watch videos and get up-to-date information on events. facebook.com/booktv. >> you've been watching booktv, 48 hours about programming beginning saturday morning at 8 a.m. eastern to monday morning at 8 a.m. eastern. nonfiction books all weekend every weekend right here on c-span2. ..

>> later, a live discussion on china's incoming government and that nation's growing international role. well, the issue of an internet sales tax has reared up again and, in fact, the u.s. congress and many states are looking at this issue, and that's our topic this week on "the communicators." now, we want to start off by talking with the chairman of the california state board of equalization, jerome horton. mr. horton, california has recently changed how it manages or its taxation policies when it comes to the internet, hasn't it? >> guest: yes, peter, it has. it broadened the definition of what's taxable in california to include online retailers who meet certain criteria. >> host: now, you said you've broadened. how was it before, and now who is included? >> guest: prior to the law, the sales tax didn't apply to companies that had affiliates and worked through various different groups here in the

state of california. the law broadened the definition of who actually qualifies to include those individuals. so now online retailers who have affiliates in the state of california who also have some form of brick and mortar either directly or indirectly working through other groups and partnerships and so forth have nexus in california by the definition of california law and, therefore, are required to collect and report the use tax to the state of california. companies that are now included would include amazon, best buy and walmart that are making sales online. there are other criteria that you have to make a million dollars, i believe, in total revenue and $10,000 a year to california consumers or something along those lines. >> host: now, mr. horton, how

much in revenue does the state of california expect to generate through this new taxation policy, and what's the rate of taxation? >> guest: peter, the rate varies depending on the destination where the product is delivered, but it's somewhere around 9.75%. the total revenue that the state of california anticipated that it was losing was $1.4 billion. we believe that this new law will allow us to collect, generate an additional $317 million a year of which approximately $83 million is attributed to amazon alone. >> host: now, 9.75%, is that the same as the state sales tax? >> guest: the tax rate is exactly the same as the state sales tax. it varies -- the total rate varies because we have in california a destination tax, so it depends on where the product

is actually delivered, and there are other, other transit taxes and bradley burns taxes that are included in the overall rates. >> host: jerome horton is chairman of the california state board of equalization. thank you for giving us an update on what's happening in california. now, we want to introduce you to a couple more folks. first, steve delbianco of a group called net choice, and joe crosby with the retail leaders association. mr. delbianco, what is your group, and what's its position when it comes to this internet sales tax. >> guest: net choice is a coalition of e-commerce companies and online platforms. if you had the authors of our constitution in here today, they'd have said they were really worried 225 years ago about the colonies erecting tariffs and trade barriers to protect their own businesses, so

article i in the u.s. constitution says that the states can't regulate interstate commerce, only congress can. so our position, california has decided to get aggressive at determining who has presence in california, but that's in keeping with this constitutional provision. california is simply saying that if you have presence here through some interesting definitions, you've got to collect for california. so it really doesn't interfere with interstate commerce because they're considering any who has an affiliate this to already be a california company. >> host: so two things. name a group that's -- name a corporation that's a member of netchoice, and are you, so are you sportive of what california has done? >> guest: oh, our members are folks like ebay, paypal, overstock, facebook -- >> host: amazon? >> guest: amazon's not. >> host: okay. >> guest: companies that have platforms for e-commerce that enable a lot of other businesses

to get online as well, and our position is that california has probably taken too aggressive a step at asserting you have presence in california simply because you paid for an advertisement there. but i'm gratified to see that california set a very, very reasonably high, small-seller exception. and they have to do a million a year in california and 10,000 a year through these partnerships and affiliates, and at that level of small-seller exception, i think that's a pretty appropriate one of insulating the small firms from burlds they could never afford to bear. >> host: joe crosby is with the retail leaders association, what's your group's position on an internet sales tax? >> guest: thank you, peter. we represent retailers across the board including some of the larger retailers of the country and in the world, and they're interested in seeing after 20 years of discussion and debate a level playing field created, as steve says, through the congress. the congress ultimately has the

