Tag Archive: Amazon Tax

Sep 09 2011

Flap’s California Morning Collection: September 9, 2011

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Happy Birthday California!

Today is the 161st anniversary of California being admitted into the United States. California became the 31st state in the union. There will be Admission Day celebrations at the Capitol today in Sacramento.

The California Legislature continues in session today and hopes to wrap up its work by the end of business. However, there are talks of a special session.

The California State Senate’s Schedule is here and the Assembly is here.

On to today’s headlines…..

Assembly approves tax plan forged by Brown, Fletcher

The Assembly Thursday night approved a sweeping package of tax reforms that Gov. Jerry Brown said will save Californians and small businesses more than $1 billion a year.

The proposal, negotiated by the Democratic governor and Republican Assemblyman Nathan Fletcher of San Diego, faces an uncertain fate in the state Senate as lawmakers wrap up their session for the year Friday.

The measure was approved 54-10, the bare minimum needed for two-thirds approval.

Brown and Fletcher earlier in the day appeared together at a news conference to announce the plan.

The complex measure proposes to trim four different business taxes and lower the personal income tax bills for millions of Californians.

To accomplish that, the proposal would raise taxes by an equal amount by modifying an obscure tax break used mostly by out-of-state companies.

Billed as a jobs-creation plan, the proposal would require companies to base their corporate taxes only on the share of sales in California, raising about $1 billion. That money would fund the business and personal tax breaks.

On average, California couples would save $100 a year on their income tax bills. Small businesses, depending on their circumstances, could save up to $500 annually.

Here’s how, according to Brown’s Department of Finance:

• An increase in the standard income deduction for individual Californians of $1,000, and $2,000 for couples, saving taxpayers an extra $306 million a year. It would save the average individual about $50 and couples $100 annually.

• A reduction in the corporate tax rate of one-half a percent for the first $50,000 in taxable income, saving the average company a maximum $250 and businesses statewide $18 million a year.

• A 10 percent exemption for the first $50,000 in for small businesses that file as personal income tax payers, saving them a maximum $500 each or $255 million combined.

• A $50 annual reduction in the minimum tax all companies, lowering that bill to $750 and saving those firms $59 million statewide.

• A new sales tax exemption when buying manufacturing equipment. Startups less than three years old would not pay the state’s existing 4 percent tax. Established business would be taxed at 3 percent.

But some out-of-state businesses will pay the price: $1.1 billion in higher taxes.

The controversy centers over what Brown calls a “toxic tax loophole” that provides a tax break for some corporations that produce goods and hire workers elsewhere but ring up big sales in California.

The new proposal would require that corporate tax bills be based solely on the percentage of sales in California. Currently, companies have either that option or can include the costs of payroll and property outside the state in their tax calculations. That latter policy provided tax incentives to companies to locate elsewhere, critics like Brown say.

Tax clash shifts to Congress

A California fight over online sales taxes could now escalate nationally on Capitol Hill, pitting Amazon and other big retailers against skittish lawmakers accustomed to stoking anti-tax sentiments.

Under the emerging deal concocted in Sacramento, Amazon would join with brick-and-mortar competitors to lobby Congress for a national online sales tax law. In exchange, California would suspend enforcement of a new Internet sales tax until September 2012.

Amazon and the other companies are motivated and politically muscular, accustomed to deploying lobbyists, campaign contributions and all the tools of wielding influence. Still, their road ahead will be rough.

“The odds of getting a tax increase of any sort through this Congress, at the moment, are zero,” University of California, Berkeley, political scientist Bruce Cain said Thursday.

Action this year is unlikely, because of the unfinished legislative business already confronting Congress. Next year will be tricky, because of the presidential and congressional elections.

If formally approved by California state legislators, the handshake deal struck Wednesday does not actually require imposition of a federal online sales tax. Instead, the Capitol Hill lobbying focus likely would be legislation authorizing states to require that all retailers collect sales taxes.

Currently, only sellers with a physical presence in a state, such as a store, office or warehouse, are required to collect that state’s sales tax. But when the Supreme Court laid down that interpretation of the law in 1992, in a case arising out of North Dakota, justices also made clear that Congress could change the rules of the game.

