Simply put, AB 178 will impose the nation's highest sales tax on all goods purchased from online retailers doing business in the Golden State.

 

This bill also radically expands the definition of “doing business” in California. And we do mean radically. If you are a blogger who engages in pay-per click advertising, if you have a facebook page that promotes a product, if you are just some regular California citizen who  just earns a bit of money through having a banner ad on your website, you will have created a legal “nexus," thereby allowing Sacramento to ensnare all businesses you link to into their onerous tax net. In fact, some policy experts have argued that the wording of this bill is so expansive and vague, that even if you only earn 1 cent in revenue, if you do it through an advertisement syndicate (which account for virtually all advertisements), this indirect link will be enough to create nexus, essentially nullifying the stated $10,000 effectiveness threshold.

 

There is one thing pretty much every economist can agree on – you should never raise taxes in the middle of a recession. Yet this is precisely what this bill will do. The cost of goods will go up by over 10%, socking it to California families and employers who are trying to cope with the $14 billion tax increase passed in February.  Also keep in mind that some of the highest cost of living locales in the country are found in California. In fact, Golden State residents work 204 days out of the year just to pay for the cost of their government. Ouch

 

If passed, expect AB 178 to exacerbate the deleterious effect that the recent sales, income, and car tax increases have had on sales. The result of this: businesses shuttering their doors, layoffs, and a heightened budget deficit. Just when you think things can't get worse for California taxes payers, if Proposition 1A passes, California residents will be hit by another $16 billion in new levies, equating to $1,100 per household