California Internet Sales Tax Bill Awaits Governor Signature

California has finally passed its long threatened internet sales tax bill. The bill now sits on Governor Jerry Brown’s desk and online affiliates are moving like mad to try to convince him to veto it. 

Dead broke states have been rattling the business world trying to find additional tax revenues. The latest big turn is to go after online retailers. Even though the retailers are not in their state, the states argue they can tax them because affiliates of the retailers are in the state. This violates all past court decisions, but nobody knows what the current pro-government Supreme Court will do. 

The reaction to these internet sales tax laws has been swift. Amazon, Overstock and other large online retailers have immediately terminated their affiliates in the offending state. This has happened time and again with Illinois, Colorado, North Carolina and other states all suffering the same impact. The only state where this hasn’t happened is New York, where Amazon is suing with the intention of taking the case to the Supreme Court for a final decision. 

California is one of the least business friendly states in the country. Given this, it should be no surprise that it has tried to pass internet sales tax laws on many previous cases. For all his faults, however, one man kept it from happening. Yes, the Governator vetoed the first such bill and his mere threats to do so subsequently kept the legislature in line. 

Unfortunately, the Governator is gone. He termed out and the governor is now tax and spend Jerry Brown. You can see where things are headed. The bill was passed by the legislature on June 14, 2011 as part of a larger bill that was vetoed by Brown to his credit. The internet sales tax was then taken out of the bill and made its own piece of legislation. That now sits on Brown’s desk. 

Will Brown sign the bill into law? It is an interesting question. Brown promised he would pass no new taxes without first letting the public vote on them. The internet sales tax would be a new one. The answer should be clear in the near future. Personally, I don’t feel to optimistic.