Senate makes openly carrying gun a crime

The state Senate acted Thursday to prohibit California handgun owners from openly carrying their weapons in public, siding with law enforcement officials who say it wastes their time responding to false alarms of armed suspects and creates a risk of confrontation.

Current law allows the open carrying of unloaded handguns in public, and many activists have exercised their right by showing up in large numbers at their local Starbucks or other public places, wearing their firearm in a holster. Sen. Kevin DeLeon (D-Los Angeles) said there is no reason for that to happen in 2011.

“This is not the wild west,” DeLeon said during the floor debate. “How discomforting can it be if you walk into a restaurant, a Starbucks, a Mickey D’s and all of a sudden you see someone with a handgun?”

But Republican lawmakers said the proposal would infringe on their constitutional rights. “Don’t turn law-abiding citizens into criminals,” said Sen. Joel Anderson (R-San Diego). “The more we chip away at our ability to protect ourselves,  it’s undermining our freedoms.”

Assemblyman Antony Portantino (D-La Cañada Flintridge) said he introduced the bill at the request of police chiefs and sheriffs who are concerned about the activity.

 “They are tied up dealing with calls from the public about gun-toting men and women in the coffee shop,’’ Portantino said. “As law enforcement officials tell me, it’s not safe and someone is going to get hurt.”

However, Sen. Ted Gaines (R-Roseville) said he has never received a complaint from a constituent about people carrying guns openly, and many feel they need the protection. “This, in my mind, is just over the top,” Gaines said of AB 144. “It’s unnecessary.”

More than 4 million lose power in major blackout

A utility worker doing maintenance near Yuma, Ariz., triggered a massive blackout that jammed roads, closed schools and businesses, grounded planes and left more than 4 million people across a large swath of Southern California and Mexico without power.

The blackout Thursday brought routine life to a halt. Many offices closed, but workers endured gridlock getting home because traffic lights were out. Officials said they noticed an increase in fender-benders in some areas as drivers tried to navigate the roads.

People were trapped in elevators and on rides at Sea World in San Diego and Legoland in Carlsbad. Hospital emergency rooms switched to backup generators, while outgoing flights from San Diego were canceled for several hours.

Customers jammed those stores that remained open, stocking up on ice and candles as utility company officials warned that power may not be restored until late Friday. Officials canceled classes Friday at most colleges and schools in San Diego and surrounding communities.

“Get ready to be in the dark. Get your emergency precautions ready,” said Michael Niggli, president and chief operating officer of San Diego Gas & Electric.

The blackout was triggered by a mishap on a high-voltage power line linking Arizona and San Diego, causing a cascading series of electrical grid failures stretching into Southern California.

APS, which is Arizona’s largest electric utility, said a worker was doing maintenance on lines at a nearby substation when the blackout occurred.

“The outage appears to be related to a procedure an APS employee was carrying out in the North Gila substation,” an APS spokesman said in a statement. “Operating and protection protocols typically would have isolated the resulting outage to the Yuma area. The reason that did not occur in this case will be the focal point of the investigation into the event, which already is underway.”

Enjoy your morning!

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Sep 08 2011

Saving Face on the Amazon Internet Sales Tax Flap

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Not so much.
Just 48 hours ago, the online retailer Amazon was doing battle against California to save the new economy from the tyranny of taxation. They were spending millions on a referendum to block a piece of the budget. They were fighting off a supposed legislative dirty trick to prevent such a referendum. And they were arguing that high principle and jobs were at stake.

Now, well, in the words of the 20-year-old Nirvana album: Never mind.

Amazon’s deal to end its referendum – in exchange for a one-year delay before it begins paying sales taxes – was designed to save face. But this was a deal in the same way that the deal the Japanese signed on the U.S.S. Missouri was a deal. It was a surrender, by an utterly vanquished company.

Has any company so bungled relations with a state?

I never did understand the referendum gambit and felt that Amazon.com would be more successful in federal court.

