---

 [ ARCHIVE ](https://mail.citywatchla.com/index.php?option=com_content&view=category&id=16)

#  California: The Pickpocket State

July 28 2011

Written by Steve Forbes.

<a class="a2a_button_facebook"></a><a class="a2a_button_twitter"></a><a class="a2a_button_email"></a><a class="a2a_button_print"></a>[](https://www.addtoany.com/share)

![](https://mail.citywatchla.com/images/stories/July-2011/cw9-60o.png)GUEST WORDS - A big tax battle is erupting in California. The immediate numbers involved are not big—about $200 million—but the principle is huge, and the outcome will have an enormous impact on our economy.

The battle is over applying sales taxes to products sold on the Internet. If California gets away with its new, unconstitutional tax, consumers nationwide could be hit for billions and the economy will be harmed.

The Supreme Court ruled in 1992—as it had before—that retailers cannot be required to collect sales tax in a state where they do not have a physical retail presence.

The battle back then was not about e-commerce but the billions of dollars in products sold through catalogs. For instance, if L.L. Bean didn’t have a store in California and you bought a pair of boots via its catalog, L.L. Bean did not have to charge you and then fork over sales tax to Sacramento.

Tax-hungry pols these days are eyeing not catalog but Internet retailers, particularly the biggest one of them all: Amazon (AMZN). [\[link](http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=AMZN)\] The Golden State legislature recently adopted the so-called Amazon tax, which dictates that the Seattle-based retailer and other e-retailers must collect a sales levy on everything it/they sell to California residents and turn the proceeds over to the state treasury.

How in the world does Amazon, which has no physical presence in the state, get hit up for sales tax?

This is as flagrant a violation of a Supreme Court decision as one will ever find. The legal fig leaf is Amazon’s “affiliates” program. Since 1996 Amazon has had a marketing program, whereby Web sites can offer their visitors a link to Amazon-offered products and services.

These “associates” get a monthly fee for sales generated by those links. In California there are some 25,000 individuals and small businesses that are profiting from their partnership with Amazon and others.

These individuals hardly constitute the definition of what lawyers call a “nexus” or a physical presence à la a store or warehouse. (Amazon does have a traditional physical presence in four states and collects sales taxes from customers in those states.)

A couple of years ago New York State pulled off a similar stunt, and other states are following suit. The attitude of most politicos: See a whale, harpoon it.

Politicians well know that the Supreme Court will ultimately throw these levies out, but they figure the litigation will last for years, and in the meantime Amazon and other Internet commercial entities might either tire of the battle or be politically browbeaten enough to go along with becoming tax collectors.

That California, where modern high-tech industry was born, should wage war against Internet-based entities is bizarre. It demonstrates the madness of its political class. California faces a budget shortfall of $10 billion.

This new tax might collect $200 million from Amazon and others. That’s hardly a drop in the bucket. More fundamentally, it will force Amazon to sever its relationships with thousands of its affiliates. This new tax law will hurt other online retailers and their affiliates, which will damage the state economy by considerably more than that $200 million. Talk about being penny-wise and pound-foolish.

Rather than passively accepting this economic disruption while the case goes to the courts, e-retailers are putting a referendum on the California ballot to repeal this unconstitutional tax. It’s no surprise that Golden State politicos are howling and trying to use every legal stratagem possible to prevent the question from going before the voters. But the state’s Attorney General, following the law, has ruled that the anti-taxers can go ahead and collect signatures to get their referendum on the ballot for judgment this November.

Instead of desperately trying to pick peoples’ pockets even more, state pols should be focusing on reforming and repairing their damaged fiscal houses.

A growing number of governors and state legislators are getting the message. A successful referendum in California on this issue will forcibly deliver the message to the rest who don’t.

For California residents interested in helping, go to [jobsnottaxes.com](http://www.jobsnottaxes.com).
 *(Steve Forbes is an editor, publisher, and businessman. He is the editor-in-chief of business magazine Forbes as well as president and chief executive officer of its publisher, Forbes Inc. He was a Republican candidate in the U.S. Presidential primaries in 1996 and 2000. He blogs at [blogs.forbes.com ](http://www.blogs.forbes.com). This article was provide by CRC Public Relations.)* -cw

Tags: California, sales taxes, Amazon, Supreme Court, Golden State, New York state, high-tech industry,

CityWatch
Vol 9 Issue 60
Pub: July 29, 2011

 [ ![save up to 4000 on used evs](https://mail.citywatchla.com/images/LADWP/dwp%20ev%20ad2.png) ](https://mail.citywatchla.com/component/banners/click/107 "LA DWP | Save $4K, Green | Priority Ad")

 [ ![Donna Tryfman](https://mail.citywatchla.com/images/ADS%20FOR%202026/Donna-Tryfman-Ad-Final-Complete-Border-White-Margin.png) ](https://mail.citywatchla.com/component/banners/click/98 "Donna Tryfman - HS1-1")

