Sunday, September 11, 2011

California AB 155 - It is just bad for business. Period

The California Assembly has passed AB 155 and it is awaiting Gov. Brown's signature.  Though the bill is primarily targeted at Amazon and would require Amazon to pay CA state sales taxes on all sales made to state residents, it has much broader implications for anyone selling online.  Assembly Speaker John Perez says that residents that make purchases online through out of state providers are "tax cheats."

CA Assembly sponsors say they are intent on making California businesses "more competitive" with out-of-state businesses, but that is just hogwash.  This is about hundreds of millions of dollars in potential tax revenue for the State of California.

 If California is successful, surely the other 49 states will follow.

One way or another, the tax is passed on to the consumer. That much is true. But, what about the cost on out-of-state businesses that must charge, collect, record, process, reconcile, and pay those taxes. For a small business that makes maybe 2 or 3 sales in the State of Cali each *month*, I now have a fairly significant monthly, semi-annual, and/or annual burden in the form of labor.  Plus, possible the cost of software and/or services to comply with this law.

A simple analysis of my own suggests that this is going to add 15 to 20% to the cost of operating my business in the form of either a 3rd party service or an accounting clerk that is going to have to track each purchase, its location, the tax rate, and what tax has to be paid for the purchases from that particular state.

Once again, California, you are proving yourself to be unfriendly to business.  Both out-of-state as well as jacking up the price of the merchandise your in-state businesses purchase.


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