Too many pro-family Californians have become cynical that anything good can happen in Sacramento. I don’t blame you. With anti-family, socialist Democrats in charge, and foolish voters who didn’t understand the benefits of partisan primaries or the protection that a 2/3rds vote on the budget offered, many California conservatives have lost hope. But when reality proclaims good news, you’ve got to take notice and be glad.
Because no Republican state legislator voted for tax or fee hikes, Jerry Brown and the Democrats failed to achieve a 2/3rds vote to get what they were pushing hard for — a multi-year “extension” of the 2009 tax increases: sales tax hike, income tax hike, car tax hike, and a major reduction in the child tax credit. All combined, the average California family would have lost nearly $1,000 per year. The good news is none of this materialized thanks to friends of SaveCalifornia.com and many others who encouraged the Republicans to hold firm and say no to more taxes.
Starting July 1, here is how your California state taxes and fees will have changed. As you can see, it’s mostly good news and mostly victories for taxpaying families and individuals:
1. Sales tax down 1 full percentage point
2. Car tax (vehicle license fee) nearly cut in half
3. The 2009 income tax hike expired Dec. 31, 2010
4. The 2009 slashing of the dependent tax credit from $309 to $99 expired Dec. 31, 2010
(Remember, the Democrats were trying hard to extend all these taxes, but they failed.)
5. Car tax is going up $12 (but that’s a likely lawsuit under Prop. 26 to strike it down)
6. $150 fee for residents in CalFire zones (another likely lawsuit under Prop. 26)
7. Sales tax enforced for Amazon.com and other businesses that have affiliates, workers, offices, property in California (as a result, Amazon.com, Christianbook.com and others have ended their California affiliate programs; so, California online businesses have been harmed, but you can still make tax-free online purchases from most online sellers that are outside California)
We’ve done further analysis of ABx1_28, the so-called “Amazon tax,” passed by the Democrat legislators and signed by Democrat Governor Jerry Brown. And we must correct our initial view that it will subject all online purchases to sales tax. Actually, hardly any new online sales tax will come from the new online sales tax law. Why? Because it only applies to online sellers that have workers, affiliates, offices, or property in California.
And already, online companies are taking steps to avoid the new tax, which enables their customers avoid the new tax. And in the 48 hours after the “Amazon tax” was signed, Amazon.com, Overstock.com, Christianbook.com and other out-of-state online sellers have sent notices to more than 25,000 California small businesses notifying them that they can no longer be affiliates.
Therefore, when Californians purchase from an out-of-state online seller, you are not likely to be charged sales tax because those sellers have severed ties with their California affiliates, and thus no longer have a “physical presence” in the state. They will have successfully skirted the new law and consumers will be “safe.”
So what’s the effect of the new online sales tax law? More than 25,000 small businesses in California will be harmed or eliminated, the economy will be further harmed, and the state government will end up losing revenue, not gaining it. This is the stupidity of Jerry Brown and the Democrat legislators. But consumers won’t likely pay any more tax online than they’ve already been paying.
Also, if you are a California affiliate of an online seller and your sales prices add up to no more than $10,000 a year in sales, you are exempt from the new sales tax law.
As the Los Angeles Times reports:
That’s because the new requirement applies only to online sellers based out of state that have some connection to California, such as workers, warehouses or offices here.
California’s new law was drafted to circumvent a 1992 U.S. Supreme Court ruling that sellers can’t be forced to collect sales taxes unless they have a physical presence in the state.
The new statute would establish that presence in two ways: when sellers pay commissions to other Internet sites in California, known as affiliates, that refer buyers; and when sellers have a related company operating in the state.
Understand more:
ABx1_28 | Analysis of Russ Fox, E.A. | Los Angeles Times | PCMag.com | CNET.com
Through wisdom a house is built, and by understanding it is established;
and by knowledge the rooms shall be filled with all precious and pleasant riches.
Proverbs 24:3-4 (NASB)
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