Amazon.com Inc.for years has fought government efforts to tax e-commerce. Now it’s poised to pocket millions of dollars in sales taxes paid by California customers.
As part of a pact reached last year with state lawmakers, some online retailers agreed to begin collecting sales taxes this fall. About half of the projected $316 million raised in the first full year is expected to come from merchandise sold by Amazon, which is also setting up two California fulfillment centers that will employ at least 1,000 workers each.
San Bernardino and Patterson, where the centers will be located, will gain not only jobs but also a tax bonanza: Sales to Amazon customers throughout California will be deemed to take place there, so all the sales tax earmarked for local government operations will go to those two cities. It’s a windfall so lucrative — about $8 million a year initially for each city — that local officials are preparing to give Amazon the lion’s share of their take as a reward for setting up shop there.
Talks with Amazon about a so-called sales-tax rebate are still in the early stages. But in Patterson, a struggling Central California community of 21,000, Mayor Luis I. Molina said he’s ready to do what it takes to help his city.
As I said before, the only ones who will lose on taxing the internet are the California consumers themselves.
Now, some of the tax money, which was supposed to achieve “fairness” for the brick and mortar stores will be going back to Amazon.com anyway.
Only the Democrats in the California Legislature and lame-brained California Governor Jerry Brown could craft such a crappy deal for California consumers and taxpayers.
Today’s the first day of the 15th annual Speaker’s Cup, a two-day golf outing in Pebble Beach to raise money for the California Democratic Party.
Tickets start at $25,000 and top out at $65,000. The higher amount will get you in the door for both days, and includes golf for four, hotel accommodation, dinner for eight people, plus a spa treatment per day for each non-golfer or guest of a golfer. Those prices are even steeper than for the Pro Tem Cup held in March.
The Speaker’s Cup is being presented by AT&T, which has sponsored the event for more than a decade. Last year, it spent more than $225,000, and the swag included a new iPad delivered with a thank-you note signed by Democratic Assembly Speaker John A. Pérez and AT&T’s chief of government relations, according to this Los Angeles Times report.
Gov. Jerry Brown said this afternoon that he has collected enough signatures to qualify his tax initiative for the November ballot.
“We should have them all,” the Democratic governor told reporters after speaking to a business group in San Jose.
Constrained by a short timeline, Brown and his supporters raced to collect more than 800,000 valid voter signatures by early this month, relying on robotic telephone calls, mailers and payment of as much as $3 per signature for signatures gathered on the street.
The measure would raise the state sales tax and income taxes on California’s highest earners.
Brown’s remarks came just hours after Republican leaders assembled at the Capitol to kick off their campaign against the measure. Brown had no comment about the Republican effort, except to say it wasn’t news.
Republicans want to be known as the “party of yes” in Sacramento. And one of the first things they want to do is convince Californians to vote no on Gov. Jerry Brown’s proposed tax hikes.
“We think that’s the wrong way to go,” said California Republican Party Chairman Tom Del Beccaro at a Thursday news conference outside the Capitol. “There is an alternative to simply raising taxes.”
Del Beccaro is launching an old-fashioned whistle-stop tour by riding the train around the state to push Republican policies. His first stops are Martinez and Bakersfield.
He was joined at the news conference by GOP lawmakers including Senate Republican Leader Bob Huff (R-Diamond Bar) and Assembly Republican Leader Connie Conway (R-Tulare). They criticized legislative Democrats for not pushing Gov. Jerry Brown’s pension proposals, which Republicans have endorsed.
Citing serious procedural errors by the District Attorney’s Office, a Superior Court judge on Thursday threw out a felony voter fraud case against City Councilman Richard Alarcón and his wife.
An indignant District Attorney Steve Cooley re-filed the charges only hours after the court’s decision.
In a stunning, see-sawing day of legal filings, Judge Kathleen Kennedy dismissed the two-year old case, which alleged the Alarcóns lived outside their City Council district and lied on voter registration records.
The prosecution, Kennedy told attorneys, failed to present evidence to the grand jury that might have exonerated Alarcón. Moreover, key terms such as “residence” and “domicile” weren’t adequately explained to the jury.
“I don’t know if the Alarcóns are guilty or not of these particular charges,” she said. “But I don’t think exculpatory evidence was properly provided.”
The ruling ended a grueling legal battle – at least temporarily – for the veteran San Fernando Valley politician and his wife, Flora Montes de Oca.
Fulfilling an unofficial pledge to California officials, Amazon.com said Thursday it will open a warehouse in Stanislaus County.
Amazon’s announcement comes nine months after the Internet giant settled a huge sales tax fight with the Legislature and Gov. Jerry Brown.
