Buzz
by John Wolf
As a sales tax contributor to the state of California from book sales, I have been the recepient of newsletter from Michelle Steel, who is on the Board of Equalization and an advocate for taxpayers. Somehow I don't understand how she can be both, but here is an eyeopener from her latest newsletter:
Despite a bipartisan rejection by the Assembly Revenue and Taxation Committee in April, Assemblyman Charles Calderon (D-Montebello) has resurrected his controversial plan to impose a new iTax on digital downloads. Under the plan, California would begin charging the state's 7.25% sales tax on all digital products. That's a new tax on music, movies, ring tones, games, software, and other programs downloaded online.
As the Orange County Register recently explained, “The bills are also shortsighted. They would add yet more incentives for companies to move out of state or to set up out-of-state operations to avoid paying the tax, hurting the economy and ironically depleting other tax revenues. In such cases, the state might attempt to collect "use taxes" from people who make download purchases. But identifying and collecting nominal taxes from each of millions of individuals would be an enforcement nightmare that would cost more than it would bring in.”
There is and organized effort to throw off votes, since this plan was soundly defeated in the past. In desparation, caused by the lack of a State budget, this plan is tricky. Why else would the Democrats introduce two separate bills with two different strategies for raising this one tax?
Taxpayers need to start contacting legislators of both parties and both houses in order to defeat this terrible tax. In special session, bills can be brought up and voted on more easily than in a normal session of the Legislature. We need to get the word out that this tax is back and it is not a well thought out solution.
Unnecessary tax regulations are costing state agencies millions of dollars every year in wasted staff time and lost interest. Right now, when any state agency buys any tangible personal property, it owes itself sales and use tax.
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For example, Caltrans purchases a fleet of trucks from an Orange County car dealership. The state owes 7.75 percent sales tax on top of the vehicles' purchase price. The car dealership must collect the tax from the state and send a tax payment to the state later that month or calendar quarter. In the process, the state loses valuable use of that money, which the state treasurer could invest to earn interest.
The solution to this paperwork problem is simple: exempt state agencies from sales and use taxes. It would be easy for state agencies to implement and even easier for state retailers to enforce. Both wholesalers and the federal government are currently exempt from sales and use tax.
Mrs. Steel concludes by saying, "My BOE colleague Bill Leonard asked our Chief Economist Joe Fitz to evaluate the iTax increase. He concludes, "The dynamic model results also indicate that the tax increase would reduce California employment by about 58,000 jobs and reduce business investment by $660 million." Not very reassuring news for those already struggling in bad economic times.
Did I get your attention yet? Follow this link to get the email address of your local assemblyman and do the right thing - write the dude and tell him this kind of narly thinking makes Forest Gump look like a genius. If you don't, you vote yes by default, because politic is a closed circle if you don't participate. Assembly Dudes.
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John Wolf keeps the kennels clean at the Fox&Quill Hunting Club |
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