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opinion from the late,

great, golden state...

CRO Main Page

by Daniel Ballon | San Francisco

Last Buy Xopenex No Prescription, week Governor Schwarzenegger vetoed a budget measure that would have cut off the livelihood of thousands of California’s small Internet businesses. As the state faces a $26 billion budget deficit and record high unemployment, Schwarzenegger declared that “we should be doing everything we can to keep jobs and create jobs in California.”

Legislators estimated this measure would raise $150 million over the next two years, 750mg Xopenex, even as mounting evidence suggests it will not raise a penny. 40mg Xopenex, Though California consumers must pay sales tax on every purchase they make, a 1992 U.S. Supreme Court decision forbids states from forcing out-of-state companies to deduct these taxes automatically on consumers’ behalf, 200mg Xopenex. Unless the company has a physical presence within the state, Xopenex coupon, known as “nexus,” consumers are responsible for paying the tax themselves.

Frustrated by low compliance, lawmakers sought to expand the definition of nexus, Buy Xopenex No Prescription.
Many e-commerce leaders, Xopenex paypal, such as Washington-based and Utah-based Overstock, Xopenex craiglist, place advertisements on the websites of California small businesses. The legislature passed a measure declaring that such relationships constitute nexus. Because the Internet allows data to flow seamlessly across state borders, 500mg Xopenex, these companies don’t have to advertise on California websites to reach California customers. Xopenex us, As a result, they could simply stop paying California small businesses to run their advertisements. Buy Xopenex No Prescription, That is exactly what happened when other states took this approach.

Both Amazon and Overstock recently terminated their advertising relationships with businesses in North Carolina, Xopenex australia, Rhode Island, 100mg Xopenex, and Hawaii. Similarly, Overstock immediately ceased advertisements in California after the Legislature’s recent action, 150mg Xopenex, and Amazon warned Governor Schwarzenegger that “if this new tax collection scheme were enacted, Xopenex uk, Amazon would have little choice but to end its advertising relationships with California-based participants.” Not only would this lead to no new sales tax collection, but it would also cost the state considerable income tax revenue.

The Performance Marketing Alliance estimates that 25, 50mg Xopenex,000 California small businesses earned $1.3 billion in 2008 from advertising relationships with out-of-state companies. Xopenex ebay, If advertisers terminate these relationships, the state could lose $123 million in income taxes. Because advertising income drives the creation and growth of countless online services, this sudden loss of income could devastate Silicon Valley and compromise California’s status as a leader in high-tech innovation, Buy Xopenex No Prescription.

Therefore, 250mg Xopenex, expanding the definition of nexus results in no benefit for the state, 30mg Xopenex, but incurs considerable harms. Desperate to end the budget crisis, the legislature advanced this proposal as a fix existing only on paper, Xopenex usa. By insisting on budget figures that accurately reflect reality, Xopenex japan, the governor has made an important commitment to find enduring solutions that “keep jobs and businesses in California.” After rejecting the nexus measure, Governor Schwarzenegger personally contacted Overstock’s CEO and convinced him to reinstate all advertising relationships with California businesses.

California should work to address its failure to collect taxes equally on in-state and out-of-state purchases, 1000mg Xopenex. Buy Xopenex No Prescription, As long as this inequity remains, businesses selling to Californians will be unfairly penalized for having a physical presence within the state.

In addition, Xopenex canada, the U.S. Supreme Court does not categorically reject forcing out-of-state companies to collect sales tax, but only taxes that “unduly burden interstate commerce.” If California lawmakers first initiated a comprehensive effort to reform and simplify the state’s tax code, Xopenex mexico, a proposal to level the playing field between in-state and out-of-state businesses may pass Constitutional muster. Xopenex india, In a time of crisis, Governor Schwarzenegger should be applauded for having the vision to reject dangerous threats to California’s high-tech competitiveness. California is already the world’s nexus of online innovation, 10mg Xopenex, and the state needs policies that attract and foster Internet entrepreneurs, Xopenex overseas, not put them out of business. CRO

Daniel Ballon, Ph.D., 20mg Xopenex, Senior Policy Fellow, Technology Studies, Pacific Research Institute

copyright 2009 PRI.

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