Stupidity 101 – California’s Attempt to Tax the Internet

 Taxation  Comments Off on Stupidity 101 – California’s Attempt to Tax the Internet
Aug 272010

Now, because Arnold Schwarzenegger is such a disaster of a governor, no one knows if he will sign this or veto it.

What am I talking about? Taxing the internet – specifically ads purchased on California based websites. (like this one)

But – it gets worse. The idea is an out-of-state company buys an ad on a California based website and that becomes a “Nexus” – meaning everthing that out-of-state company sells in California is now taxable. Nice, huh.

Rhode Island, North Carolina and New York passed such a law – so guess what, businesses closed their affiliates within that state causing job losses and <<POOF>> no new revenue for the tax and spend liberals.

Commentaries are springing up about this in some unlikely places.

Capitol Weekly

And people go in droves to affiliate websites. Affiliate marketers in California earned $1.6 billion in 2009, and they paid $124.5 million in California state income tax. For that same period, the advertising industry declined 18 percent but advertising through online affiliates rose 1 percent It is a small business success story in one of our worst economic downturns.  

If the affiliate nexus tax is passed, out-of-state retailers will make the easy decision to terminate their California affiliates, devastating the incomes of 25,000 small businesses who rely on their advertising dollars. But those out-of-state retailers will still reach California consumers by advertising on affiliate sites located in different states. And those out-of-state retailers still won’t be collecting sales tax on those purchases. The state will gain zero new sales tax revenue.

San Diego Union-Tribune

Together, California affiliates generated about $123 million in income tax last year. The Amazon tax would generate about $48 million; however, it would also starve California affiliates to death, eliminating any income and taxes on that income that they would pay to the state. That would be another $75 million deficit putting us deeper into the red.

While the Legislature’s goal of finding ways to forestall additional cuts to essential state service is laudable, this just isn’t the way to do it. Rhode Island learned this lesson the hard way and is currently working to repeal a similar law because it simply did not generate the revenue proponents had hoped for. The last thing California needs now is less revenue for public safety and education, not to mention an additional 25,000 people on our unemployment rolls.

The second commentary is definately from a liberal who still is having a hard-time grasping SPENDING CUTS and CUTTING GOVERNMENT – but when liberal commentators are speaking out against taxes, it is amazing.