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Oppose Tax Hikes on Online Shopping!
An Open Letter to the California Board of Equalization:
November 15, 2010
Dear Board Members:
On behalf of the National Taxpayers Union’s (NTU’s) 52,000-plus members in California, I urge you to reject any proposal that would tax out-of-state online retailers through their in-state affiliates.
States that have attempted to prey upon online retailers beyond their
borders through the creation of “affiliate nexus” schemes have not raised the
desired revenues. In fact, North Carolina officials report that they are not keeping track of revenues collected from
the tax scheme. Additionally, Rhode Island’s tax administrators say that their
treasury has actually lost revenue
following enactment of the tax. What these policies have done is impose high
costs on the states through litigation and lost business activity. Both North
Carolina and New York have been sued over this issue and the litigation
continues to this day.
Several major online retailers have also terminated their affiliates programs
in Colorado and Rhode Island due to those states’ sales and use tax-reporting
requirements for online transactions. A loss of business activity that shrinks
the tax base is the last thing any state needs during this time of economic
California faces serious fiscal problems and needs to undertake equally serious reforms, especially reforms to its burdensome tax code. It does not need to add to the complicated tax burden by imposing a new tax on online shopping. Therefore, our members hope you will reject any proposal to do so.