The controversial California state budget signed by Governor Brown included 200 million dollars in expected revenue from a new tax of internet sales in California. As a result, Amazon immediately terminated its relationship with all of its California affilliates, preventing the collection of tax and actually resulting in a reduction of income (and thus income tax) to California. Of course, this tax is not a land use regulation, but it is a great illustration of the law of unintended consequences. Even regulations which have their desired effect have the tendency to result in other unintended negative consequences. These negative consequences then lead to more regulation and more unintended consequences. California’s internet tax is a useful lesson, as we rarely see the unintended consequences of regulation so quickly and directly.
Posted by: Mark Alpert | June 30, 2011
California Tax Plan Foiled By the Law of Unintended Consequences
Posted in Regulation Nightmares
Not even a little surprised at this turn of events. Keep an eye out for the news about Riverside County trying to skim 2% from all new commercial solar projects. If anyone could screw up the economics of solar photovoltaic power, Riverside County could. When our government employees do not work in a competitive environment, they fail to understand the competition for private sector dollars and how it affects the prosperity of all their constituents. And you thought the sun was free?
By: T Payne on June 30, 2011
at 9:43 pm
Interesting–the advocacy of solar power has its own unintended consequences. It reduces utility taxes. Thus, the County government wants to pass new regulations to recover that income.
By: Mark Alpert on June 30, 2011
at 11:16 pm