rules keep changing.
Some examples of California’s fizbin tax
code:
Food products in California are exempt from
the sales tax, "unless otherwise specified."
Cold food is exempt from the sales tax, but
hot food is taxable. Both cold food and hot food are taxable if a restaurant
decides to do its customers a favor and provide seating.
Cold sandwiches at a take-out restaurant
are exempt from the sales tax, but they are taxable if the sandwiches are
toasted.
Fruit juices, vegetable juices, and "other
beverages, including bottled water," are exempt from the sales tax, but
carbonated beverages are taxable.
Services in California "unless otherwise
specified" are untaxed. Tips, which are
voluntary payments for a service, are therefore untaxed; unless a restaurant
requires a tip.
If a restaurant says "18 percent gratuity
included for parties of eight or more," for example, that tip becomes
taxable. If you decide of your own
volition to leave an 18 percent tip after dining with a party of eight or more,
your tip is tax free.
Last, in California, discounted cell phones
sold with a service contract are taxed on the full retail price of the cell
phone, not on the discounted purchase price.
When you buy a cell phone without a
contract in the City of San Diego, for example, the sales tax rate is 8.75
percent, but when you buy a cell phone with a contract the effective tax rate,
on average, is 47.45 percent.
I am working with Assemblyman Martin
Garrick to change that with Assembly Bill 279
(Garrick).
This is how it works: According to Board of
Equalization (BOE) staff, the average price of a cell phone in California is
$336.14, and the average discounted price of a phone in a "bundled transaction"
– meaning the phone is sold along with a service contract – is $61.97.
Under current law, if you buy a bundled
phone at $61.97, you are required to pay sales tax on $336.14. At San
Diego’s tax rate of 8.75 percent you are paying $29.41 in sales tax, or almost
half the purchase price of the phone.
This creates confusion for taxpayers who
are used to paying sales tax on the purchase price of the goods they buy,
regardless of the original retail price.
The BOE gets flooded with phone calls from rightfully angry taxpayers
every time a new cell phone is released; all because of this ridiculous law.
Under AB 279, you would only have to pay
sales tax on the price you actually paid for the phone, using the $61.97
average, that’s $5.42. The rest of that
money would stay in your pocket where it belongs, not with big government.
AB 279 will define "sales price" for
wireless communications devices as limited to the amount charged for the sale
of that device in a bundled transaction.
This bill will not turn California’s fizbin
tax code into a game of chess, but it will correct the injustice of having to
pay more in sales tax on cell phones than what should be owed.