California Takes First Step Towards Internet Sales Tax…Again

The California Assembly has passed a new internet sales tax in an effort to tax online retailers. This is the third attempt by the state and the best chance to make it happen. 

California is about as anti-business as a state can get. There is open hostility towards companies in this state by the government beaurocracy. To give you a taste of how bad things are here, any formal business entity [corps, LLCs] must pay an annual $800 fee for the “privilege of doing business in the state”. How over the top is that? 

Given this attitude, you might find it surprising that the state does not have a law that seeks to collect sales tax from online retailers. With a state that is billions in debt, it would seem a rather obvious move even if it might result in many small businesses in the state being closed after Overstock and Amazon terminated them. Well, the state politicians tried to pass such a law, but ran into one problem…

The Governator has been taking a beating and rightly so. Playing daddy – literally – with the maid in your home is not a good thing. When it comes to the internet, however, Arnold was a real savior. He used his veto power to terminate the first bill that came across his desk and his mere threat to do so again resulted in the termination of the second bill before it was voted through. Alas, Arnold is gone and we now have a tax and spend Governor who has no qualms in this regard.

The California Assembly passed the new bill, AB 155, by a large margin. Fortunately, it is only the first step of the process. The bill will now go to the Senate where, sadly, it will probably be passed. From there, it will hit Governor Brown’s desk and probably be signed at the same exact moment it lands. The real question is what happens then? Will Amazon and Overstock terminate all their California affiliates? Nobody knows, but any supposed tax revenue gain from the new tax will be lost when all the affiliates go out of business. 

California is extremely anti-business. Given massive unemployment figures, you might guess the state would try to change its ways. The passage of AB 155 suggests that simply isn’t the case.