Is Meg Whitman a Tax Cheat?
Has Meg Whitman encouraged tax evasion during her 10-year stint as CEO of the Internet auction house eBay?
Republican Candidate Meg Whitman
Newspaper writer Tom Elias, of the Redding Record, has offered an editorial slightly suggesting that there may be such a concern for eMeg and her claim to be qualified to be the next governor of California.
Elias states:
“One way eBay creates jobs is by encouraging untold thousands of individuals around the world to become sellers of everything from cars and houses to used clothing and fine art. All they need do is sign up with a little personal information that is kept secure by the auction house, then pay a small part of their take to the company. eBay sellers can call themselves whatever they like, and most do not use real names.”
“This makes them very hard for tax collectors to track, both in California and other states and countries. Yet, those states and countries are entitled to collect sales tax from sellers operating within their boundaries, just as they do from other merchants. Order a pair of pants from the Internet clothier Land’s End, for example, and you must pay sales tax even though the company’s physical presence is in Wisconsin.”
So, is former CEO of eBay guilty of tax evasion for not making sure individual responsibility is followed through on by each transaction within the eBay arena?
Elias references a ‘reader’ who delivered some a ‘list of more than 200 California-based eBay sellers’ the reader said he has personally patronized without being asked for a penny in sales tax. Elias says that a ‘random check of sellers’ on the list proved that claim correct.
So a reader and an eBay list has Meg cornered; is this a growing problem for Meg Whitman?
Did eMeg and eBay look past small businesses and their illegal behavior; both the sellers and eBay making millions off of the worldly transactions – without the players inside of the auctioneer arena paying California their fair share of sales tax?
Tom Elias took it the state Board of Equalization, which is responsible for oversight of sales taxes, and spoke with Republican Bill Leonard about this finding.
Elias reports that the BOE knows of this form of tax evasion, one that sees eBay sellers undercut their competition by not charging sales taxes that average more than 9 percent in this state.
Elias added, “That’s like giving all their customers a significant discount. Illegally.”
BOE member Bill Leonard stated when asked of Meg’s possible tax heist:
“The allegation has been made that many hundreds or thousands of its sellers are evading. Some BOE staffers say the taxes evaded total in the billions of dollars over more than 10 years.”
Leonard, a leading supporter of Steve Poizner for governor, confirmed that the tax board asked eBay for lists of its Golden State sellers while Meg was CEO, only to be refused by her department. Leonard said, “If we ask for that information, there’s no law requiring them to provide it,”
Tom Elias concludes his editorial by stating:
“It’s true that every candidate carries some negative baggage into any campaign. The open question: Will public opinion change when voters learn that Whitman’s refusal to allow tax collectors access to her company’s records has contributed substantially to California’s financial plight?”
Before we get to that question, we might want to ask if the voters really believe there is a violation of ethic here; we all know there is no violation of law – even Bill Leonard admitted such.
Can we say that Meg Whitman is personally responsible for millions of small businesses NOT being individually responsible to fulfill their requirements as it relates to sales taxes inside of a sales or service transaction?
Can you charge that eBay is liable if they never touch the tender during the sales?
I am not the biggest eBay’er, but I remember when I signed up to sell my widgets online, I had to sign-off on a disclaimer that states that each, individual auctioneer (seller) and customer (buyer) is ‘personally’ responsible for their tax liabilities.
If Bill Leonard and Tom Elias, and the unamed reader of the newspaper, believe that eBay is illegally ignoring the gathering of sales tax revenue for California, what are they proposing?
Should conservatives slide into the Internet and ask every online auction house like eBay, or Craigslist, for their client-lists, so to inturn knock on the small businesses front door with gun in hand, forcing them to ante up for Sacramento’s coffers?
Consider that eBay is not a retailer. California state law provides exemption for any transaction made by an individual, or organization, that is not a retailer.
If we hold this argument, the state tax collectors can visit the local farmer’s market and ask each tent for personal information from each and every paying customer that day.
Or worse yet, your neighborhood developer can be contacted for the personal information from each resident who participates in the yearly community garage sale.
From my research, no state in the country that allows for online auctioning mandates that the operators oversee the individuals pay sales tax. Nor do any of these states mandate that eBay, or Craigslist, turnover their files of clients personal records.
And you can’t approach eBay themselves, due to the fact that there is not transaction of legal tender under their control, of which they can pay state taxes from. The sales are from one person, to another person – these sales are not ‘three party transactions’.
As I consider the attempt here, much of this seems rather sophomoric – a reach.
I am sure there was immediate excitement when the information was first considered, but after it has been volleyed about, this campaign argument intended to make a ”Poizner Point”, may end up being a “poison pill to swallow” once your average ‘Joe and Jane Ebay’ grasp the slippery-slope of the end scenario.
UPDATE: (October 21st at 12:31p)
Do you (campaign) have any comments on Tom Elias’, or Bill Leonard’s charges here?
From Poizner Campaign Communications Director Jarrod Agen:
“Eric, we’re focused on presenting Steve’s 10-10-10 Plan to cut taxes by 10%, reduce spending by 10%, and begin creating a $10 billion Rainy Day Fund. The voters of California want solutions to the high taxes and reckless spending in Sacramento, so Steve has been outlining a detailed plan to get California back on track.”
