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Residents Association of Greater Lake Mathews

RAGLM Board > General Discussion > Personal Use Tax/Small Business/Board of Equalization-Costs More Than It Makes
8/4/2011 3:02:07 PM
Personal Use Tax/Small Business/Board of Equalization-Costs More Than It MakesPost: Cindy Ferry

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A Victory for California's Small Businesses


VIDEO: George Runner speaks to reporters about the Qualified Purchaser Program

It's not every day a government program becomes less burdensome for small business owners and entrepreneurs, but it can happen.

In my recent op-ed "A Qualified Mess," I described the many problems plaguing the "Qualified Purchaser Program" -- a use tax collection program targeting small business owners. I invited impacted business owners to send me their feedback via a survey on my website, and I shared this feedback with my colleagues and BOE staff.

I also joined small business owners and taxpayer advocates at a press conference urging reforms to this program. This NFIB-sponsored event was well-attended and led to stories by CalWatchDog, Capital Public Radio, The Orange County Register, The Sacramento Business Journal and others.

These efforts are yielding fruit. I'm pleased to report that my colleagues on the Board have agreed to make changes to the Qualified Purchasers Program, including eliminating the automatic registration of businesses and allowing businesses to leave the program if they don't owe tax or their income falls below the $100K threshold for a specified number of years. (For more details, see this issue paper.)

The Board has solved a good part of the problem. Now it's the Legislature's turn to further fix this failed law or, better yet, repeal it entirely.

VIDEO: The State Board of Equalization discusses and adopts reforms to the Qualified Purchaser Program

Government is the Greediest Actor in "Amazon Tax" Debate

Editorial boards and newspaper columnists are quick to assign "greed" as the motive driving Amazon, eBay and others to oppose a new law aimed at making more out-of-state online retailers collect sales tax on behalf of the State of California. But the greediest actor in this drama isn't Amazon ---- it's the government.

You see, online retailers didn't pick this fight. State lawmakers did ---- out of misguided lust for revenue they'll never see.

Put aside the rhetoric and consider the facts. Under the U.S. Constitution, state lawmakers can't compel out-of-state retailers to collect sales tax unless those retailers have a physical retail presence ---- known as "nexus" ---- in our state. Californians are supposed to pay use tax ---- the equivalent of sales tax ---- on out-of-state purchases, but few do.

It works the same way in reverse. California businesses making out-of-state sales in states where they have no brick-and-mortar retail presence don't have to register with the tax bureaucracies in those states, collect and remit sales tax or be subject to audits. In five states where Amazon collects and remits sales tax, many California businesses don't.

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A Temporary Tax That's Still Here

California taxpayers are celebrating a rare victory. Despite Democrat efforts to extend them, the sweeping "temporary" tax increases of 2009 have gone away. This is an uncommon treat, as many prior tax hikes sold as "temporary" are still with us today.

As Californians enjoy the benefits of this victory, last month marked the 20th anniversary of a prior sales tax increase that is still with us. On July 15, 1991, Californians were impaled with a "temporary" sales tax increase of 1.25 percent. This measure was enacted by the Legislature to address the state budget shortfall during the early 1990s economic downturn.

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State Heading Toward Highest Unemployment

The state of Nevada has the highest unemployment rate in the nation, but California is a close second. Unfortunately, recent employment trends show California could soon swap places with Nevada, assuming the dubious distinction of having the worst unemployment rate in America. This is discouraging news for California's more than two million unemployed workers.

Adding insult to injury, California's liberal political leaders are like a flock of ostriches with their heads in the sand when it comes to getting California's economy back on track. As lawmakers continue their annual tradition of sending "job killer" bills to the governor's desk, California's economy remains stuck in neutral even as other states pass us by.

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In the News

California use-tax program hits small businesses (San Francisco Chronicle, 8/1/11)

Amazon tax dispute puts California tax board in spotlight (Sacramento Bee, 7/29/11)

‘Mary Kay Tax’ Mugs Small Businesses (CalWatchDog, 7/27/11)

State wants to start collecting online sales tax (ABC, 7/26/11)

Some state leaders call for tax fix for small businesses (Sacramento Business Journal, 7/25/11)

Will California's Budget Be Unbalanced In A Few Months? (Capital Public Radio, 7/25/11)

Should Amazon Have to Collect Your Sales Tax? (Which Way LA?, 7/20/11)

Fire Protection Fees A Hot Issue In Sacramento (KHTS, 7/20/11)

Brian Calle: Will California have highest unemployment in U.S.? (Orange County Register, 7/20/11)

Referendum on "Amazon Tax" Likely Next Fall (Capital Public Radio, 7/19/11)

Our View: Amazon tax must be tossed (Appeal-Democrat, 7/16/11)

Amazon Takes on California (New York Times, 7/13/11)

Amazon aims to have voters decide on sales-tax law (Los Angeles Times,7/12/11)

Ex-Lawmaker: Amazon Sales Tax Would Cost California $150M (CBS Los Angeles, 7/12/11)

BOE member Runner seeks feedback on tax program (Examiner.com, 7/9/11)

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For more information, please visit www.boe.ca.gov/Runner.

Cindy Ferry
Proud Member of RAGLM
Unity of Community, Supporting the Rural Way of Life

If you ignore beauty, you will soon find yourself without it ...
But if you invest in beauty, it will remain with you all the days of your life.
Frank Lloyd Wright

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