Wednesday, September 19, 2012

Amazon to Start Collecting Sales Tax in California, and Surprise

Looks Like Almost Everybody Will Benefit

The battle over internet sales tax collections is entering its final phase, and tax collection is going to win.  California and Amazon reached an agreement last year to give Amazon a one year grace period before Amazon would start collecting sales tax on purchases by California residents.  The year is up.

Why is this a good thing for Amazon and California?  Well a couple of reasons.  First of all Amazon will now start building distribution centers in California which will benefit customers and the economy.

The resolution of Amazon's tax fight in California has allowed the company to start building a network of distribution centers. Soon, customers in the nation's most populous state will receive shipments from warehouses in San Bernardino, which is near Los Angeles, and Patterson, near the San Francisco Bay Area  instead of from Reno, Nev. or Phoenix. Each new center is expected to bring hundreds of jobs to California, where the unemployment rate is the third highest in the nation.

So jobs will go up, and guess what, customers will get improved delivery, maybe even same day delivery.

Oh yes, the state of California will start collecting sales tax revenue.  No this is not new taxes, citizens are supposed to self report sales taxes they owe on purchases where the tax was not collected.  What, only 1% of the people did that?  Amazing.

The other thing this does is to make the playing field a little more fairer between the brick and mortar businesses and the internet businesses.  The new collections will discourage shoppers from going to stores, checking out the merchandise and then ordering on line and avoiding paying sales tax.  So there are really no losers, unless one counts those who avoided paying taxes and who will now not be able to avoid paying taxes.

And yes, if anyone is asking The Dismal Political Economist lives in a state where Amazon and other internet retailers who do not have a physical presence in the state do not collect sales tax.  And yes he does check that box on his tax return and pays the sales tax according to the formula.  Is that the right number?  Well let's just say it probably evens out.

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