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Internet sales bleeding the life out of California economy By William W. Baker Fresno (Published Saturday, January 18, 2003, 5:17 AM)
The recent article discussing the sales tax loss to California due to major item purchases over the Internet was interesting, but missed most of the loss the state and its citizens suffer in such transactions. Internet merchants have no investment in California. They have no stores, no equipment, no employees -- in fact they have no interest in our state. Many do not even carry an inventory, instead drop shipping to their customers from suppliers' or manufacturers' warehouses. Not only do we lose sales tax revenue, our local governments lose revenue from business taxes and licenses. Payrolls and payroll taxes are lost to state and local entities. Internet merchants do not buy their supplies and equipment from other California firms. They do not purchase advertising space or time from newspapers and radio-TV. They pay no rent. Their income is taxed by other states. California does not participate in their profits. Of course, these Internet merchants have a tremendous advantage over traditional merchandisers, and their prices reflect this advantage. One must wonder if the increasing use of Internet purchases will lead to the demise of thousands of local businesses, with their tens, even hundreds of thousands of employees. Are "big ticket" stores going the way of buggy whip manufacturers? Is there anything we can do to stem the tide, or is this the wave of the future?
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