What is Use Tax?

I read an article today about Amazon threatening to cut all ties with their affiliates if California passes the law to have Amazon collect sales tax on purchases made by California residents.

Amazon does not want to include sales taxes in their prices because they do not want to act as a tax collector for a state they do not reside in, which is probably bullshit. Amazon is able to profit in California by not including sales tax in their prices. When a customer compares an Amazon price sans sales tax with a local store that includes sales tax, they will most likely purchase from Amazon.

California’s state government is flat out broke. They need money from any avenue they can find. This tax loophole has been open for the past decade. With the number of consumers going online to make their purchases, revenue from sales taxes has been shrinking. To remedy this loss, California wants all out-of-state retailers who sell to residents in this state to collect the state’s sale tax. They targeted Amazon because it’s the biggest fish in the pond.

For the state to collect on sales tax from an out-of-state company, the company must have a physical presence in this state. Amazon does not have a retail store in California, I am not sure if they even have a distribution center here. But they do have affiliates–webmasters who drive traffic to Amazon to collect on commissions from customer purchases. These affiliates reside in California, so in a roundabout way, Amazon does have a physical presence in the state.

Amazon stance is to sever ties with all California affiliates, thus removing their physical presence in the state. In this manner, they will continue to sell their products to California residents without applying sales tax. They will have to retroactively pay for the sales tax incurred from past purchases which would amount to a couple hundred million. California will lose out on the extra income taxes from resident affiliates. And the affiliates will lose a source of income.

Who is to blame for all this? Everyone who buys products online and don’t pay the Use Tax at the end of the year. Random guy remarks, “You’re crazy! What is this Use Tax? I’ve never heard of it in my life! Stop making shit up!”

No, my friend, the Use Tax is all too real. The law has been in the books since 1935 but it referred mostly to catalogs at the time. In 2003, a line for use tax was added to the state income tax form. California requires residents to pay a tax on purchases of taxable products from out-of-state companies that do not collect sales tax. The Use Tax rate is the same as our sales tax.

So, if you saw and bought that sweet 3D TV deal for ~$2000 from Amazon, when tax day rolls around, you need to pay ~$200 in Use Tax to California. This also applies to those few who cross state lines to buy products from Oregon tax-free and bring them back to California. You know who you are. Don’t try to cheat the system.

And on that note, go buy something from Amazon through this link which has an affiliate id attached. The affiliate is not mine but a friend who needs funds to satisfy his otaku needs. Otakus Unite!


Texas with a WTF Moment

Watched the news last night and a video story came up of Texas’ Governor Perry saying their state should secede from the United States. Really?

Sure, talking about secession isn’t a new thing. There was talk in California about becoming its own country when the state had a larger GDP than many independent nations. But, all it was just talk. It never came out of the mouths of the states’ leadership.

But, let’s just run with it. What would it mean for Texas to become its own country?

They will no longer be subject to the laws and regulations of the United States.
They can set their own rules and policies for immigration.
They can create their own constitution to fit their ideals.

That sounds pretty sweet, but what would Texas lose by becoming its own country?

They will no longer have the protection of the United States military.
Texans living abroad (outside Texas) will have to apply for a working visa or be deported.
They will have to decide on the type of political system to use–Total Capitalism, Democracy, Dictatorship?
Their leader will be Governor Perry.

Cons seem to outweigh the Pros there.


CA Bill 178 – Update

Performance Marketing Alliance reports:

The hearing to discuss [CA Bill 178] has been moved to April 27th (2nd or 3rd delay). We have heard anecdotally that the committee was surprised at the opposition to this bill. Beth Kirsch and Brad Waller are coordinating district visits, and are looking for participants. If interested, email: district_visits@performancemarketingalliance.com. Karen Garcia, and Brook Schaaf are considering another possible visit to Sacramento. If interested, email: lobby_day@performancemarketingalliance.com. Beth, Brad, Karen and Brook are also organizing editorial visits with mainstream press.


CA Bill 178 – A lesson in not seeing the big picture

I was reading the backlog of news the other day and I stumbled on a surprisingly short-sighted bill which is equivalent to the Warriors signing Maggette in a panic move after Baron skipped town.

CA Bill 178 is authored by Assembly Members Nancy Skinner (D) and Charles Calderon (D). The bill adds this paragraph into the Revenue and Taxation Code:

(5) Any retailer entering into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers of tangible personal property, whether by a link or an Internet Web site or otherwise, to the retailer, if the cumulative gross receipts or sales price from sales by the retailer to customers in this state who are referred pursuant to these agreements is in excess of ten thousand dollars ($10,000) during the preceding four calendar quarterly periods. This paragraph shall not apply if the retailer can demonstrate that the resident with whom the retailer has an agreement did not engage in referrals in the state on behalf of the retailer that would satisfy the requirements of the commerce clause of the United States Constitution during the four quarterly periods in question.

