Does your state give your small business back almost 50% of the taxes you paid? I doubt it, but that’s what California gives Best Buy and some other businesses. Today’s Times shares that local municipalities are giving kick backs to businesses in order to compete for business. While competition is healthy, it’s unfair and potentially detrimental to give tax breaks to some companies and not others, and give breaks that may be excessive.
California’s odd tax rules make gaming the system easier than normal. Excerpt:
“Most states allocate sales tax revenue based on the location of the buyer. California is among a handful of states that uses the location of the seller. That effectively lets online retailers pick a city to get the tax revenue — and to sell the rights to the highest bidder.“
Best Buy has been a recent star in the business community for its survival against the big tax cheat Amazon. Now we know one way that it succeeded: it took a page from Amazon’s tax play book.