Opinion: Unintended consequences of online taxes
By George Runner
They’re at it again.
Lawmakers in California, in a desperate attempt to generate revenues are again seeking to force out-of-state retailers to collect taxes for online purchases made by California shoppers. If they are successful in passing this legislation, not only will they fail to raise even one more nickel in tax revenue, they will cost the state thousands of jobs.
It’s a bit complicated, but allow me to explain: California has a cutting edge industry of internet entrepreneurs called “affiliates.” You’ve seen “affiliates” while surfing the web: blogs and websites that provide “click through” ads to online retailers. If you click through and make a purchase, the affiliate gets a small percentage in payment from the retailer.
According to the Performance Marketing Association, there are nearly 25,000 California-based affiliate businesses that provide information to California consumers and improve the ease and thrift of their shopping experience online or with remote retailers and their catalogs.
One example of a successful California affiliate is Ebates, a company based in San Francisco. Without affiliate relationships, Internet entrepreneurs like Ebates will face a painful choice: cut jobs to keep costs in line with reduced revenue or move out of California to more welcoming states. Either way, California will lose jobs and taxes.
Affiliates like Ebates can conduct business from any state in the country, but they are choosing to make California home. Likewise, online retailers choose to market their products through affiliates like Ebates because they help make the shopping experience for their customers easier.
If the Legislature passes a so-called “nexus” law, which will require out-of-state retailers to collect and remit California’s sales tax, those online retailers will terminate their relationship with California’s affiliates. They have done it in other states and have said they will do it here.
Paul Misener, Amazon’s vice president for Global Public Policy, recently sent me a letter citing four pending measures aimed at requiring out-of-state online retailers to collect sales tax. He warns: “If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon ‘Associates Program.’”
Misener notes that similar statewide terminations have already occurred in North Carolina, Rhode Island and Colorado after those states enacted similar laws.
A Board of Equalization analysis cautions that the proposed legislation’s projected revenues would fall by 50 percent as a result of Amazon’s action and be “further diminished” if other online retailers also terminated their affiliate programs. The analysis also warns of an “adverse impact on state employment,” resulting in lower corporate and personal income tax revenues for the state.
Thus, the unintended consequence of this tax policy will be to wipe out one of California’s few healthy business industries. That’s not what California needs when we have a statewide unemployment rate of more than 12 percent.
Collectively, affiliate businesses in California last year paid a total of $124 million in state income taxes, plus business, employment and property taxes. If a nexus law is enacted, California can say goodbye to a good portion of those revenues.
With the exodus of affiliates comes a government-sponsored brain drain as those whose mastery of online marketing and entrepreneurial drive have made it easier for California shoppers to find what they’re looking for move their companies elsewhere to find a new home.
How did this whole thing get started? And, why is California even considering a new law that would further damage the economy?
Most people know that they pay a sales tax on typical transactions, but few Californians probably know they have to pay an equivalent tax – the use tax – on their out-of-state purchases. Yet for 75 years, it has been the law. As a member of the Board of Equalization, the publicly-elected tax board charged with collecting this tax, I believe the best course of action is to make it easier for Californians to be aware of their obligations and pay them.
Lawmakers’ efforts aside, neither the Board of Equalization nor the Legislature has the authority to force out-of-state retailers to collect sales tax. In 1992 the Supreme Court ruled that the Constitution prohibits states from asserting taxing authority outside their borders unless the retailer maintains a physical presence in the taxing state.
Let’s not miss the forest for the trees. California’s most pressing problem isn’t tax collection, it’s jobs. When Californians have jobs in a growing and vibrant economy, the state will have ample revenue to fulfill its responsibilities. But when Californians don’t have jobs, we’ll always have budget problems. Rather than chase entrepreneurs like Ebates away, lawmakers need to prioritize jobs.
The unintended consequences of a nexus law would be disastrous for thousands of California families. Killing private sector jobs only worsens our state’s budget crisis. Lawmakers should reject such ill-conceived measures and instead start helping Californians get back to work.
