Saturday, August 6, 2011

Advocating 4 Amazon.com: A Bad Investment


...the selfish spirit of commerce that knows no country, and feels no passion or principle but that of gain.
Thomas Jefferson

If we learned anything during the month-long madness of debt ceiling mania it was that now is the time to make a gigantic national priority list. What is it precisely that we want our federal and state governments to invest in? Like all budgets (including families and businesses), once our priorities are made clear, we need to figure out how to pay for them. Shall we go the way of Secretary of Defense Leon Panetta, who, in his very first press conference, fearmongered that Washington cut Social Security and Medicare instead of cut $400 billion from the military budget over the next decade (and consider the $65 billion spent on F-22's too unsafe to fly)? Or is another direction more sane and humane?

It comes as no surprise to loyal EasyYolk readers that we believe in the prioritization of "the least of these," which today (as always) means the poor, children, women, the mentally & physically handicapped, veterans, the elderly, racial minorities, workers and small business owners. The Debt Ceiling Debate should protect programs (like Pell Grants, Social Security, Medicaid & Medicare...and many more) that have been successful in giving opportunity to these vulnerable citizens while shifting a little sacrifice towards those who have been fortunate (and prioritized by policy) to increase their share of the wealth during the Great Recession.

However, there's a cult in America which has been tremendously successful with their rhetoric, effectively framing the debate to convince the minions just how big the government (on every level) has gotten in recent years. Consider the Orange County Register editorial page, which today came out on the side of Amazon.com in their battle to collect zero taxes in states like California which, just last month, passed a law mandating the collection of sales tax for all customers logging in from California.

Note: this was not a tax raise, but a policy change for how taxes are collected for purchases from on-line retailers. As the OC Register pointed out in their editorial today, only 1 in every 100 Amazon California customers paid their sales tax at the end of the fiscal year:

Apart from the convenience and wide selection, Amazon purchases can cost much as 10 percent less than buying from a California-based company that the law requires to add state and local sales taxes.

If there's shame to apportion here, it should be for these illegal tax dodges by the roughly 99 percent of people who buy online from out-of-state retailers, but who refuse to comply with the law by writing the government a personal check for the sales tax. That's what the law requires. About one of 100 Californians comply.


See, the problem with this economy are people like me (and the vast majority of you) who make convenient purchases on-line and then play the tax-dodging game at the end of the year! Knowingly? I think not. If only 1 out of 100 Californians comply, isn't there a pretty good chance that this is a collection issue? The tremendously rare bipartisan coalition of California political leaders agreed with this assessment and changed the law, mandating that Amazon.com collect the taxes and send them to Sacramento quarterly (just like every business in California).

However, the OC Register adamantly put the stake in the ground, siding with on-line corporations and their shareholders and customers, leaving small businesses, brick-and-mortar corporations and the People of California with hundreds of millions of dollars of lower profits and revenues every year. That means loss of jobs and less money for programs that work for vulnerable Californians.

Reminder: out here in California, there has been a $600 decrease in per pupil spending in the past 3 years, a 65% increase in public university tuition rates over the past 5 years and vastly overcrowded prisons that the Supreme Court has recent mandated needs to be solved in 2 years (this either means new prisons built or a massive transfer of prisoners to jails and the streets). In short, revenue matters. Especially if it is another $600 million to $1 billion (as CA political leaders estimate will come as a result of the policy change).

And consider: from 2001 to 2009, according to the California Budget Project, the total adjusted gross income of California’s personal income taxpayers increased by 16.5 percent. In contrast, the net profits reported by corporations for California tax purposes nearly tripled, rising by 192.0 percent.

But if we raise taxes on force corporations to collect sales tax won't it create an anti-business climate and send entrepreneurs packing to states? This is what the OC Register claims:

We've seen this eminently principled economic decision play out countless times as California government has ratcheted up taxation on people and businesses. It's one reason so many have fled the state for less tax-greedy environs.

Not so says a recent UCLA study that exposed the complexity of the economic situation in CA. As it turns out, some businesses leave, some businesses stay and some businesses even choose to set up shop in California because of conditions that are favorable to their industry. And as it turns out, reading the OC Register is just like what Stephen Colbert once said about watching Fox News: it's like watching a Disney movie about the news.

But the truly great part of this tale is the one that makes it clear that the intensely profitable Amazon is clearly the big bad wolf. Amazon is refusing to collect sales taxes for the People of California and instead propagandizing this fight straight to the ballot box (so Californian). Again, in the concluding editorialized words of Amazon's greatest advocates--the OC Register:

Amazon hasn't abandoned California entirely. It is circulating a referendum petition for the ballot to repeal the so-called Amazon tax. Tax-collecting bureaucrats want to interpret the new version of the law as forcing online retailers to collect sales taxes, even without having a traditional physical presence in the state. The company says the law is unconstitutional. We hope the referendum is successful.

In the meantime, we applaud Amazon for minimizing its tax exposure, a prudent move for a for-profit business that benefits its stockholders and customers. And we deplore the money-grubbing government that presumes companies are greedy for wanting to keep what they've earned.


We, of course, call on the People of California to refuse to sign these petitions and to spread the word. We need action on this issue. Amazon will probably get the referendum on the ballot because they are contributing $3 million to (get this) "The More Jobs Not Taxes" referendum campaign (and, if on the ballot, will probably spend $10-20 million more). Amazon is so ruthless in its pursuit of profit that they are stationing petition-gatherers (who get paid $1 to $3 per signature) in front of Target, Ralphs and Trader Joe's (all competitors of on-line businesses).

It has become clearer and clearer to us during this past month that there are some very powerful and wealthy Americans who will self-interestedly rant "less government" over and over while making confident and aggressive claims for how effective and efficient the private sector is (no matter what the facts are). These powerful and wealthy Tea Party and/or Republican benefactors (and their TV and newspaper propagandists) have convinced millions that their policies actually look out for the interests of middle-class workers, small-business owners, families with children and the elderly.

These forces do not actually believe in less government (consider the military budget, regulation on abortion and marraige, corporate subsidies), but are hell-bent on erasing New Deal social programs (that have been successful at lessening the income inequality gap and keeping millions out of poverty) from the American economic landscape. And the results of surveys frighteningly reveal how much Americans benefit from these social programs and do not even know it. In the end, what will happen when we no longer have any money left for schools, roads, libraries, fire and police protection and so much more that government covertly and efficiently does for her People? Hopefully, we won't have to find out.

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