After a quick skim, it looks like the state wants to apply sales tax to transactions made between online retailers and the local populace on the condition that the retailer has made more than $10,000 in sales in California in the past year. These retailers currently do not charge sales taxes in California because they do not have a physical presence in the state. That sounds reasonable, right? They do business here, we tax them. It’s the American way.

But, if you were to read the bill more carefully, you would see a major blunder on the part of Assembly members Skinner and Calderon. There is a loophole in the text which allows retailers to sell to California tax-free and those that get burned again are the residents of California.
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Fall 2008 Election Results

On the national scene, the Obama-Biden ticket won the Presidential election. Barack Obama will become the 44th President of the United States and the first African-American to do so.

The Democrats have also taken control of the House of Representatives and the Senate. So, these next few years will all be on the shoulders of the Democrats. If they falter, then in the next election, the power to control will swing in the Republican favor. Although, if the Republicans go with Sarah Palin as their ticket, then we might get an Independent as our next president. How cool would that be?

As of November 6, 2008 10:00am, 99% of the votes have been tabulated for California and 100% for San Francisco:
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Fall 2008 Election Predictions

Again, I was 8 for 10 in my June 2008 election predictions and 8 for 10 in the election before that, so I am feeling pretty good about my predictions for tonight’s November 4, 2008 election.

California Propositions

Prop 1A – Safe, Reliable High-Speed Passenger Train Bond Act.
Proposition 1A will start the process of building a high speed passenger train stretching from Sacramento to San Diego.
Vote: Yes
Prediction: No

Prop 2 – Prevention of Farm Animal Cruelty Act.
Proposition 2 will force farms to allow enough room for certain animals to stand up, lay down, and turn 360 degrees without touching the enclosure.
Vote: No
Prediction: Yes

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CA: Prop 12 – Veterans’ Bond Act of 2008

Proposition 12 calls for $900 million bonds to be issued to subsidize the Cal-Vet Home Loan Program. Since its inception in 1921, 420,000 veterans have been able to purchase homes via the Cal-Vet program. The program is self-sufficient in that the state is paid back by the participating veterans via their mortgage payments. The current fund in the program is down to $102 million.

The men and women of the armed forces put their lives on the line to protect our way of life. This is the least we can do for them on their return to their home. The fact that the state will recoup the costs from the veterans themselves proves this program is a win-win situation.


CA: Prop 11 – Voters FIRST Act

Proposition 11 will change the people who govern the boundaries of districts used to elect public officials every ten years. Proposition 11 will create an unnecessary process to give 3 democrats, 3 republicans and 3 independents the power to choose the people who will oversee the distribution of boundary lines.

Rather than going through the whole process of picking those favoring the party views, we should just leave it to the legislature to complete the task. The legislature is chosen by the people to follow through on their interests. We don’t need a group of nine chosen by one office to decide our interests.


CA: Prop 10 – The California Renewable Energy and Clean Alternative Fuel Act

Proposition 10 will create a five billion dollar fund to help subsidize consumers who purchase alternative energy vehicles. Yes, you heard it right. The state will pay people to buy cars.

*golf clap*

We all want to jump off the petreoleum bandwagon and into the clean and renewable energy cycle, but the state shouldn’t have to give us an incentive to do so. The decision to purchase a clean car should be up to the individual. They should calculate the cost of fuel and maintenance of a regular car compared to the clean car to decide whether or not to make the purchase.

The fund is not limited to subsidizing car owners; a quarter of the fund will go towards companies researching ways to produce clean vehicles with no expectation of return to taxpayers. Another twenty-five million will go towards educating people about the wholesomeness of purchasing clean vehicles.

Proposition 10 will basically fund the research, production, sale and marketing of car companies pimping their new product.


CA: Prop 9 – Victims’ Bill of Rights Act of 2008: Marsy’s Law

Proposition 9 will keep members of the prison community in prison for a longer period of time, pay for damages done unto the victim using the prisoner’s money, and reduce the number of parole hearings for lifers.

In the news, we always here about criminals with life sentences bogging down the court with appeal after appeal with no chance of the appeal going through. Proposition 9 will limit the number of appeals so the state will save money in this area.

I am unsure as to whether or not lifers are given the chance to appeal when a new technology is created that may help them prove their innocence, such as the revelation of DNA. It would be wrong to not allow inmates the chance to appeal their case if the new technology proves their innocence.

I am on the fence on this one. It is basically one of those heart vs brain battles.

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