Amazon debate: Is the Golden State just desperate for more gold?

Opinion L.A.

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from The Times' Opinion staff

Amazon debate: Is the Golden State just desperate for more gold?

July 28, 2011 California's sales tax rule for online retailers kicked in July 1, but Amazon isn't collecting the tax and instead cut ties with its affiliates in the state; now, it's working on a referendum to overturn the law in the next election.

A recent poll by USC and the Los Angeles Times showed that voters were divided on whether the company should collect sales taxes: 46% were in favor of using the tax revenue to help balance the budget, while 49% were opposed to the new law. And, not surprisingly, younger voters were more likely to be against the law than older voters. Commentators seem to be split as well.

An Op-Ed by Steve Forbes called the law both unconstitutional and desperate pickpocketing. The potential revenue to be gained from online retailers is small in comparison to the budget shortfall in the state, and could adversely affect the economy and consumers across the nation, he wrote. It is a desperate attempt to gain revenue when California legislators should really be trying to fix the dire fiscal situation of the state, Forbes said.

That California, where modern high-tech industry was born, should wage war against Internet-based entities is bizarre. It demonstrates the madness of its political class. California faces a budget shortfall of $10 billion. 

This new tax might collect $200 million from Amazon and others. That's hardly a drop in the bucket. More fundamentally, it will force Amazon to sever its relationships with thousands of its affiliates. This new tax law will hurt other online retailers and their affiliates, which will damage the state economy by considerably more than that $200 million. Talk about being penny-wise and pound-foolish.

The Times' editorial board took the opposite position: Amazon has the unfair advantage of lower prices without sales tax that brick-and-mortar retailers don't have. Most consumers don't know they're required to pay sales tax regardless of whether it is collected for them, so the current debate will, at the very least, make them aware of that obligation.

Simple: The so-called Amazon-tax law isn't a tax at all. It doesn't impose any new obligation on Californians, who have been required for decades to pay sales taxes on goods purchased from out-of-state sellers. The law that has driven Amazon to such fits governs solely whether the tax gets added to the bill at checkout or, instead, the buyer bears the full legal burden of calculating and remitting the tax. Amazon and other online retailers may claim that it's just too hard and too expensive for them to figure out the different sales taxes levied by each state, but of course what they really don't want to lose is the tax-cheat business model that gives them a bottom-line advantage over their brick-and-mortar counterparts.

--Samantha Schaefer