But, then again, I did not know about the 7/11 store distribution plan either. In the end, it was simply about money and not principle.

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Sep 08 2011

Update: Amazon.com Makes a Deal to Delay Collection of California Internet Sales Taxes

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+++++Update+++++
Just a few additional thoughts on the Amazon.com deal. There is this piece.
An agreement would essentially mean that California would lose out on more than a year of revenues but have the certainty of taxes thereafter.

“It’s a good deal,” said one source who was involved in the talks. “All those uncertainties are gone. A referendum, whether they’d win a referendum, whether we could get the votes, whether we’d have to get involved in a big fight. No worries about litigation.”

All sides planned to get together to finalize details Thursday, one source said.

I am just wondering if this business venture between Amazon.com and 7/11 stores would create a California nexus anyway and of course, there is the issue of the Kindle Warehouse.

California Democrat Legislators will have to find a replacement for this year’s $ 200 Million they budgeted from the collection of these taxes, but next year they will get their hooks into California taxpayers.

In what looks like a sell out to Californians who will end up paying these taxes, Amazon.com has cut a deal to avoid a costly referendum election and federal litigation over the issue of tax nexus.

In a deal with state lawmakers and brick-and-mortar stores, Amazon tentatively agreed Wednesday to stop fighting a requirement that internet retailers collect sales tax on California purchases.

Under the handshake deal, Amazon won a delay until at least September 2012 but will eventually collect state sales taxes.

The arrangement could lay the groundwork for a national online sales tax law. Amazon and major brick-and-mortar retailers like Wal-Mart and Barnes & Noble agreed to lobby Washington over the next 11 months for an internet sales tax law that applies across 50 states.

“Basically, Amazon will get a safe harbor to lobby Congress and the retailers will go hand-in-hand with them to adopt a law that will apply to all of the states,” said Assemblyman Charles Calderon, D-Whittier, who worked on the compromise.

If no federal deal emerges by July 31, 2012, Amazon would have to begin collecting California sales taxes starting on Sept. 15, 2012. State lawmakers intend to pass a new bill in the next two days that would delay implementation of the online sales tax law until that date, according to Calderon and several sources.

If Congress strikes a deal by July 31, 2012, online retailers would begin collecting taxes starting on Jan. 1, 2013 under whatever federal requirements are approved.

Good luck with federal legislation to raise/collect taxes in the Congress in a Presidential election year. So, I am wondering if this is a stall game for Amazon.com and whether they have been planning to develop a tax nexus in California anyway.

I cannot see how this will “deal” will benefit Californians who will now seek out and buy from internet sites that do not collect sales taxes at point of sale. Of course, California taxpayers are supposed to pay “use tax” on those purchases, but who will police that?

As a business strategy, maybe Amazon.com has earned a monetary advantage over other retailers for a year or so. For Californians, it means more money out of their pockets to be delivered to the “money pit” of Sacramento politics.

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Sep 08 2011

Amazon.com Makes a Deal to Delay Collection of California Internet Sales Taxes

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California Democrat Legislators will have to find a replacement for this year’s $ 200 Million they budgeted from the collection of these taxes, but next year they will get their hooks into California taxpayers.

In what looks like a sell out to Californians who will end up paying these taxes, Amazon.com has cut a deal to avoid a costly referendum election and federal litigation over the issue of tax nexus.

In a deal with state lawmakers and brick-and-mortar stores, Amazon tentatively agreed Wednesday to stop fighting a requirement that internet retailers collect sales tax on California purchases.

Under the handshake deal, Amazon won a delay until at least September 2012 but will eventually collect state sales taxes.

The arrangement could lay the groundwork for a national online sales tax law. Amazon and major brick-and-mortar retailers like Wal-Mart and Barnes & Noble agreed to lobby Washington over the next 11 months for an internet sales tax law that applies across 50 states.

“Basically, Amazon will get a safe harbor to lobby Congress and the retailers will go hand-in-hand with them to adopt a law that will apply to all of the states,” said Assemblyman Charles Calderon, D-Whittier, who worked on the compromise.