authority to regulate interstate commerce, and we think it's appropriate with some of the simplification included in those legislations to make it so that all retailers above a certain threshold can collect taxes in all the states where taxes are legally due. >> host: so, mr. crosby, what california did, is that simplification in your view and do you support it? >> guest: well, we support the activities california has undertaken, and i think the important thing to understand is california, as steve said, is doing everything it can under the limitations that the supreme court has placed upon the states. ultimately, congressional interaction is necessary, intervention is necessary to insure that retail is treated similarly across the board so that anyone who is selling is collecting tax where the tax is owed and doing so in a way that they can do easily enough with whatever similarlyifications congress might impose. >> host: and we want to introduce you to one more member of our panel, this is cara griffith with state tax notes,

she is the legal editor and our guest reporter. >> thank you. thank you so much for having me. it's a pleasure to talk to you guys and get your thoughts on this. as you both mentioned, we've got several bills pending before congress, and it seems as toe we need -- though we need some sort of federal intervention to get this issue taken care of. are we going to see any movement on the bills that are pending? >> guest: that's a great question. it is a foolhardy thing to protect congressional action especially when they're out now and will be coming back for a relatively short period of time. we're optimistic, we're working very hard. there's a lot of interest, as you know, this year has been unprecedented in terms of the attention congress has given to this, so we're continuing to work dill gently on it and are hopeful that when congress resumes its work, that there'll be an opportunity to move this forward, one of the various bills that is out there. >> guest: yeah, carrie, there has been movement, and i

testified at each of the last two hearings on these bills, and i think that movement is constructive because it's focusing on congress' role on protecting interstate congress and what kind of implications they can require before they allow states to export their burden on businesses that aren't even having in those states. so that's a conversation i'm glad we're having, and we're having an opportunity to talk about multiple rates per state. the states haven't all agreed for a single filing form. so i think we're on the right track, but will it happen in 2012? i doubt it. >> now, in terms of the simplification that we need, um, what are your thoughts? are one of the bills better than another? are there things that congress should focus on that they haven't yet? >> guest: the legislation differs in the kind of minimum simplifications, the quid pro quo it puts on the states in order to let them export their

tax collections. they all include the notion that states have to provide some sort of software. but you see, it's not enough to have software that looks up a rate for a given home address. software's also got to do electronic filing for the states, automatic remittance to every state, and looking beyond software, there has to be compensation for vendors. software installation is expensive, handling questions from customers in 46 different states and handling audits is going to be expensive for business. we're going to need to streamline the rates and definitions. these bills don't even area require every state to have the same definition for items that are taxable. >> now, in terms of providing software, where are the states going to come up with the money to do this? we've such a difficult period of budget area concerns. is that going to be a factor? >> guest: joe and i have both been engaged with the streamline sales project, joe even longer,

and streamline has several software vendors who have agreed to develop, certify and deploy software as long as they get to keep a piece of the sales tax that's collected, and they don't always do all the integration that the vendors and retailers and small businesses of america need. and that's where some more congressional leadership is going to be needed. >> guest: and i think these things can definitely be worked out. for me, it's exciting that after almost 15 years of working on this sitting next to steve here that we're not talking about whether this should be done, but how it should be done, and i think that shows how the debate has evolved. it's been going on for much longer than that. i think there's a general recognition now that there's no principled reason either legally or economically that sales taxes should not be collected on remote sales. and with regard to the simplifications, the bills do vary somewhat, in fact, they vary from bills that have been out there previously. and i think it reflects

congress' normal balancing of the needs of interstate commerce versus the sovereignty rights of the states. and the supreme court has stepped in here, as you know, and said, well, here is the line. but it's up to congress ultimately to determine where the line should be placed, and i think that's what they're doing now in the discussioning that's being engaged on in capitol hill, what is the right balance to insure that the playing field is level for all sellers while not unduly burdening sellers that don't have a physical presence in a state or putting too much of a burden on smaller sellers. so i think all those things are going on right now, and i agree with steve this is moving forward in a productive way and hopeful we'll get activity soon. >> host: but, mr. crosby, if you represent a macy's or a walmart, they sell online plus brick and mortar. >> guest: right. >> host: so where's the lost revenue for them? is there lost revenue for them? >> guest: the revenue is the state's revenue.