One thing that is not specified in the article, but items purchased for resale are exempt from sales tax (the sales tax is shifted when the sale is made to an end-user). There are many companies that do this, especially for high-ticket items. And in effect it increases the sales tax revenue when this occurs (as well as adds jobs). Let me outline an example. Customer Joe goes to Fred’s auto shop to buy a part for his ’57 Chevy. Fred does not have the part. Fred goes to Pat’s Auto part store that does not have part. Pat goes on eBay and purchases part from Clyde’s Chevrolet in Cleveland. Pat sells the part to Fred. Fred sells the part to Joe. At the transaction where Fred sells the part to Joe, sales tax is collected.
In this context, without an eBay, either the transaction may have never happened, and three companies would not have done business. This sort of business takes place more often than you may think. In the networking world (for example) look up Cisco on eBay. There are thousands of items for sale that would not be purchased by the average consumer, and the people that buy and sell the parts are doing hundreds of transactions not just one(kind of like dealing in a commodoties market).
Beyond not completing understanding the full dynamics of eBay, it concerns me that a Poizner supporter of some repute (Bill Leonard) would appear to compromise Conservative core values (government intrusion in commerce) for ambition for power.
One other question that should be asked, can they show that sales tax revenue has gone down since the creation of eBay… or has it gone up? How do they quantify the billions of dollars of “lost tax revenue”?
This is not an issue about the tax laws. It is a classic issue about Whitman’s leadership of Ebay – ignore what in inconvenient and take half-measures to keep up an appearance.
Not everything legal is ethical.
So if it is true that people who sell their used jeans on ebay should collect and forward sales tax, is it also true that people who sell their used jeans at a neighborhood garage sale should collect and forward sales tax? I wonder how many garage sale patrons pay sales tax? I wonder how many garage sale holders collect and forward sales tax to the state? I wonder why Mr. Hague asks so many questions in his opinion piece? I wonder how many opinion writers Mr. Poizner has on his campaign payroll?
Nothing like giving voice to insignificant charges, before giving Whitman a pass at the very end of the post. I am too libertarian to be a supporter, however, I am stunned at the meek dismissal of “charges” here. I am not fan of Whitman; I am skeptical of promise to “create” private sector jobs as governor. I may have to rethink my position.
She refused to assist in government tax collection: great! That is the biggest point in her favor that I have heard to date. Why should eBay be responsible for such things? I would think less of her if she had complied with the BOE and dutifully handed over her client list.
So she didn’t vote. Show me a candidate in the last 20 years -other than McClintock – unwavering in his/her support for free enterprise (worth voting for in other words). That her interest has been reawakened only points to a) her own desire for power, or b) how off-course she perceives this state to be (what was not a priority has become one).
Erik,
A few points; I don’t believe either candidate should be promising “jobs”, they should be promising leadership that ‘allows for profits’. Then you will see new jobs. On the charges here of tax evasion; they are weak, very weak. Meg’s eBay is not a state ‘retailer’, and the sales tax is only applied at the end of the final sales, from the “seller” to the “buyer”. Once again, eBay is neither of those in this event. There is no tax evasion here, there is only a question of individuals who do not show responsibility toward state tax law. Meg was right in not giving over the materials – next it will be the home association forced to give over details of those residents who participated in the neighborhood garage sale. Just wrong.
I have yet to find anyone running for Governor of California who will be able to fix the mess we are in. Arnold was nothing more then a Bulked up Girly Man who lost every battle after he agreed not to smoke his cigar inside his Office.
Any one who can find a way around our IRS code (EBAY) should be seen as a Patriot who cares about our Constitution (FORMER Law of the Land) over stealing the people’s money to buy votes for them selves.
I would like to give Meg 100 points for finding away around the Tax Code but it is just not true. Meg found every way possible to charge for everything on EBAY. I have sold things on EBAY in the past and after all was said and done I was negative $11.00 once.
Steve Posser sounds like Jerry Brown as Jerry Brown is sounding like Ron Reagan.
As long as the State House continues to collect our Taxes every April 15th and we continue to elect people who can buy the election as Governor we will be screwed.
Think about it this way. Meg said on the Eric Hogue show she would spend 100 million dollars to buy a job that pays how much?
Guess I am missing something.
If Whitman wants to “get the economy moving” or “create” private sector jobs, she should propose policies such as: suspend (or at least drastically reduce) the income tax for 1 year, end any state programs designed to prop up asset prices, and work to end some of the more egregious social welfare programs (like Meathead’s First Five). Those might have a chance of doing some good. Every dollar returned to the private sector – which produced it in the first place – is a dollar that can be invested in new business ventures. Savings=investment.
Ebay’s disclaimer of third party liability is obviously above the law of taxation and for that matter any fraud or theft that may occur while representing it’s customers online. Fed and State attorney has had it’s hands full with Ebays crimes of fraud and theft for years, but it continues without any fear of prosecution. But this is not just about taxation, Meg Whitman has spent millions at the chance of siting in the Gov chair. I’ve voted the last 9 presidential elections and I’ve learned that when a prospective candidate fails to disclose thier past there’s usually a reason. People will vote without any thought of what that person has been up to and what their agenda for your future holds. I believe California’s problems are bigger than any one person can change, I believe it started in the 70′s with prop 13. the majority of people who purchased thier homes back then are now elderly and living on fixed incomes. But the new home buyer will pay more than 3 grand a year in taxes while his neighbor pays 250 dollars, and the local city is becoming a demilitarized zone because one person in 10 is trying to make up for lack of funding, while paying 4 times in state employment taxes. For California to get above water your current taxation will have to more than quadrupel. People are leaving CA. for a more effordable living and those staying are buying motorhomes for a future for thier children. CA. currently leads the nation in unemployment, overtaxation and homelessness. And we worry about illegal aliens!