Proponents of a quartet of bills that would close a sales tax loophole exploited by out-of-state online retailers such as Amazon.com are wildly exaggerating the tax revenue they will generate, if passed.
The math always looks good on the surface. If we double the tax rate, tax revenues will also double. You can even paper over California's budget gap this way. But in practice, tax revenues often decrease when taxes are increased--leading to disappointing results, larger than anticipated budget deficits, and the predictable call from clueless politicians for higher taxes.
Berkeley Assemblywoman Nancy Skinner is one such politician. She estimates that her AB 153, one of the four "Amazon bills" winding through Sacramento, will raise between $250 million and $500 million for cash-strapped California. [continue reading]