so the retailers are simply collect it on behalf of the states. >> host: but one of the arguments that brick and mortar places have said is we lose revenue because it's cheaper to buy online. >> guest: the competitive advantage of a seller that's not required to collect tax has, jerome horton was just talking about the rate on average in california, it's about 9.75%. so you have that differential. of course, the consumer has a legal responsibility to remit taxes where they're not collected from by the retailers, the so-called use tax, but very few folks do that. for most consumers, by now this is your last tax-free shopping day. that's not entirely accurate, it wasn't tax-free, but it wasn't going to be collected from the seller, and then you're up to you and the man in the mere roar to -- mirror to determine whether that's going to be paid or not. >> host: fairness is when everyone plays by the same

rules. every business collects and files sales tax for every place that has a physical presence. so every online company collects and files where they have stores. this is a move to let states force businesses who don't have a presence in their state to collect. and that really shifts a disproportionate burden on those, we call them remote retailers, folks that are out of state. in california i know that mr. horton told us part of his wall was to kaptur walmart -- capture walmart and target.com. what's new is that amazon began collecting a week ago in california, and amazon, as mr. horton said, is a big part of their expected revenue. so if, in fact, the fairness argument and the level playing field is really so important, well, i guess a week into it we'd expect a lot of of stores in california to see growing sales as customers flock into their stores instead of buying

online. well, don't hold your breath. that's not likely to be the case. people buy online for convenience, for choice and for lower prices without even getting into the sales tax. >> host: is e bay, mr. delbianco in your view, an exception since it's often many used items? >> guest: well, i would say that less than half of e pay is used -- ebay is used items. ebay is a platform, like a classified ad, a platform for other sellers, and it's a fabulous platform for companies who would otherwise never reach that audience. and ebay is a california company. but with ebay was only looking out for the interests of small sellers from the united states who occasionally had california purchasers, right? should a small pennsylvania business that uses ebay to reach customers suddenly have to collect, remilt, file and face audits from california because it has a handful of customers? i'm glad they said the answer to that was no.

they had to be doing at least a million dollars in california before they had to start looking in the eyes of the challenging of collecting for that state. >> host: carrie griffith. >> but if you had an ebay seller who reaches that limit, then they are -- >> guest: if they are a million in california plus at least 10,000 a year that they spend with a california web site or publisher which would be the nexus to california since that california business would be in the eyes of the boe, they'd be acting as their agent. >> okay. >> guest: i'd like to just take a moment to get back to the idea of fairness, and fairness is a concept that, ultimately, is interpreted by the individual, and steve posited it as it's only fair because of the physical presence that the retailer has there. but certainly there's fairness when you have a marketplace, a country where there are very few limits to very few barriers to commerce that all of the sellers are affected. and certainly although people shop online or in stores for a variety of reasons, if you just

looked at all the news articles coming out of california, you'd be hard pressed to convince me that not paying tax wasn't one of them because that was deriving all of the reporting on this. i find it hard to believe that the papers would cover it like that if there was, in fact, no interest by consumers. >> guest: if i could follow up on that, it's a great point. but you can also learn a lot about watching what the most affected company is telling its wall street analysts and purr sunt to the securities and exchange commission rules, amazon.com told analysts, they probed them and said you're about to start collecting sales tax, isn't that going to put a dent in your sales? one-seventh of the u.s. economy is the largest market for amazon. the answer was an unequivocal no. they've begun collecting in many states, and they don't see an appreciable hit to their sales. people aren't buying on amazon to avoid the sales tax. they pay the shipping, they have

to stand in line at the post be office or ups store if they want to return something. so it's really not about the sales tax. and if california businesses are looking for to save them, they have another thing coming. the biggest threat is the walmarts and targets and shopping malls, and it's really not the internet. >> but in terms of fairness, and lets kind of take it to the small business, collecting sales tax seems to be a huge burden on -- and some of your small businesses are going to be below some of the thresholds, but still going to be some of those that are relatively small, they've got a national presence because they're online. it seems very buddensome -- burdensome for them to have to figure out their sales tax liability for thousands of jurisdictions. is it fair then to ask them when they stand to lose money that they nonetheless have to collect and remit sales tax in. >> guest: you know, i think certainly there is, obviously, an administrative burden to

