California Internet Sales Tax Becomes Law

California has cut off its nose to spite its face once again. The states version of the internet sales tax scam became law today with predictable results.

Jerry Brown is a tax and spend liberal from the antiquated 1970s. His reputation for raising taxes was such that when he ran for governor this time, he had to make a pledge not to create any new taxes without letting voters decide whether the individual taxes would be allowed. In signing the internet sales tax bill, Governor Brown has openly and expressly broken his word and proved himself to be an utter fraud. What’s worse is his act will actually ruin thousands of California businesses. 

As soon as Governor Brown’s signature hit the dotted line, online retailers began doing what they always do. They terminated all their California affiliates. Amazon did this immediately and many others are soon to follow. The end result is most of the affiliates are now either completely out of business or devastated. While Governor Brown has created a magical market for bankruptcy attorneys, he has slaughtered small businesses in the state with the result being any sales tax collected from smaller online retailers is more than offset by the loss of business and income tax collected by the now out of business affiliates. Well done, Jerry. 

The fact that online retailers are termination all their California affiliates is hardly a surprise. The issue boils down to Quill Corporation v. North Dakota, a 1992 Supreme Court decision. The Court ruled that states could not force out of state companies to collect and pay sales tax unless those companies had a physical presence in the state in question. 

California and other states have tried to get around this ruling by arguing that affiliates constitute the physical presence. When states pass their petty laws, the online retailers terminate the affiliates and thus the position of the states also dies. Instead of making more in tax revenues on sales tax collections, the states not only don’t collect much but they also lose all the income and business tax these affiliates would have paid. And people wonder why the states have such budgetary problems. 

One has to praise Governor Jerry Brown for his action on this one. Politicians usually don’t show they are frauds for at least a year or two. Not Jerry. He is pretty much breaking his campaign promises form the get go. What a scumbag.