May 7, 2013

A Net Loss For Small Businesses

The Senate will vote today to pass the Marketplace Fairness Act, an Internet sales tax bill. If this bill passes, online retailers will be required to collect sales taxes for the state where they ship goods. Previously, stores were only required to collect sales tax on goods shipped to states where they have a physical presence, however now state governments would obtain the ability to collect an Internet sales tax from businesses headquartered outside of their respective state borders.

Big box retailers support this tax arguing that out-of-state retailers have an unfair advantage over brick and mortar stores, as they are not required to collect sales tax owed on products they sell. However, small business owners object to a national sales tax on the internet. This tax would be another way of redistributing wealth from the private sector to the public sector. Additionally, this would create complicated administrative issues, imposing audits, compliance costs and lost wages for small businesses. Tod Cohen, the Vice President of eBay agrees that this tax is bad for small business, “These are very, very small businesses that employ less than 10 people, or even less than 20 people, and for them to take the amount of time and effort necessary to comply with all the laws, and more importantly to deal with the enforcement of those laws, puts them at a real disadvantage to their larger competitors.” Washington, for the sake of the small business economy and the health and well-being of Americans, should stop overtaking its citizens and immediately reduce the size of government. The internet and technological innovation has been one of the bright shining stars for the United States and the global economy over the last three decades. The Government cannot wait to get its hands on some of those cash flows and figure out new and innovative ways to maintain its size, largess and growth.