The company promised to bring 10,000 jobs to California over several years, and the warehouse in Patterson, about 17 miles from Modesto, represents a kind of down payment.
In announcing the warehouse, Amazon Vice President Dave Clark hailed “the support from Governor Brown and state and local officials.
“We look forward to creating hundreds of full-time jobs with benefits in Patterson when the facility begins shipping to customers in 2013,” Clark said in a press release.
Amazon didn’t specify how many workers it would hire. Rod Butler, Patterson’s city manager, said in an email that “we are expecting at least 1,000 full-time regular jobs, with several hundred more seasonal jobs during the holiday season.”
Enjoy your morning and Dan Walters daily video: Tax showdown looms
A Capitol Hill clash between Amazon.com and eBay complicates California’s hopes for an online sales-tax fix.
The fight flared Wednesday, underscoring how big differences between the Internet sales giants stand in the way of congressional efforts to help California and other states collect hundreds of millions of dollars in taxes.
Each side has its respective political champions, and each side wants small businesses exempt from the burdens of collecting state taxes for online sales. They diverge sharply, though, over what “small” means.
“We want to stand with the little guys,” Rep. Zoe Lofgren, D-San Jose, noted at a hearing Wednesday in the House of Representatives, “and the difficulty is, who is that?”
The Seattle-based Amazon wants a much more limited small-business exemption than eBay, which is based in Lofgren’s hometown. So long as the companies remain apart, they can’t put their combined weight behind an online sales-tax bill, versions of which have been floating around Congress for years.
The differences and the delays matter because the clock is ticking, particularly in California.
As I have said before, I don’t really think the various online retailers will be able to work out any legislative compromise particularly going into an election year. There really needs to be a national solution to the collection of state sales taxes for online businesses, but I do not foresee it anytime soon.
The federal courts may eventually decide the issue, but this will take many years and lots of expensive litigation.
States drool with anticipation of receiving a piece of the online sales tax pie, but to capture tax revenue from customers of companies that do not have a physical presence in their state, they will have to wait.
Amazon.com Inc. Chief Executive Jeff Bezos said Wednesday that the online retailer would collect taxes on its sales to California residents by 2013.
California legislators and Amazon officials agreed to a deal in Sacramento earlier this month over the issue of sales-tax collection from online retailers. The lawmakers said they would delay the enactment of a new law, which would require Internet stores with retail-related offices California to collect sales tax, until September 2012. In exchange, Amazon agreed to stop pursuing a ballot measure to repeal that law and to lobby Congress to pass federal Internet sales-tax legislation.
The California law would go into effect on September 2012 if Congress doesn’t enact federal legislation by then. If Congress does pass a law, then the California legislation would go into effect in January 2013.
“In either case, we are going to start collecting,” Mr. Bezos said in an interview.
When asked whether Amazon would either challenge the law in court or close its California facilities to avoid sales-tax collection, Mr. Bezos said, “no.”
Amazon historically hasn’t collected state sales taxes in many states, often giving the company a price advantage compared with brick-and-mortar retailers.
Mr. Bezos also said Amazon would build more facilities in California.
The key here is that Amazon.com will be building more facilities in California (maybe for their new tablet?) and a tax nexus will be created and under the federal law would be obligated to collect them.
Now, the rationale for their “compromiise” becomes more clear.
Saying it would save existing jobs and create new ones, Gov. Jerry Brown signed into law legislation to require Amazon.com and many other out-of-state Internet retailers to collect sales taxes on purchases by California customers.
The new law will “create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years,” Brown said Friday at a ceremony held at the San Francisco headquarters of clothier Gap Inc. The event was attended by the lawmakers, who sponsored the bill, and and retail industry executives.
Experts predicted that the new law would help bricks-and-mortar stores that have sales staffs compete with e-commerce companies that need fewer people to fill orders. They also predicted that new jobs would flow into the state if Amazon, as expected, opens some large distribution centers to better serve California, which is estimated to represent as much as 20% of the company’s market.
Although the bill, AB 155 by Assemblyman Charles Calderon (D-Whittier), takes effect immediately, it doesn’t require that sales taxes be collected from Californians until Sept. 15 of next year. The delay was part of a compromise put together by Amazon with representatives of national retailing chains, including Wal-Mart Stores Inc. and Target Corp., as well as local, independent store owners.
As part of the deal, Amazon agreed not to go forward with a planned referendum to ask voters to overturn an earlier sales tax collection law that took effect July 1.
In the meantime, a decision on the entire tax nexus question is pending in a New York court and a national online sales tax bill will be floating around in the Congress. Plus, Overstock.com and other online retailers who do not plan physical facilities in California will likely fight this law in federal court.