Business Taxes?
I can almost appreciate the rationale behind Randall Stross’ piece in today’s New York Times that more sales tax revenue would help states like California in the current economy. Everyone could use more money right now. But the article just seems to assume the money comes from some great pot of money, as though the California state legislature were to stumble across a pot of gold while on a romp through the field.
Even if Amazon (and other online retailers) were to collect a tax that they aren’t obligated to collect, and even if they were to do this collection without significantly adding to their own overhead (reducing profits or increasing prices), why should consumers sit by and let 8.75% be added to each and every purchase for a tax that that retailer has no obligation to collect? I wouldn’t, and I’d certainly be taking my business elsewhere or reducing my spending.
I also object to the implication in the article that online retailers are abusing states like California by not collecting sales taxes even though they may have employees in those states. Those employees are paying income taxes, and sales taxes on their purchases. Many probably pay property taxes on their homes too, and countless other fees and taxes here and there. The state and localities are getting their pound of flesh. If a company chooses to structure it’s operations to avoid passing additional taxes (or other costs that add no value) onto their customers, more power too them – they just became more competitive. That’s supposed to be good in capitalism.
The article reads like the Professor is simply asking for the retailers to do what the legislature has decided not do do; to raise taxes directly on consumers during the middle of a massive economic downturn. Corporate interests may run amock in Sacramento, but they can’t directly amend laws yet, and I doubt any well run company’s leadership is actually so short-sighted as to follow the professor’s suggestions.
Even if retailers were inclined to add a surcharge on purchases to help fund local services such as police, fire and schools, I would hope that rather disguise it as a non-existent tax they would be honest about their intentions and give the funds directly to worthy groups rather than letting the moral defectives* in Sacramento get their grubby little fingers in the pot.
*Yes, that’s Kip’s phrase for politicians. It works.
This seems just a variation on the “tax the tourist” fallacy (or, more recently, “tax the student”). It completely ignores the budget function: If I’m going to spend $50 on books without a tax, then I’m probably going to spend $50 on books with a tax — i.e., just buy fewer books such that my total bill is still $50.
In this case, the California resident bears essentially the full burden of the tax (i.e., by now having less than $50 worth of books despite having paid $50 for them).
This is, supposedly, good for California residents. Somehow.