Internet Sales Tax would hurt Mom & Pop Businesses

This week the Senate is expected to vote on an Internet sales tax bill that would hurt small business and job growth in America. For small businesses, there is nothing fair about the Marketplace Fairness Act. The legislation stems from a fight between big bricks-and-mortar national retailers and big online retailers, all of whom seem unconcerned that small enterprises—and the jobs they create—are going to be collateral damage. 

The trouble with the bill is that it treats mom-and-pop businesses the same way as it does multibillion-dollar retailers. Yet a small business with a dozen employees simply can't be lumped in with national behemoths such as Amazon and retail chains that have warehouses and stores around the country. The Marketplace Fairness Act should include an exception for small businesses. Why? Because otherwise an unfair burden will be placed on them.

Today small businesses that operate online are responsible for collecting sales taxes on purchases made in the state where they are located. That is fair. But the proposed bill would require them to collect sales taxes on behalf of every state where they make a sale. That would make it difficult, if not impossible, for them to succeed. 

While compromise seems like a foreign concept in Washington these days, eBay is advocating a simple solution. Small businesses with fewer than 50 employees or with less than $10 million in annual out-of-state sales should be exempt from the chore of collecting sales taxes nationwide. These are reasonable exemptions, equivalent to other federal standards, such as those set by the Affordable Care Act and the Treasury Department's Office of Tax Analysis.

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