Amazon Tax Bill Passes Assembly

John Seiler:

California’s Democratic legislators are the nation’s most narrow-minded and unimaginative. In the Assembly, they just passed a bill by Charles Caleron, D-Whittier, to tax Amazon.com and other companies that currently avoid paying the state’s hefty sales tax, usually 8.75 percent.

Federal law bans such taxes unless a company has a “nexus” — a physical location — in a state. Amazon is headquartered in Washington state, and doesn’t have physical stores.

But the Calderon bill also defines as a “nexus” if a company has a subsidiary in California. Amazon, for example, makes its Kindle e-book readers here.

So, if this bill becomes law, all the little “Mom and Pop” affiliates that sell books and many other things online would be taxed. All of which might raise just $26 million — less than $1 per Californian for this hassle.

Amazon, not surprisingly, says it will leave California rather than pay the taxes. In other states, such as Illinois, it has ended the businesses of the Mom and Pop stores. The California tax thus could kill thousands of California jobs.

Calderon, who has to be — to use a technical term — the dimmest bulb in the Legislature, actually said, “If you oppose this bill, you support tax evasion and are anti-business and are not listening to your constituents.”

But if Amazon leaves, then thousands of jobs could be killed in the computer development area — as well as destroying thousands of Mom and Pop affiliates. And the state’s deserved reputation for being rabidly pro-tax would grow.

And as I’ve said before, California, the high-tech capital of the world, should be the first to back what’s called “frictionless capitalism” — selling stuff online with a minimum of hassles. Our state designs and makes Internet switches and software. More Internet use means more money for California businesses, a larger tax base — and greater tax revenue.

But that two-step thought process is too complicated for Calderon and the other Democrats. Also note that he believes that California needs higher taxes — even though it’s the highest taxed state in the country.

The bill likely will pass the Senate.

Whether Gov. Jerry Brown signs it is still up in the air. He might do it just to appease his fellow Democrats.

— June 1, 2011