Tuesday, May 07, 2013

5 Reasons Why The Internet Sales Tax Must Die

I'm appalled at the Senate's approach to an internet sales tax. Making millions of small businesses accountable to thousands of local sales tax district is a ridiculous way to implement an internet sales tax. Although an ardent Democrat, I find myself totally connected to the Republican's on this issue.

This bill sharply tips the balance toward local stores and away from internet businesses. Here are five reasons why an online Sales Tax is a bad idea.

First, internet businesses requires the use of the U.S. mail, so there is immediately that additional expense for customers of an online business. This is an expense local retailers do not have.

Second, there is always the delay of 3 days for my products to arrive through the mail when shopping with an internet business. Local businesses can provide the product immediately.

Third, internet businesses will be subject to audits and thousands of local tax jurisdictions.  Local merchants are only ever subject to their local tax authorities.

Fourth, the job of reporting to thousands of local tax jurisdictions will be onerous, to say the least.  Cutting hundreds of checks to these agencies will be a huge burden.

Fifth, proponents say that this will only affect businesses who have $1 million or more in revenue.  Revenue is a stupid way to trigger a tax.  A software company with $1 million in revenue will have a much greater margin than an internet retailer who does $1 million in revenue but has a 10% margin.   Number of employees is a much better way to trigger any kind of a tax, not simple revenue. Clearly, this measure was not well thought out.

The playing field is already "level," so do not buy into the non-sense that the proponents of this bill are spreading. It's not true.

Lastly, because of the huge expense necessary to comply with this bill, many internet retailers will probably be forced to sell their products through a large 3rd party, such as Amazon.com. They will take 20-30% of their business right off the top. Is there any question in your mind about why Amazon is pushing this bill.  Clearly, Amazon is moving to squash their small business competition by making the playing field so onerous that only they and their partners can participate.

Reject the online sales tax.

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