If no federal deal emerges by July 31, 2012, Amazon would have to begin collecting California sales taxes starting on Sept. 15, 2012. State lawmakers intend to pass a new bill in the next two days that would delay implementation of the online sales tax law until that date, according to Calderon and several sources.

If Congress strikes a deal by July 31, 2012, online retailers would begin collecting taxes starting on Jan. 1, 2013 under whatever federal requirements are approved.

Good luck with federal legislation to raise/collect taxes in the Congress in a Presidential election year. So, I am wondering if this is a stall game for Amazon.com and whether they have been planning to develop a tax nexus in California anyway.

I cannot see how this will “deal” will benefit Californians who will now seek out and buy from internet sites that do not collect sales taxes at point of sale. Of course, California taxpayers are supposed to pay “use tax” on those purchases, but who will police that?

As a business strategy, maybe Amazon.com has earned a monetary advantage over other retailers for a year or so. For Californians, it means more money out of their pockets to be delivered to the “money pit” of Sacramento politics.

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Sep 07 2011

Flap’s California Morning Collection: September 7, 2011

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Ronald Reagan Presidential Library in Simi Valley, California

Today is all about the GOP Presidential debate at the Ronald Reagan Presidential Library in Simi Valley – just down the road from where I live in Thousand Oaks. The debate which marks the debut of front-runner Texas Governor Rick Perry will begin at 5 PM PDT. John F. Harris of Politico and Brian Williams of NBC News will be the moderators.

I will be tweeting the debate live and you can follow me here (@Flap).

After the debate I will head down to Camarillo for a meet and greet with Rick Perry.

The California Legislature is in session and will end its session on Friday. A number of bills are to be considered including AB 155, the Amazon Tax which while defeated in the State Senate yesterday can be called up for reconsideration by its sponsor Senator Lori Hancock.

The California State Senate’s Schedule is here and the Assembly is here.

On to today’s headlines…..

California’s top Democrats reject Amazon offer

Top Democrats denounced an offer by Internet retailer Amazon.com Inc. to create thousands of new jobs if the state postpones for more than two years its effort to force online merchants to collect sales taxes on purchases by Californians.

Legislators and their bricks-and-mortar retail allies cast doubt that Amazon would follow through with a promise to build two distribution centers in the state and hire as many as 7,000 people.

The company, which has a total workforce of 38,000, has made similar promises in other states that also are trying to force Amazon to collect sales taxes, they said at a state Capitol news conference Tuesday.

“More jobs will ultimately be created in California when we have a tax system that is fairly and adequately applied to everyone in our state,” Assembly Speaker John A. Pérez (D-Los Angeles) said.

“And, we’re not going to allow the notion of jobs that may or may not materialize to dictate our position on an issue of fundamental fairness to all businesses in California,” he said.

Amazon, said Assembly Rules Committee Chairwoman Nancy Skinner (D-Berkeley), is “cynically promising jobs that aren’t going to materialize.”

California has lost about 18,000 jobs because of unfair competition from Amazon and other Internet sellers that don’t collect sales taxes, enabling the online merchants to undercut store prices, said Bill Dombrowski, president of the California Retailers Assn.

A spokesman for Amazon’s “More Jobs Not Taxes” referendum campaign did not respond to requests for comment.

The company and its allies are close to gathering the required number of signatures on petitions to get the referendum on the June 2012 ballot. The referendum would ask voters to repeal a new state law requiring the collection of sales taxes by out-of-state Internet companies that have offices, workers or other connections in the state. The company has refused to comply with the law, which took effect July 1.

In the meantime, Democrats in the Senate and the Assembly, as well as lobbyists hired by big-box retailers, are trying to persuade a handful of Republican members to vote for a new, similarly worded bill that would replace the recent law, thus nullifying the Amazon referendum. Also, as a so-called urgency measure, the proposed law would be immune to a voter referendum.

Lawmakers seek stronger Internet sales tax law

Supporters of a bill that would force Internet retailers to begin collecting sales taxes immediately pressed lawmakers on Tuesday to pass the measure before the end of the session this week.