George Runner represents the Second District of the Board of Equalization. Prior to his election to the board, Runner served 12 years in the California Legislature.
Returning to skis after 16 years on a snowboard
By Kathryn Reed
TWIN BRIDGES — Yahoo was incorporated that year. Bill Clinton was president of the United States. A gallon of gas cost $1.09.
1995 was also the last time Pam Valentine was on skis.
At 51, she decided to trade in her snowboard for a day for two planks. It’s not like this was her first time on skis. She had skied from about age 15 to 35.
“I couldn’t remember what to do with the poles,” Valentine said. “They were more of a nuisance.”
This was a bit obvious with her upper body swivel.
But as her younger sister, I limited my advice. It had been suggested she take a lesson to figure out what do again. No, she said. She preferred if there were to be any embarrassing moments, I would be the only one to see them.
What amazed me is the ease at which she took to the sport. Of course it helps to be fit and athletic. But, still, skiing and snowboarding are two distinct sports even though plenty of people do both.
I’m not one of those people. I tried snowboarding years ago and failed miserably. Skin changed colors that I didn’t know it could change. But I digress.
As much as skiing takes balance, my sister said skis were easier than her board because of not having to be on the front or rear edge.
Plus, this was her first time on the wide skis.
“It was easier to turn,” Valentine said of the new type of equipment. “With them being shorter, it didn’t feel like I was crossing the tips like I used to.”
In fact, she tried to snowplow but found that more difficult than paralleling.
She stopped skiing years ago when she lived in Sacramento and her friends were getting into boarding. They often made the trek up to Sierra-at-Tahoe for the day. Now when she comes to Tahoe from Redding we still end up at Sierra.
The guys in the rental shop were friendly. Mike reminded her her toes should not wriggle too much. Tyler explained why she might want a certain length of ski over another. And Bryan the pole dude said, “I think the blue ones will be the key to your happiness.”
Basic rentals at Sierra are $41 for the day or $35 for a half day.
Although we started on Easy Rider, we only lasted one run. My sis was ready for West Bowl. Then we headed up Grand View. Other than the fast skier nearly taking her out on Lower Main, she ended the day with a smile and ready to start demoing skis to possibly buy some in the near future.
ngg_shortcode_0_placeholder (Click on photos to enlarge.)
State looking to replace Placerville courthouse
By Carlos Alcala, Sacramento Bee
A new Placerville courthouse site favored by locals is officially being considered, state officials announced Friday.
The Administrative Office of the Courts has been looking for a site to replace the nearly 100-year-old Main Street courthouse and two other facilities for the El Dorado Superior Court.
Late last year, Placerville and El Dorado County government leaders had expressed fears that the Office of the Courts favored sites outside Placerville.
N. Shore wants input on infrastructure/transportation plan
The North Lake Tahoe Resort Association in partnership with Placer County is seeking public input for its annual Integrated Infrastructure and Transportation Work Plan and Long Range Funding Plan at a community workshop scheduled for March 14, 4-7pm at the Tahoe City Public Utility District, 555 Fairway Drive in Tahoe City.
Public input is needed for bike and pedestrian trails, shuttle systems, transit routes, traffic calming, information and interpretive centers, bus shelters, museum exhibits, mile markers, way finding signage, North Lake Tahoe Airport Express, as well as new opportunities. Attendees will also become familiar with current projects under way.
The Integrated Work Plan is an “action plan” that summarizes the status of the infrastructure and transportation projects throughout North Lake Tahoe that are ongoing and those projected for the 2011-16 time period.
For more information about the workshop, call Ron Treabess at (530) 581.8735 or via email at ron@puretahoenorth.com.
Reno expert: Japan’s quake ‘a completely different class’
By Steve Timko, Reno Gazette-Journal
If the world was a bell then Friday’s earthquake in Japan would leave it ringing for a month, the head of the Nevada Seismological Laboratory said.
“This is a completely different class of earthquake,” said Graham Kent, director of the seismology lab at the University of Nevada, Reno.
