California Grabs $96.4 Million in First Round of Online Sales Tax Collection
February 20, 2013 7:11 PM
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This amount is strictly for the September-December 2012 quarter
Some U.S. states -- like California -- are starting to see new revenue from
sales tax on internet purchases
from the likes of Amazon.
The California Board of Equalization said it made $96.4 million in sales tax on internet commerce from September-December 2012, which is the first full quarter that the state started collecting. This is good news for the California Department of Finance, which has a forecast budget goal of $107 million in new e-taxes for the fiscal year starting July 1, 2012.
While these numbers look great for the state of California, they're a bit off from the estimates provided by a 2009 University of Tennessee study that said California would make $1.9 billion in 2012 revenue if it collected online sales tax. It also said states would miss out on $11.4 billion in 2012 revenue nationwide if they failed to collect online sales tax.
As of right now, Amazon collects sales tax in nine states (including California) and will collect in seven more over the next year.
Georgia is one the most recent to collect online sales tax. Amazon started collecting sales tax in Texas in July 2012, and California and Pennsylvania in September 2012.
Amazon has been fighting states that force it to collect sales tax for years (except in Kansas, Kentucky, New York, North Dakota and Washington). The e-tailer fled many states that attempted to force tax collection on the company, such as
and Illinois. But between states looking for ways to offset large financial deficits and brick-and-mortar stores like Best Buy complaining about Amazon being unfair competition, the issue swelled.
Amazon CEO Jeff Bezos said many times that his company would agree to collect taxes if there were some sort of federal legislation.
But eventually, Amazon finally broke down and started collecting sales tax in certain states, which allowed it to build more distribution centers within those states. For instance, Amazon announced that it would
collect sales tax in New Jersey
last May so that two Amazon distribution centers could be built. This led to faster shipping for customers, such as
Amazon's same-day delivery
program, making it more competitive than ever.
But earlier this month, Amazon and Overstock.com challenged a New York law passed in 2008, which forces companies with affiliates within the state to collect sales tax. However, Amazon said
this law is unconstitutional
because a 1992 Supreme Court decision said retailers that don't have a nexus of operation in a state does not need to collect sales tax. While New York said that websites with purchase buttons for Amazon as well as other national retailers are local solicitors because they receive fees for doing so, Amazon said argued that web referrals are less like solicitors or a local sales force and are more like advertising.
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2/21/2013 1:52:27 PM
The fixed annual income vs expenses model for personal finances doesn't really apply when you get up to government or even corporate levels of income and expenses. When you're talking about economies that large, the old adage "you have to spend money to make money" on average prevails. Yes you can balance your budget by cutting spending, but frequently the better way for a company to get back into the black is by
spending. You just need to increase it in a way which results in increased sales. And if you do it right, the increase in sales revenue will exceed the increase in spending, resulting in a net reduction in debt.
Unfortunately, our government is pretty bad about spending money in ways which increase revenue (productivity). If social programs truly were a safety net, they'd increase productivity (by preventing people from falling off the cliff and becoming homeless non-productive members of society). But arguably they've become a way of life for a large segment of the population, thus representing a net drain (my personal opinion is we need a lifetime limit on how much you can get in social benefits). Likewise, aside from tangential technological improvements like GPS, defense spending isn't really productive unless you're actually fighting someone with all that military hardware you're buying.
2/21/2013 2:19:32 PM
"Unfortunately, our government is pretty bad about spending money in ways which increase revenue (productivity)."
You hit the nail on the head. It is for that exact reason that I nearly puke every time I hear someone parrot the narrative that government spending will create jobs. Sure, they occasionally do something good, like infrastructure. But as you mentioned, the bulk of it goes to welfare/warfare/lawsuits/tax compliance which is a complete squandering of the nation's productive resources. The government cannot allocate resources better than the market. If they could, there'd be no need for a market economy.
Governments need to understand they cannot spend their way out of debt.
"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
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