With a new Amazon sponsored referendum potentially in the making in response to Assembly Bill X1-28, California students will find themselves caught between the political struggles of two powerhouses: The State of California and Amazon.com, Inc.
Students will be the ones losing out this coming academic year, as the effects of the permanent ABX1-28, popularly dubbed the Amazon Tax, combine with rising tuition fees to increase education costs for many.
State Senator Loni Hancock, who authored an earlier version of the Amazon Tax, has mentioned these types of bills will help claim what the state considers lost tax revenue that Amazon has not previously collected on sales within California.
In response, Amazon has stopped working with California affiliates who make the company liable to taxation under ABX1-28.
According to a staff analysis on a similar bill, SB 234 that was not passed, by the State Board of Equalization, Amazon’s response will effectively reduce revenue generated from the bill from an estimated $317 million to $234 million for 2012-13.
While it is clear that the state must eventually tax online retail sales in order to reduce Amazon’s unfair competitive advantage, doing so without nationwide comprehensive support will only reduce the economic competitiveness of California, as large companies like Amazon move their business to other states.
California needs to find long lasting solutions to the budget crisis and I question the appropriateness of the Amazon Tax at this time, without multi-state cooperation to help ensure collection of tax revenue from online sales and to help reduce the negative economic impact of Amazon being able to move shop.
Furthermore, many students will find themselves footing a chunk of the bill, as tax-free online book sales begin to disappear in response to the bill. Thankfully, California’s version of the bill will not affect e-book sales.
However, California students are already getting a raw deal with tuition hikes ranking among the highest nationwide, stemming from the state’s budget crisis. Tuition has already increased at CSU East Bay by 46% from 2008-10, which does not include increases from last year or the current year, according to a new website from the U.S. Department of Education that is trying to increase education cost transparency.
In all fairness, online retailers must be taxed in order to keep tax revenues flowing which help fund the government in the long run.
Yet, ABX1-28 seems to reflect a state government that is scrambling to find any fix to alleviate the crisis, rather than a solution that will create fundamental improvements within the system.
What do we need to do?
Students must take a close look at any referendum introduced by Amazon and approve it, if it doesn’t cripple the state’s long-term ability to eventually collect taxes from online sales.
What does the state need to do?
Sacramento needs to find more comprehensive solutions to the budget crisis and reinvest in public education.
Like a nightmarish version of Bob Dylan’s “Stuck in the Middle With You,” California students find themselves stuck between Amazon.com, Inc. and the State of California with the CSU system and perhaps Amazon’s ex-California affiliates for company.
