Amazon Tax Would Slam eBay, Too

John Seiler:

Our Katy Grimes first wrote a story, two days ago, about how the tax-ravenous Legislature’s attempt to tax Amazon, a company based in Washington state, also would slam eBay, which is located right here in San Jose. The Sacramento Bee caught up with her today, reporting:

California lawmakers thought they were targeting Amazon.com, the out-of-state giant, when they voted last week to force Internet retailers to collect sales tax.

It turns out eBay Inc., California’s own golden child of e-commerce, isn’t so thrilled about it, either.

The San Jose online auction company says the legislation would hurt its business model, which relies on thousands of entrepreneurs who sell goods on its site.

The intent may have been to go after Amazon, but “we’re literally caught in the crossfire,” said David London, senior director for state government relations at eBay.

Another question is what to do with foreign sales. Over the past decade, I’ve bought several items from Europe from Amazon and eBay, all of them low-priced books or music, maybe one a year. I’m currently bidding on some cassette tapes from Ireland. The price if I “win,” in U.S. dollars, is about $6.78. The shipping is about another $10. Not much in either case.

I’m buying from a private seller through eBay’s auction system. Should the Irish seller, from what I can tell a small Mom and Pop outfit, be forced to collect California sales tax from me on the purchase price, which would be about 60 cents, and remit it to the Board of Equalization? Should eBay be forced to figure this out?

What benefit does the small Irish company get from paying 60 cents to the state of California? Do they get to use our crumbling freeways or our sub-par schools? How about the lavish pension system for government workers? Nope. They get nothing because they live 5,000 miles from here.

This example demonstrates the absurdity of the situation. But our leaders in the Legislature don’t understand business, especially not small business. Both Assembly Speaker John Perez and Senate President Pro Tem Darrell Steinberg are government union hacks. They only look to see how to grab private-sector wealth, not how to foster its creation.

Let’s hope Gov. Jerry Brown, who fostered small-business creation as Oakland’s mayor, has more sense and vetoes the Amazon-eBay tax.

June 23, 2011