collecting sales tax that all sellers that collect sales tax today face, and i think that's one of the important things about the congressional legislation, is making sure that the small business exception is set at a level so as not to burden those small retailers and sufficient not through just the simplifications, but also through the provision of software that works, that those smaller and even mid-sized businesses don't pay any more than necessary to deal with the collection costs. but i think it's also important to note there are small sellers across the country who are supporting this legislation, including small ebay sellers. there are folks on both sides even when you get down to the small business level. t not as if it's monolithic, you have small businesses on both sides of this, and you have large businesses. ebay has not been a fan of this legislation in the past despite the fact it doesn't sell anything, many of its small sellers have come out publicly in favor of this legislation. >> guest: , you know, fairness is a big position of it is where you sit right now. amazon, for instance, will be

collecting for over half the u.s. population by 2014 because they have regressively expanded their presence, distribution centers. in california they've got two distribution centers coming up to get same-day delivery. that means they're collecting in more and more places, and after a while if your already collecting from most of the country, you would probably take any little bit of simplification as a way to reduce your costs, and you also like the idea that it imimposes new burdens on your competitors. a lot of what amazon has done is to shift burdens that it never had to bear before it became a $50 billion company and amazon at this point would love to see those burdens imposed on even the tiniest of its competitors. >> is there, in looking at the bills with their differing thresholds, is there one that is better? do you have an opinion on what the threshold should be to define a small business? >> guest: you know, the streamline sales tax governing board has done a study on what

small businesses were spending out of their own pocket, and it concluded it was about 17 cents for every dollar of tax today collected for businesses that were under a million a year in sales. and that kind of burden was foremost in the mind of flying to come up with -- trying to come up with a small seller exception. over time that number has been all over the map. it's somewhat constructive to take a look at last year based on the united states retailer top 500 that the top 500 retailers here account for about 90% of the uncollected sales tax. so the states could potentially grab 90% of the sales tax that they want to collect and set that small seller exception at the number 500 seller. that's 5 million a year -- 15 million a year in sales. if california's one-seventh of the national economy, a million times seven is seven million, so they've given the equivalent of a $7 million national exemption there. of. >> guest: looking at that, the figure of the washington study

and the three month sales tax study, it think it helpful to boil that down to real numbers. let's say the sales tax rate's about 7%, you're collecting $70,000 in taxes, and if your costs are 17% of that, it's costing you about $10,000 a year or one-tenth of 1% of your sales to comply with sales tack collection. it's not an insignificant sum. win thing i need to -- one thing i need to point out, at least one of the bills sets the threshold at a million. over a million the costs drop quickly and significantly. the other thing, i think, that is important is that study was done before any of the simplifications that have been put in place by the streamlined states or that are contemplated by the federal bills were put in place. presumably, combine with the the provision of sort ware, that will -- software, that will reduce those costs to a burden where something can be dealt with. >> host: steve delbianco and

joe crosby, is there a state in your view that's done it well and done it right? >> guest: many states maintain a single tax rate across the entire state. they don't allow the local cities and counties to add a mosquito abatement tax, they might even restrict states from having sales tax holidays on school supplies. i mean, rules like that are what makes collecting sales tax across the country insanely complex. so my own state of virginia has done a pretty good job of being simple and attractive to businesses. they exempt digital downloads from taxation to encourage that industry, and they're not members of the streamline sales tax because they want to maintain what they call a business-friendly environment. >> guest: i think the balance congress has to strike b, many of those things that make the sales tax more complex are things that consumers and voters

