States looking to avoid making devastating budget cuts following the Great Recession have turned in recent years to closing tax loopholes, including requiring online retailers with a physical presence in-state to collect state sales taxes. Unsurprisingly, states who have pursued this approach have been fought every step of the way by huge corporations, specifically the online retail giant Amazon. This week, the battle came to a head in California, where lawmakers — who had earlier this year passed a measure requiring large online retailers to collect sales taxes — compromised in the face of a multimillion dollar effort by Amazon to take the issue to the voters in a ballot referendum by agreeing to delay the implementation of the law by one year.
During 2011 legislative sessions, most states chose to close severe budget gaps without revenue increases, instead opting for further damaging and deep cuts to critical education, health care, and social service programs. However, now that most sessions have ended, lawmakers, business leaders, and community groups in a number of states appear to be increasingly interested in taking revenue increases to voters as an alternative.
On Tuesday, President Obama signed the Budget Control Act of 2011 to increase the debt ceiling and avoid default, marking the end of a manufactured crisis that saw the right wing engage in hostage-taking antics that threatened to push the nation toward economic catastrophe. The deal makes it even more apparent that there exists a pernicious dichotomy between Washington's priorities and the actual economic experience of average American families. While the wealth gap continues to widen, unemployment remains abysmally high, and states reel from historic revenue shortfalls, federal discourse over the past month instead centered on the depth and extent of programmatic cuts. And while the exact details are uncertain, it is clear that states stand to lose substantial federal funding for vital programs — such as education, public safety, and elderly care — in the coming years.