 [ ![LA DWP #2 (Pay Your Bill Help)](https://mail.citywatchla.com/images/LADWP/dwp%20level%20pay%205-7-25.jpg) ](https://mail.citywatchla.com/component/banners/click/82 "LA DWP #2 (Pay Your Bill Help)")

 [ ![David DeJute Campaign](https://mail.citywatchla.com/images/ADS%20FOR%202026/DejuteAd.png) ](https://mail.citywatchla.com/component/banners/click/111 "David DeJute Campaign")

 [ ![Pay Water Bill Help](https://mail.citywatchla.com/images/LADWP/dwp%20-%20cares-ad.jpg) ](https://mail.citywatchla.com/component/banners/click/97 "Home - LA DWP #2 (Pay Water Bill Help)")

 [ ![Anna Reitano Vertical R. Col](https://mail.citywatchla.com/images/ADS%20FOR%202026/reitano%20vertical%20rework.png) ](https://mail.citywatchla.com/component/banners/click/112 "Anna Reitano Vertical R. Col")

 ![](https://mail.citywatchla.com/images/banners/signup-for-cw.png)

## Get The News In Your Email Inbox Mondays &amp; Thursdays

 Message

 ---

##  Featured CityWatch Stories

 [ ![](https://mail.citywatchla.com/media/yootheme/cache/8c/074h-8ccaaf79.png) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33349:l-a-county-faces-a-government-shake-up&catid=312)

### [L.A. County Faces a Government Shake-Up](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33349:l-a-county-faces-a-government-shake-up&catid=312)

WESTSIDE - Currently larger than 40 states in terms of population with roughly 10 million residents, Los Angeles County…

 [ ![](https://mail.citywatchla.com/media/yootheme/cache/4d/073e-4dc54bff.jpg) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33336:may-day-international-workers-day-a-major-us-holiday-ignored-by-the-media&catid=398)

### [May Day/International Workers Day, a Major US Holiday Ignored By The Media](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33336:may-day-international-workers-day-a-major-us-holiday-ignored-by-the-media&catid=398)

PLANNING WATCH - Monday, September 7, 2026, was Labor Day, a holiday only celebrated in the United States and Canada as…

 [ ![](https://mail.citywatchla.com/media/yootheme/cache/17/074g-17fdff1c.jpg) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33346:before-we-ask-god-to-judge-us-the-jewish-people-must-judge-ourselves&catid=375)

### [Before We Ask God to Judge Us, the Jewish People Must Judge Ourselves](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33346:before-we-ask-god-to-judge-us-the-jewish-people-must-judge-ourselves&catid=375)

Yom Kippur demands more than personal repentance. At a defining moment for Jews everywhere, it asks whether we have tru…

 [ ![](https://mail.citywatchla.com/media/yootheme/cache/12/073d-1253ced3.jpg) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33338:quid-pro-no&catid=378)

### [QUID PRO NO](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33338:quid-pro-no&catid=378)

MY VIEW - Quid pro quo: Latin for “this for that.” English for “bribe.” In Assemblymember Schiavo-speak: quid pro no—“N…

 [ ![](https://mail.citywatchla.com/media/yootheme/cache/09/073i-0998df2d.jpg) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33330:cd3-doesnt-need-another-promise-it-needs-a-councilmember-who-can-deliver&catid=401)

### [CD3 Doesn’t Need Another Promise It Needs a Councilmember Who Can Deliver](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=33330:cd3-doesnt-need-another-promise-it-needs-a-councilmember-who-can-deliver&catid=401)

THE BOTTOM LINE - Los Angeles voters have heard the promises before: safer streets, cleaner neighborhoods, more housing…

---

##  [ ARCHIVE ](https://mail.citywatchla.com/index.php?option=com_content&view=category&id=16)

 [ ![](https://mail.citywatchla.com/images/stories/Apr-2018/034e.png) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=15339:early-intervention-and-jobs-are-key-to-stemming-chronic-homelessness-in-los-angeles&catid=16)### [Early Intervention and Jobs are Key to Stemming Chronic Homelessness in Los Angeles](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=15339:early-intervention-and-jobs-are-key-to-stemming-chronic-homelessness-in-los-angeles&catid=16)

### [Tucker Carlson and Gay Rightwinger Blame California Wildfires On Hiring LGBTQ People](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=18755:tucker-carlson-and-gay-rightwinger-blame-california-wildfires-on-hiring-lgbtq-people&catid=16)

### [Anti-LGBTQ Veep Just Can’t Stop Talking about Mayor Pete](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=17690:anti-lgbtq-veep-just-can-t-stop-talking-about-mayor-pete&catid=16)

 [ ![](https://mail.citywatchla.com/images/stories/Apr-2018/033j.png) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=15316:news-pulse-corrupt-system-reason-for-not-voting-in-2018-majority-wants-more-than-two-parties&catid=16)### [NEWS PULSE: ‘Corrupt System’ Reason for Not Voting in 2018 … Majority Wants More Than Two Parties](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=15316:news-pulse-corrupt-system-reason-for-not-voting-in-2018-majority-wants-more-than-two-parties&catid=16)