He struggled to describe the enormity of a magnitude 8.9 earthquake like that one that struck off the coast of Japan at 9:46 p.m. Thursday Reno time.
For one thing, Kent said, it’s big enough that it slightly affected the earth’s rotation on its axis.
“It’s so big that it sets the earth in a vibration mode that will have it ringing for a month,” Kent said.
He also scoffed at media reports that attempted to show the epicenter of the quake. A magnitude 9.3 earthquake that struck off the coast of Sumatra in December 2004, for instance, had a fault line move that was more than 620 miles long, he said. Kent is guessing Friday’s quake in Japan had a rupture point 360 miles to 500 miles long.
“A little point on the map means nothing,” he said.
S. Tahoe council to discuss Heavenly Village agreement
By Kathryn Reed
At the last South Lake Tahoe City Council meeting, Bruce Grego asked for an item to be on the March 15 agenda that would address whether the city should continue being a member of PADMA.
The city councilman referenced the March 17, 2010, letter the city sent to the Park Avenue Development Maintenance Association board saying the city intended to withdraw from the agreement as of Jan. 1, 2011. City Manager Tony O’Rourke extended that date in an attempt to work with PADMA to revise the agreement.
Although the letter signed by City Attorney Patrick Enright from a year ago outlines irregularities and legal problems with the 30-year contract, it is still a contract that cannot just be nullified just because a different council has been seated from when the document was signed in 2002.
PADMA officials have agreed to look at the contract and possibly offer concessions to the city in return for in-kind help such as relief with the parking garage fees and assistance with bringing events to Heavenly Village.
The council meets March 15 at 9am at Lake Tahoe Airport. The PADMA board next meets April 18.
Nevada children’s shelter receives donation
Carson City ATA Black Belt Academy recently donated $473 to Austin’s House. The martial arts students raised the money during a special fitness program fundraiser where they exercised non-stop for 25 minutes. They completed laps with running, squats, kicking, punching and push-ups.
The total amount collected was $.1419 with one-third going to Austin’s House, one-third for scholarships and one-third for new equipment at the facility. Carson ATA provides scholarships to 10 students every six months.
Shawn Goodner, owner and chief instructor of Carson ATA, believes every child deserves an opportunity to succeed.
Austin’s House is the only emergency children’s shelter in rural Northern Nevada. Austin’s House provides services and care for up to 10 children from infants to age 18. The children are placed at Austin’s House after being removed from their homes due to abuse or neglect.
If you would like more information or would like to make a donation to Austin’s House, call (775) 267.6711 or go online.
LTBMU seeks comments on off-highway grant
The U.S. Forest Service Lake Tahoe Basin Management Unit is accepting comments for its Off-Highway Motor Vehicle Recreation grant application. his annual grant funds Off-Highway Vehicle programs in the Lake Tahoe Basin including trail and trailhead maintenance and restoration and education and law enforcement of OHV and over the snow vehicle areas.
The grant proposal is available for public review and comment is April 4 on the state website.
Written comments and suggestions may be sent to Don Lane, U.S. Forest Service Lake Tahoe Basin Management Unit, 35 College Drive, South Lake Tahoe, CA 96150 or by email to dlane@fs.fed.us.
Dante’s on Hwy. 50 becomes restaurant from hell for couple
By Carlos Alcalá, Sacramento Bee
Kevin and Nancy Cairns moved to El Dorado County hoping for a piece of heaven on the American River.
They got a taste of hell.
They opened Dante’s on the River seven years ago on an isolated stretch of Highway 50, east of Pollock Pines.
“It’s a beautiful piece of property,” Kevin Cairns said.
But since they opened, they say they’ve been besieged by people who violently demand to use the restaurant bathroom or just do their excretory business in the parking lot. Other motorists pull over to vomit and move on.
“Nobody’s ever offered to clean it up,” said his wife.
As a consequence, Cairns has taken to asking people to leave the lot unless it’s an emergency or they’re coming to the restaurant.