like, sales tax hold days, caps and thresholds so that you're not paying tax on the full price, you pay it on a much reduced price. those are things that consumers and voters like, so it's a balance on one hand between those desires of the voters in the states and the desire for fairness and also, frankly, for the states to be able to maintain their taxes in a way that makes sense so to the extent that the tax is being posed, it's actually being collected. and a number of states have done things like california. all of them, you asked is there a model, i think ultimately it's congress that's the model because there's only so much each individual state can do. there's no way for an individual state to impose it tax system on another state, nor can they solve the larger problem that the supreme court decided without congressional intervention. >> host: cara griffith, next question. >> assuming in the perfect world that we had one of those bills enacted this year, how long would it likely take to get presumably software still has to

be developed and then implemented. any sense of how long that would take? i mean, are we looking at like a five year down the road, or would it actually be next year and we roll it out relatively quickly? >> guest: some of the legislation is in congress, so it requires such trivial things for the states to do that many of them would begin to demand tax collection immediately. after all, software vendors are eager to get paid to cover them. i think the bigger question is not just how long it would take, but how much it would bring in. some of the numbers that we've heard are exor by about the exaggerations -- exorbitant exaggerations. the most this could be is about $12 billion nationwide of new tax revenue. that sounds like a lot, but it's over 50 states, and it represents just about half of 1% of total state and local government tax revenue. this isn't the silver bullet. >> guest: certainly, the

revenues won't save the states from any one tax, but they all certainly would be happy to have that money coming in this on legally-owed taxes that aren't being collected today, and the other thing is this is not simply about revenue, it's about fairness. now, steve, in putting those numbers together you looked at only business to consumer sales. >> guest: that's right. >> guest: so 93 percent of internet commerce is business to business, not business to consumer. there is a substantially higher level of use tax with business to business sales, but it's nowhere near 100%, so i think steve's $12 billion number probably understates it because it excludes 97 percent of e e-commerce. on a base that is, you know, what is that 16 times more than b to c sales, even a small, uncollected amount can generate substantial additional revenue above the 12 billion that steve articulated. >> okay. now, you know, in the more likely scenario that we don't have a bill pass this year, are

we going to see more movement on streamline sales tax? >> guest: next year? it'll be back. it always comes back. the states are in a fiscal crunch. streamline sales tax has lost some of its steam and is badly in need of a reinvigoration, so i think it will come back. and after all, there's a lot of large companies willing to lobby to bring that bill back this year, and they're in alliance with tax collectors who'd like to see the extra revenue. so it will be back next year, and i hope that conversation drives straight this on the minimum simplifications, single audit, being able to challenge the states in federal district court if a state doesn't adhere. >> host: are there any states we should keep an eye on where there could be further legislation or action? >> guest: i think assuming that nothing happens in congress this fall, there'll be some action in the states. a lot of states have already done what they can and are now relying on congress, but i could

see potentially some action in massachusetts and maybe wisconsin and potentially michigan. and there's a few others. pennsylvania, although they've already done some things on the regulatory side. but it will definitely if it doesn't get enacted, it will come back. there's no doubt about that. and i think that the issues that the federal government is dealing with its own finances and the likely impact on state governments of the changes make this a very attractive thing to consider if you're on the one hand going to reduce federal funds to the states, you should at least give the states the tools they need to collect the taxes they're already imposing. >> host: joe crosby is with the retail industry leaders association, steve delbianco is with netchoice, and cara griffith, our guest reporter, is with state tax 2340e9s, the legal editor. thank you all for being on "the communicators." >> guest: thank you, peter. >> thank you. >> watch and engage with c-span's road to the white house coverage as the presidential

candidates meet tonight for their final debate at lynn university in boca raton, florida. coming up next, campaign advisers to president obama and republican presidential candidate mitt romney debate defense policy. then we'll turn to health care as congressional staffers discuss what to expect in 2013. and later, the heritage foundation hosts a discussion examining china's incoming government. >> you're watching c-span2 with politics and public affairs. weekdays featuring live coverage of the u.s. senate. on weeknights, watch key public policy events and every weekend the latest nonfiction authors and books on booktv. you can see past programs and get our schedules at our web site, and you can join in the conversation on social media sites. >> also today the u.s. institute of peace hosts a discussion on society's role