Gov. Jerry Brown signed a bill as part of this year’s budget to expand tax collection by Internet retailers effective July 1, but Amazon.com has spent more than $5 million toward a 2012 ballot referendum to overturn it.

If approved, the bill under consideration this week could not be overturned by voters because it would be considered an urgency measure.

Democratic lawmakers and retail businesses that support the new bill, AB155, say Amazon is trying to undermine the legislation with a proposal to add 7,000 California jobs at new distribution centers if the online sales tax law is delayed for at least two years.

Speaker of the Assembly John Perez, a Los Angeles Democrat, said Amazon and other Internet retailers kill thousands of California-based jobs each year by unfairly undercutting local businesses on price because they don’t charge the tax.

In the flurry of legislative activity in the last week of the session, Perez said, “California will not sacrifice real jobs for phantom promises.”

Amazon has proposed adding a total of nearly 22,000 jobs in six states that have stepped up tax collection efforts, which would amount to roughly a two-thirds increase in its worldwide workforce, said Bill Dombrowski, president of the California Retailers Association.

“The job numbers appear to be nothing but fiction,” Dombrowski said.

Amazon has been pushing for a major expansion of its distribution network, proposing at least an additional 15 distribution centers as part of an effort to speed deliveries to customers.

Gay marriage foes may win right to defend Prop. 8 in court

The California Supreme Court appeared ready Tuesday to rule that the backers of Proposition 8 and other ballot measures have the right to defend them in court, a stance that would give opponents of same-sex marriage the chance to champion the initiative all the way to the U.S. Supreme Court.

During an hour of oral arguments, several justices appeared skeptical that only elected state officials may defend measures passed by voters, as gay-rights lawyers claimed.

If that were the case, same-sex marriages would resume in California because Gov. Jerry Brown and Atty. Gen. Kamala D. Harris have refused to appeal last year’s federal ruling against Proposition 8.

Justice Ming W. Chin observed that the power of the people to enact laws would be curtailed if initiatives could be blocked in court every time officials refused to defend them.

“So the attorney general and the governor get to pick the laws they want to enforce?” asked Chin, a conservative on the court.

Justice Joyce L. Kennard, one of the court’s more liberal members, appeared to agree. Denying initiative sponsors the right to appeal, she said, would be “nullifying the great power that the people have reserved for themselves” and “would not promote principles of fundamental fairness.”"What we are going to hold is not limited to gay issues,” Kennard said. “Our holding will apply to any other circumstance when proponents of initiatives are asserting standing” — the legal term for the right to bring a case in court.

The seven-member court will decide within 90 days whether ProtectMarriage, the sponsors of Proposition 8, have the right to represent the state in litigation. That ruling will clear the way for the U.S. 9th Circuit Court of Appeals to decide whether ProtectMarriage had standing to appeal U.S. District Judge Vaughn R. Walker’s ruling against the 2008 ballot measure.

Bill to ensure parents’ right to circumcise clears Legislature

California cities and counties could not ban circumcision of male children under a proposed state law that cleared the Legislature today.

The Assembly overwhelmingly concurred in Senate amendments, 67-2, and the measure now goes to Gov. Jerry Brown, who has taken no position on it.

Assembly Bill 768 would prevent local governments from enacting laws prohibiting the circumcision of male children.

The measure was sparked by a circumcision ban that initially qualified for San Francisco’s November ballot but was removed by a Superior Court judge, who ruled that an existing state law pre-empted it.

Assemblyman Mike Gatto, a Los Angeles Democrat, opted to continue pushing his bill after the court ruling. He has characterized circumcision as a personal, medical and religious freedom.

AB 768 would take effect immediately if signed by Brown, which would prevent the possibility of a San Francisco vote on banning child circumcision if the Superior Court ruling is overturned on appeal.

Gatto contends that passage of AB 768 also would serve as a deterrent to other circumcision opponents, who might consider placing a similar initiative on their local ballot in years to come.

San Francisco’s first-of-its-kind initiative drew national attention for targeting circumcision, removal of the male foreskin, a practice that has biblical roots and that many believe was commanded by God in a covenant with Abraham.

Enjoy your morning!

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