As an occasional eBay seller, my email box has been filling up with messages urging me to call my Senators to oppose the Marketplace Fairness Act, which would require internet retailers to collect sales taxes even in jurisdictions where they have no physical presence.
As an accountant, I can only imagine the nightmare this is going to cause. I predict that a new service industry will emerge, much like ADP emerged when multi-state payroll became complicated enough to warrant a stand alone speciality.
But this is worse. First of all, this is coming from a Republican. Sneaky Senator Mike Enzi has been quietly trying to push this thing through for 12 freaking years. This time, he has 4 Republican and 16 Democrat cosponsors.
Next, this isn't about making the markets fair. Markets make themselves fair, without any government intervention required. As usual, this is big corporations using the government to destroy any advantage their smaller competition might have.
The way things work now is pretty simple. If a seller has a physical presence in a state, then they are required to collect sales tax on behalf of that state if they are selling their merchandise to a resident of that state. For example, if I sell a book to a fellow Michigander, I am required to collect sales tax. If I sell to a resident of any other state, then I am not.
So, since Amazon does not have a warehouse or an office in Michigan, I do not pay sales tax if I buy from Amazon. I do pay sales tax if I buy from a third party Amazon vendor who happens to live in Michigan.
The bigger retailers think that isn't fair, even though that's been the law for as log as I remember. They believe that buyers use their stores as "showrooms" then go home and buy the item of their desire off the internet specifically to save the sales tax.
Balderdash. While people who shop on-line are indeed cost-driven, the price of postage and handling more than raises the apples-to-apples cost. For example, I can buy a $10 shirt on eBay or at Walmart. If I pick Walmart, I pay 6% - .60 - in sales tax. If I pick eBay, I pay $4.00 in shipping. When prices are the same, clearly shopping locally is the cheaper option most of the time.
And we can't forget the immediate gratification factor. If I buy my shirt at Walmart, not only do I get the benefit of trying it on beforehand, I can drive home and wear it that very night if I choose. But if I choose the internet, I have to wait.
Different customers making different choices based on different factors. I think there's a phrase that describes that, but it isn't coming to me right now...free something?
Nobody wants that, I guess. Especially the states who fund their operations with sales taxes. They have been salivating over the thought of finally getting the chance to tap into a revenue stream that has heretofore been denied them.
They've tried to demand that their citizens pay the tax by passing laws requiring citizens to 'fess up and admit they bought goodies across state lines at tax time. Guess how that worked out?
This national sales tax thing will have the biggest impact on mid-size retailers, as our corporate Congress has wisely used the "divide and conquer" strategy when they exempted small sellers, like me, by including a floor. If a seller doesn't sell more than $500,000 per year, they're exempt.
But that really puts the larger small sellers in a bind. While the mega-corporations already have entire departments devoted to taxes, the single-location operators don't have that luxury, nor do they have the margins to set up and maintain a system like that. Coupled with the fact that they don't get the huge discounts the mega-retailers get when buying merchandise, they're going to be priced out of the markets in no time flat.
Of course, I can't help but notice that a lot of the trade organizations that are pleading with me to lobby on their behalf are the same organizations that didn't hesitate to pressure eBay into giving them huge discounts on their listing and final value fees, at the expense of the smaller sellers. What goes around...
Don't worry, Professional EBay Sellers Association. I called my Senators for you, but they never met a tax they didn't like so it was a pretty unexciting couple of calls. (Seriously, I'll be so glad when Levin is gone - his staff is horribly snotty. I really, really detest those people.) And my Rep isn't any better, so I'm not sure how much help I'm going to be.
But if it's any consolation, barring hyperinflation I'll never sell anywhere near $500,000 in a year, so you can at least rest assured that your price-shopper customers will be in good hands with me.
Until the next tax comes along, I guess.
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