Friday, July 1, 2011

California Dreaming

Demonstrating once again that nothing motivates a politician like his own self-interest, California now has a budget, and it's legislators will begin receiving their pay.
That's the short-lived good news. The budget is balanced on paper, but our deficits are like the blister that keeps returning: we can't cure this disease with the lifestyle Sacramento expects to lead.

Besides the usual rosie scenarios of economic growth, this budget contains two items that will likely prove to be the shams they really are:
  • An additional $12 'fee' on all care registrations.
  • An internet sales tax.
Like I explained before, all new taxes (and fees) in the state of California require a 2/3 majority vote. This was bypassed once again, and is facing a court challenge. My guess is that Governor Brown's strategy is to collect the fee while the challenge winds it's way through the courts, expecting it will be repealed, but he'll still be able to keep the ill gotten gains he's collected until that time. There is precedent for just that happening. This also breaks Brown's election promise of no new taxes without a vote of 'the people'. Typical of him, anyway.

The second point, the internet tax, will prove, and already has proven, to be more troubling. Currently, the legality of state imposition of sales taxes on internet sales are working their way to the Supreme Court. It is my understanding that (the plaintiff) is expected to win this fight eventually.

The argument for the States works like this: Since Amazon has affiliates in that state (California for the sake of this post), all sales from California are subject to sales tax with holding by Amazon (or whoever the retailer is). The SCOTUS has already ruled that a physical presence, (i.e. brick and mortar stores) within a state require online retailers to abide by tax law in relation to sales tax. This is where it gets tricky. The State of California is claiming that a website which contains a link to constitutes a physical presence within the state, and is deemed an affiliate.
Within seconds of Governor Brown's signature on the budget, Washington-based Amazon deleted all affiliates in California. This doesn't affect your favorite blog as I do not include an Amazon link on my page, but many monetized blogs do. It's been been reported somewhere that this amounts to several million dollars being taken out of the California economy in the form of Amazon kickbacks alone, but will have near zero affect on Amazon itself.

The good news is that I can still purchase from Amazon and avoid the sales tax. The bad news is that some blogger in Minnesota may receive the meager kickback for my doing so, unless I access Amazon directly. Which I normally do, anyway.

I'm really looking forward to several months from now, when the projections do not hold up, and Brown finds himself with a bigger hole to plug next year while continuing his campaign to convince a majority of Californians to approve still more tax increases while threatening to kill our children and burn our houses down if we don't. When they tried this two years ago, the vote was 2-1 against.

Brown forgets that months before the first 'Tea Party', Californians were already holding large and raucous rallies opposing new taxes. If he thinks he's got a chance this time, he's dreaming.

1 comment:

Mr. D said...

Within seconds of Governor Brown's signature on the budget, Washington-based Amazon deleted all affiliates in California.

Of course they did.