Thursday, August 4, 2011

"They want to tax the Internet"

Those words were spoken by a signature-gatherer at the Riverside Downtown Terminal last week, trying to get me to sign on to an effort to repeal the recently-passed AB28. AB28 would require out-of-state Internet retailers to collect California sales tax and pass it along to the state. The signature-gathering effort, which is almost certain to succeed, has been funded primarily by

Now, like anyone else, I don't like paying taxes. If I were able, I'd simply avoid paying them, and revel in the enjoyment of an instant 10-30% boost in my income. However, I understand what it is that taxes pay for. The school I attend, the clean water I drink, the parks I enjoy, the (relatively) clean air I breath, and of course the bike lanes that I ride along and the buses and trains that I ride, are all funded by tax revenue. In California in particular, we rely heavily on sales taxes to fund our government expenditures, and those tax revenues have been dwindling due to the recession and continued unemployment crisis. (Surprise surprise, but when people lose their jobs they tend to buy less stuff.)

I also tremendously enjoy shopping online, and do a lot of it at Amazon. They tend to have cheaper prices than comparable brick-and-mortar stores (though not always- Fry's has been known to beat their online competitors), and Prime membership gives me both streaming video and free shipping. However, I don't shop online because I'm trying to avoid sales taxes. I'm sure some people do, but by and large most folks I know shop online for the same reasons I do- better selection, better prices, and the convenience of shopping from home and getting stuff delivered. (By the way, I'd bet that shopping online is probably greener too, with one UPS truck performing the job of several private cars.)

The long and short of it is that this anti-sales-tax campaign by Amazon is unnecessary- it probably won't hurt Amazon's sales all that much- and will inevitably hurt the already-deteriorating quality of California's state services. Furthermore, I think the framing being pushed by signature-gatherers-- "they want to tax the Internet"-- is misleading at best. This is not a tax on Internet access or use, but a collection of sales tax that (technically) you're obligated to pay anyway. (Look at the "Use Tax" section of your California form 540. Yeah, all those Amazon goodies really should be on there.) If you care about the quality of our public services, including public transit and street improvements, don't sign any petition repealing an Internet sales tax-- and vote it down when it (inevitably) comes up for a vote this fall.

EDIT: This was Riding in Riverside's 500th post!


Thomas J. Webb said...

I basically agree that moving to collect sales tax online is more of a closing of a loophole than a new tax. If one doesn't like taxes, the strategy should be to lower it overall rather than poke holes in it (or leave holes unplugged). Inconsistency means unfairness.

That said, the relatively laissez-faire nature of the internet is what makes it what it is. Every new regulation and tax we bring to it stops it from being the laboratory of experimentation it currently is (or was). Some transactions cease to worth it once a tax is added so some ideas will simply not be tried. Is someone who makes things and sells them for Lumens on second life going to have to file taxes? If so, their response isn't going to be to comply but to simply stop doing what they're doing.

The issue of shipping confounds me and I really am curious. It really depends on which retail store you're comparing it with and which distribution center. Amazon optimizes for price and performance, not ecological impact. When I order multiple things, they still tend to come from different distribution centers (often using jet fuel to get to me since I, too am on Amazon prime). A store near me probably required quite a bit of distribution to get the it, but some stores are quite close to major hubs.

JN said...

Technically, if one were to make stuff in SecondLife and sell it, they're self-employed and should report the income when converting their Lindens back to dollars... but I agree that tax law probably needs tweaking to deal with Internet realities. Case in point- Amazon.

As far as ecology, I wasn't really factoring in the distribution supply chain. The "last mile" of getting stuff from merchant/shipping hub to my house is almost certainly less ecologically damaging, but you do bring up a good point in that much of my stuff comes from Tennessee- which probably means the cheap, Chinese-made item was put on a boat to LA, then stuck on a train to TN, and then flown back to me.

Then again, online shopping can help eliminate a person's need for an automobile entirely. I think it's an open question, and I certainly don't have the expertise to generate a satisfying answer.