Saturday, April 11, 2009

California state taxes-- WWJD?

Tax day, April 15, is this Wednesday. I have to file for federal and state income taxes. The state I live in is California, and I just came across this thing California has called the use tax. I honestly don't remember if I've ever heard of it before (but I've been filing my own taxes for years now, so I may have just blocked it out of my conscious memory).

What is use tax? It's something in addition to the tax on income and in-state purchases. As explained at the link above:

In general, you must pay California use tax if you purchase an item out-of-state (for example, by telephone, over the Internet, by mail, or in person) and
  • The seller does not collect California sales or use tax, and
  • You use, give away, store, or consume the item in this state.
To determine the amount of use tax you owe:
  1. Add the amount of all purchases made from out-of-state or Internet sellers made without payment of California Sales/Use tax. Include only items on which you would have paid sales tax if you had purchased them in California. See the Board of Equalization Website for more information on taxable items.
  2. Look up the use tax rate for the location where you used, gave away, stored, or consumed the items you purchased.
  3. Multiply the amount by the use tax rate.
  4. Subtract any sales or use tax you paid to another state for the items you purchased.
  5. Enter this amount.

So, whether I buy clothes from Victoria's Secret or a digital camera from Amazon or a budgerigar from New Hampshire... I'm supposed to have kept a record of every purchase I made out of state all year. (That's a lot because I buy more on the internet than in retail stores.) Then I'm supposed to look up the tax rates in the cities of Lakewood, Arcadia, Pasadena and wherever else I might have used the various items, and calculate the tax I owe on the stuff. Then I can subtract whatever sales tax I've already paid to all the other states I bought stuff from. Then I pay what's left over to California.

I have the following reflections:

1) The average citizen is not capable of executing this task. I really mean the average person, and not just the dumb folks. It requires good organization, lots of time, lots of motivation, accurate and complex record-keeping, information that's not trivial to locate, and solid math skills. I don't know how a professional tax preparer might handle this, but of course not everyone can be expected to hire a professional.

2) A law that is impossible for most citizens to obey even if they want to: isn't that unjust?

3) It seems a bit desperate and pathetic that a state would try to tax all out-of-state purchases. Of course California with its very high sales tax (8.25% - 10.25% depending on what city you're in) would have the problem of people trying to escape it. Just the other day a co-worker told me he'd order his printer ink from Amazon to avoid California state tax. And of course, with our huge budget shortfall, lawmakers would be casting about for more income.

4) Leaving aside the question of #2, here's my situation. It is not completely impossible for me to try to comply with this law. If I spent all my free time between now and Wednesday on taxes, I believe I could check my checking account and paypal account and credit card accounts from online records, and cobble together a list of out-of-state purchases-- assuming the online records say where each seller was located and what the purchase was, whether it was a taxable item or not and how much state tax I already paid on it. Actually I'm sure the online records don't have all that information, so it's not possible for me to comply fully, but I could come up with an estimate. I could at least try.

5) I'm not going to do it. I simply do not feel the slightest obligation to attempt to obey this stupid, ridiculously difficult tax rule. California won't get it from me-- no, not so much as the forty cents I might owe on that used book I bought for my mom that was shipped to me from Nebraska. I ain't paying no use tax.

6) I don't feel even slightly guilty about it.

7) Now, there are guilty feelings, and then there's guilty knowledge. It's possible to know you've done wrong even though you're not at all sorry about it. What I'm doing now is thinking of my objective situation. Normally I have a pretty sensitive conscience; I attempt to avoid even small sins, and I'm sorry about it when I inevitably fail. But right now I feel an utter lack of remorse-- indeed, even a bit of satisfaction-- even though objectively it seems I'm in the wrong. I'm totally going to go to the Easter Vigil Mass tonight and receive Holy Communion without compunction and with no intention of calculating any use tax in the next three days, or ever.

8) There's a theory which says that laws shouldn't be enacted that go too far ahead of what most people are prepared to obey. Even if a law is good and just in itself, if it's imposed on a populace that views it as ridiculously restrictive, they'll grow contemptuous of law and government in general, and they'll all become lawbreakers and no longer view that as a serious thing. Thus, a good law can have a bad result if unwisely imposed. Prohibition in the 20's and 30's is one common example of backfiring: the prohibitionists wanted to end drunkeness but arguably they only increased vice overall, and quite a few people died in gang wars over the bootleg alcohol business before the thirteen-year experiment ended.

9) But I'm not trying to use all that as my excuse for ignoring this requirement of paying use tax. If use tax violated the natural law I'd have a right, and even a duty, to oppose it-- but that's not the case. I could try to obey this law; I'm just not going to because it's too hard. Maybe this isn't wrong, because as noted in #4, it is literally impossible for me to get all the information I'd need to make the calculations. But that might not excuse me from at least making an estimate.

10) My mom, who wiped my nose when I was three and has been seeing through my nonsense ever since, just walked into the kitchen here at my parents' house, saw me blogging, and asked, "Are you procrastinating instead of doing your taxes?"

11) That would be a yes.


Joe of St. Thérèse said...

My good friend, I've never paid, and am not going to pay that tax either, no, the math isn't difficult, but I am much too lazy, but I'm sure gov't won't mind, they have enough of my money through school anyway.

On tax day I'll be in Santa Ana protesting :)

Eanah said...

The use tax has been around for a while. I've never paid. I never will. If they want my money that badly, they can find a way to make the online businesses calculate and pay each state their owed taxes. If I buy locally, I don't have to cut a separate check for the government. I'm not going to do so for online purchases either.

And don't feel bad. Less than 1% of people actually comply with this law, is the statistic I've heard. You're in good company. :)

Rachel Ann said...

Did you just say CLOTHES at Victoria's Secret? Cause I didn't realize those were clothes...

Christina said...

Hi, I stumbled across your blog, and I just found out about the use tax here in Indiana. The state I moved from had not yet caught on to this new method of separating taxpayers from their money.

Like you I do most of my shopping online and it would take several days to catalogue all my purchases from the past year. I came up with a rough estimate and left it at that. Not even my Catholic guilt could compel me to do more! :) This tax is quite unreasonable and I see it as nothing more than a way for states to "punish" online shoppers.

Rachel Gray said...

Thanks guys. The more I think about it the more egregious it seems, first, that California would feel entitled to tax me just for buying and wearing a pair of jeans from Indiana, and second, that I would actually be expected to spend huge amounts of my time doing tax calculations to figure what I owe.

Rachel Ann, there are actual modest clothes in the Victoria's Secret catalogs-- you have to hunt for them, though. :)