Ron Kaye: The political system only serves itself

Drive down any main street and it is hard not to notice all the empty shops, the “Going Out Of Business” and “For Lease” signs, the proliferation of 99-cent and dollar stores.

Book stores and record shops have largely disappeared. Major electronics retailers like Circuit City are long-gone, Fry’s greets customers with leaflets declaring they’ll match any Internet price and now Best Buy plans to wall off a quarter of its giant stores and rent the rest of the space to grocers, beauty suppliers — anybody with a buck.

Is it any wonder retailers are struggling?

Competing for precious tax dollars, cities have green-lighted just about every type of shopping center project for years, over-building — much to the dismay of small, local shopkeepers — as mammoth national chains take an ever greater share of the market.

Even the chains now are being hit hard by the impact of the boom in online, mostly tax-free business. Amazon and eBay may be the giants, but there are hundreds, thousands of other websites offering free shipping, no sales tax and low prices because they don’t carry the cost of stores and sales help.

If you’re buying a flatscreen TV that costs a thousand dollars at Best Buy, you probably can get it for $100 less online, plus save another $100 in taxes, and it will be delivered to your door instead of trying to squeeze it into your car.

In theory, we the consumers owe the state a “use tax” in lieu of the sales tax on everything we buy online — estimated at $1.1 billion a year, enough to avoid savage cuts to education and the poor — but we’re not likely to do that, anymore than we are to pay the $480-fine for an unenforceable red-light camera ticket unless we don’t know better or are a truly good citizen.

In their wisdom, our state legislators — temporarily unpaid and serving in a volunteer capacity — have finally tried to do something about untaxed Internet sales in hopes of generating about $300 million for the state and local governments.

As part of the vetoed phony budget package, they included a bill, ABX1-28, that attempts to make an end run around the federal ban on states charging sales tax on out-of-state retail transactions.

The bill refers to three ways of beating the federal ban: “The New York Style or Amazon Approach, the Reporting Group Method, and Long-Arm Nexus.”

Essentially, they all try to make Amazon and other online retailers liable for state taxes if they have any affiliation with California companies — referral businesses, sister companies like product developers, and the truly creative “nexus” scheme that tries to skirt the commerce clause of the Constitution through a narrow crack that will never stand up in court.

Right now the bill is being held hostage with a lot of other budget-related measures, like abolishing community redevelopment agencies, because the legislative leadership and Gov. Jerry Brown and state Controller John Chiang are engaged in a Democratic Party civil war.

It has taken so long to begin to rein in runaway Internet sales that are killing jobs and businesses locally that it is probably too late to make much of a difference.

And that’s the point: Loss of jobs and businesses didn’t prompt legislative action; the desperate need for tax revenue to feed the political system did.

The bottom line is that the political system has stopped serving the public interest. It has sold out to special interests and is only serving itself.

Eighteen months ago, legislative salaries were cut 18% to $95,000 because of their failure to deal with the state’s financial crisis. Now, they aren’t being paid at all because they haven’t dealt with the state’s financial crisis.

Nothing has yet gotten legislators’ attention. Try to remember that when you vote next year with open primaries and redrawn legislative districts that will be more balanced.

RON KAYE can be reached at kayeron@aol.com. Share your thoughts and stories with him.
 
 

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