CA will never agree to online sales tax

CNet has an article entitled “Days numbered for tax-free Net sales” The article declares that online sales will all be subject to sales tax very soon. Well, people have been saying that since the days of catalog sales (ie pre-Internet) and I’ve been saying no way for as long.

Writers that push this notion have no concept of how things really work. There are three reasons this will never gain traction in CA:

  1. CA already taxes these out-of-state purchases under the Use tax laws.
  2. CA has an army of auditors that shake out CA taxpayers for unpaid use tax. Although this is targeted mostly at businesses, that is definitely where the juice is.
  3. Agreeing to an online sales tax will give these use tax dollars to other states 

It’s not a coincidence that the most populous states, CA and NY are not part of the efforts to come up with a national streamlined sales tax. They have the most ot lose and any uniform sales tax would cost them tons of tax revenue.

I also doubt the feds would pass something because sales tax law varies so much from state to state. Heck, some states don’t even have a sales tax. A federal law would cause kaos.

So rest easy Californians (and New Yorkers) your out of state purchases will remain tax free. 

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