Where’s the integrity?

When you buy your books and clothes using online retailers, you may have noticed that you often don’t pay California sales tax, so online seems cheaper than the corner store. But did you know that you are actually supposed to figure it out and pay the tax yourself? That happens to be true! The more interesting thing is that the controversy over this online sales tax has become yet another unfortunate example of deceptive and misleading corporate campaigning.

I’m an owner of a small farm outside of Sacramento. We are a bit familiar with California sales tax because we pay it on a few items like flowers, and we also pay tax called a “use tax” on any of our purchases from online retailers that don’t collect it the easy way—at the point-of-sale.

Lately, it’s been in the news that many large Internet retailers are incensed because they may soon be required to collect the California sales tax themselves rather than leaving it up to all of us. Amazon is leading the charge, hoping to enforce its wishes with a referendum for the California ballot.

The Internet retailers say that it’s too costly and burdensome for them to figure it all out—different tax rates for different states. If you haven’t ever been a retailer who had to pay sales tax to the state after collecting it from your customers, you might find this to be a persuasive argument, but when my business pays our sales tax online, the percentage that we owe in our county just pops up automatically. I bet it wouldn’t be too hard for those Web-based businesses to figure out. Take note that five states have already implemented laws that require the likes of Amazon, which hauled in $34.2 billion in sales last year, to charge state sales tax.

It’s astounding to me that certain members of the California State Board of Equalization (where sales taxes go) are on the side of Amazon in this controversy. George Runner, a Republican from Lancaster, went so far as to say that the tax would hurt the business climate and that legislators who pushed it “should be ashamed to appear in public.”

This is very curious, because it is the very same Board of Equalization that is requiring that California businesses go through their records of Internet purchases and self-assess any tax that wasn’t charged at the point-of-sale. Further, on its website the board says, “Even if you are an individual … you are still required to report use tax on all purchases made from out-of-state retailers in which California tax was not collected.” So the board wants all of us to pay the tax on our Internet purchases—it’s just that most of us don’t know that yet.

The question that the board is facing is not if the tax should be collected—it clearly thinks that it should be, and has been making California businesses pay it for several years. The real question is, who should do the collecting?

How can Amazon say, on the one hand, that the sales tax would be bad for business, when on the other hand, it must know (hoping that the public doesn’t put two and two together before the referendum ballot) that the law already says that all of us should be saddled with the burden and liability of paying it? It seems to me that in its eyes it is only bad for business because now it is going to apply to them the same way it applies to the rest of us. This position has no integrity whatsoever. Laws and regulations should apply equally to everyone, even if you happen to be a multibillion dollar corporation.