 [ ![](https://mail.citywatchla.com/images/stories/Jan-2016/1404d.png) ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=10245:dead-dog-set-on-fire-sparks-fears-for-strays-in-los-angeles&catid=16)### [Dead Dog Set on Fire … Sparks Fears for Strays in Los Angeles](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=10245:dead-dog-set-on-fire-sparks-fears-for-strays-in-los-angeles&catid=16)
<div data-id="1" 
	class="eb-inst eb-hide eb-emailform eb-1 eboxContentLocker"
	data-options='{"trigger":"onPageLoad","trigger_selector":"","delay":3000,"early_trigger":true,"scroll_depth":"percentage","scroll_depth_value":80,"firing_frequency":1,"reverse_scroll_close":true,"threshold":0,"close_out_viewport":false,"exit_timer":1000,"idle_time":10000,"close_on_esc":false,"animation_open":"slideInDown","animation_close":"fadeOutDown","animation_duration":400,"disable_page_scroll":true,"test_mode":false,"debug":false,"ga_tracking":true,"ga_tracking_id":"G-P16BQ7X1SW","ga_tracking_event_category":"EngageBox","ga_tracking_event_label":"Box #1 - Global Email Signup Form","auto_focus":false}'
	data-type='popup'
	>

	<button type="button" data-ebox-cmd="close" class="eb-close placement-outside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>
	<div class="eb-dialog eb-formVer" role="dialog" aria-modal="true" id="dialog1" aria-label="dialog1">
		
		<button type="button" data-ebox-cmd="close" class="eb-close placement-inside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>	
		<div class="eb-container">
						<div class="eb-content">
				
<form action="https://citywatchla.us2.list-manage.com/subscribe/post?u=34d69f33624fd058ee9b56516&amp;id=4bfa422f51&amp;f_id=00d6c2e1f0" class="eb" method="post" id="mcform-1" name="mcform-1" target="_blank">
			<div class="eb-form-header"><p><img src="/images/2023/06/be-a-city-watcher.png" alt="be a city watcher" width="350" height="97" loading="lazy" data-path="local-images:/2023/06/be-a-city-watcher.png"></p>
<p>Sign up to receive our special e-news blasts on Monday and Thursday evenings!</p></div>
	
					<div class="eb-field-row">

			
			
			
			<input class="eb-input" type="email" name="EMAIL"  placeholder="Email address"  id="EMAIL" value="" required>

			
		</div>
										
	<div class="eb-footer">
    	<button class="eb-btn" type="submit" name="subscribe" style="background-color:rgba(93, 183, 93, 1);color:rgba(255, 255, 255, 1)">
    		Sign up    	</button>
    </div>
</form>			</div>
		</div>
	</div>	
</div>
<div data-id="3" 
	class="eb-inst eb-hide eb-yesno eb-3 "
	data-options='{"trigger":"onScrollDepth","trigger_selector":"","delay":0,"early_trigger":false,"scroll_depth":"percentage","scroll_depth_value":80,"firing_frequency":2,"reverse_scroll_close":false,"threshold":0,"close_out_viewport":false,"exit_timer":1000,"idle_time":1000,"close_on_esc":false,"animation_open":"fadeInUp","animation_close":"fadeOut","animation_duration":300,"disable_page_scroll":false,"test_mode":false,"debug":false,"ga_tracking":true,"ga_tracking_id":"G-P16BQ7X1SW","ga_tracking_event_category":"EngageBox","ga_tracking_event_label":"Box #3 - Yes \/ No Donation Popup Box","auto_focus":false}'
	data-type='popup'
	>

	<button type="button" data-ebox-cmd="close" class="eb-close placement-outside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>
	<div class="eb-dialog " role="dialog" aria-modal="true" id="dialog3" aria-label="dialog3">
		
		<button type="button" data-ebox-cmd="close" class="eb-close placement-inside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>	
		<div class="eb-container">
						<div class="eb-content">
				
<div class="ebox-yes-no">
	<div class="ebox-yn-text">
		
		
		<div class="ebox-yn-headline" style="font-size:22px;color:#888888">
			<p>If you only give once a month, would you consider giving to CityWatch?</p>
<p>Your support fuels our mission to promote and facilitate civic engagement and neighborhood empowerment, and to hold area government and its politicians accountable.</p>
<p>Would you like to help? Even if you can only give $5, it will make a difference.</p>		</div>
			</div>
	
	<div class="ebox-ys-buttons" style="font-size: 16px;">
		
<a
					data-ebox-prevent="0"
		data-ebox-cmd="close"
				target="_self"
		href="https://www.citywatchla.com/donate"
		rel="noopener"
	
	
	
	
	class="ebox-ys-btn"
	style="background-color:#2ec664;color:#ffffff;min-width:100px">
	Yes
	</a>
<a
	
	
			data-ebox-cmd="close"
		href="#"
	
	
	class="ebox-ys-btn"
	style="background-color:#ef2345;color:#ffffff;min-width:100px">
	Not Right Now
	</a>	</div>

	</div>			</div>
		</div>
	</div>	
</div>