A December 29, 2011 press release from Amazon states: "Throughout December, customers purchased well over 1 million Kindle devices per week." That seems like a lot for just one month, even if it is December. Assuming the new owners prefer to read books on their Kindle, they will purchase electronic books. In many states, including California, the electronic books are not subject to sales tax. This is because the California sales tax only applies to tangible personal property. So, even though the end result is that both the buyer of an electronic book and the buyer of a tangible book, have a book to read, only the buyer of the tangible book is charged sales tax. This is not a nexus issue, it is an "eroding tax base" issue and one of growing significance.
I suspect that sales of Kindles and Nooks and iPads will continue to increase. The books downloaded onto these devices represents consumption and should be subject to sales tax. California has serious budget problems. One contributing factor is the eroding sales tax collections caused by having a 19th century sales tax in a 21st century economy.
It is way past time to broaden the sales tax to also apply to almost all personal consumption, Raising the sales tax rate fails to address the underlying problem. The problem is the base, not the rate.
What do you think?
Monday, January 2, 2012
Over 4 Million Kindles Sold in December 2011
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