California: will how we solve the inequity of sales tax cause jobs to leave?

It’s gotta be tough to be a Californian politician. Every year we’re $15 billion in debt and already we’re seeing that they are firing cops, firefighters, school teachers, and others. Even dangerous criminals are getting put on the street.

So of course politicians are looking at the Internet and its inequitable sales taxes as a solution. Here’s how they are unfair:

I used to help run a camera store in San Jose. If I sold you a Canon 5DMKII for, say, $2,500 I’d have to charge you 9.250 percent sales tax, which comes out to $231.25. But if you bought it off of Amazon or from BH Photo you wouldn’t need to pay that (yeah, I know, you are SUPPOSED to pay sales taxes on pretty much everything you buy, but be honest, how many of us pay that if you buy on the Internet. Almost no one).

So, this system is inequitable and is having HUGE consequences on local stores. Of course, that now means Walmart, Target, and other “big box” retailers. Funny, they didn’t care about the local stores when THEY disrupted the marketplace with their lower overheads (which is why the camera store I worked at is no longer in business) but now that their businesses are being threatened they are caring all of a sudden and spending BIG BUCKS lobbying our politicians.

And they are finding welcome ears. Politicians are sponsoring bills all over the place (they estimate that in California alone taxing Internet businesses could collect more than a billion dollars a year). This morning I listened to what they are doing at both state and national levels and it’s pretty clear we’re going to see rules massively changed so states can enforce their tax rules.

The problem is, as Keith Posehn blogged, this could have devastating consequences for a raft of startups.

Go read Keith’s post. It’s eye opening.

Is Silicon Valley about to see a good chunk of its startups done away with to protect the business models of out-of-state retailers (neither Target, BestBuy, nor WalMart are located here)?

All so California politicans can try to solve our government’s budget crisis?

Who will protect our jobs? Hint: no one.