Calif. bill to yank Amazon, e-commerce tax revenue from Valley communities fails

State Senator Steve Glazer’s bill (Senate Bill 1494) aimed at changing the rules for where online sales tax dollars flow is dead, to the relief of Valley communities that host booming e-commerce fulfillment centers.

Driving the news: Glazer argued that treating taxes as returnable to corporations gives them significant bargaining power over local governments, leading to the loss of over $1 billion in tax dollars that could go towards public services in all jurisdictions.

• The opposition to the bill was bipartisan, with some senators representing cities benefiting from the current rules, such as Cupertino which returns 35% of the taxes it collects from Apple, about $4.5 million per year, back to the company.

• The bill sparked a debate about where the sales tax revenue should go – the location of the buyer or the seller. Glazer advocated for the revenue to go to the local government where the seller is located, creating a fairer system of tax allocation.

• Despite bipartisan support, the bill did not pass the 40-member chamber due to 12 senators not voting, which counted as a “no.” Some senators who opposed the bill have communities benefiting from the current tax agreements.

What they’re saying: Senators like Susan Talamantes Eggman and Kelly Seyarto voiced concerns about the bill’s potential impact on smaller communities’ ability to compete for major business developers and the distribution of tax-sharing agreements.

• “This bill is about what local governments can do with the resources they have,” Eggman said. “So I’ll tell you some of the winners, and you tell me if they’re the big guys or not. City of Dinuba, city of Fresno, city of Merced … city of Tracy, city of Stockton. You know who those folks are? The little guys that live on that corridor, that breathe that diesel, that smell that gas, that have a lot of our jobs taken.”

• The League of California Cities opposed the bill, arguing that its members had agreed to place a cap on corporate kickbacks, provide enhanced transparency, and make equitable changes in tax distribution.