Some in Congress pushing for online sales tax

It’s Small Business Saturday, and I figured this subject was appropriate. For years I’ve been closely involved with retail sales at a local level. I’ve struggled with the thought of Internet retailers selling the same products or services online for a lower cost. But – even putting aside the constitutional argument – I do not support a sales tax for out-of-state online purchases.

As a retailer you compete against other retail stores and Internet shops on price, quality and service. When it comes to price, I know majority of customers are willing to pay more to either support a local store, to receive better service or for convenience. I am one of those shoppers, and quite honestly paying the local or state sales tax – 6.35% in Connecticut – is only a minor consideration when it comes to a purchase.

We are, after all, responsible for paying the Use Tax on products we purchase out-of-state are we not?

Update: Scroll down for information on the US Constitution’s Export Taxation Clause.

The most important factors for me is to be able to find what I need easily, and the ability to get good advice from knowledgable people. Could it be possible many businesses are pointing to the sales tax they must collect as a crutch because they do not want to stock a wider variety or are unwilling to become product encyclopedias?

Local retailers need to do their market homework, stock appropriately and invest in self and staff training. Sorry, being able to correctly provide change won’t cut it, sales people need to know how to sell and know the products they are selling.

A question for local retailers. If the online sales tax is implemented and people continue to buy products online, what will you complain about next?

Retailers Push for Online Sales Tax

Retailers and retail advocacy groups are attempting to use the enormous online consumption of “Cyber Monday”, the Monday after Thanksgiving when many online shops offer deep discounts to consumers, to bolster their argument.

Alison Joseph, a spokeswoman for the Alliance for Main Street Fairness, said:

This should be the last holiday shopping season that Main Street businesses have to compete on a playing field that is not level. Cyber Monday is just another opportunity for out-of-state, online-only retailers to exploit a government-sanctioned loophole that puts local businesses at a significant disadvantage over brick-and-mortar retailers,” she added. …

Let’s deconstruct the above. First make note of the name of the special interest group – Main Street FairnessI’m sorry, the world is not fair and you can’t make it fair through legislation. Suck it up.

Next, let’s take the sales tax completely off the table and discuss wholesale quantity discount on products. Micro small businesses are going to have a tough time competing with regional grocery stores simply because vendors give quantity discounts. Is it fair the Nilla Wafer people provide a lower price on their delicious wafer-style cookies – that I crunch up and use as a base for my cheesecake – if you buy 1,000 boxes?

I could come up with at least a dozen more examples on why smaller businesses are at a competitive price disadvantage. Could you imagine the legislation possibilities?

Of course like any sweeping legislation that makes complete sense … we have the exemptions.

Sens. Dick Durbin (D-IL), Mike Enzi (R-WY) and Lamar Alexander (R-TN) have authored the Marketplace Fairness Act, which would empower states to collect taxes on online purchases. Businesses that earn less than $500,000 annually in out-of-state sales would be exempted.

There’s that word fairness again. Why exactly are they exempting businesses that earn less than a half million? Are they somehow not a threat to local businesses who have to collect sales tax? I assume the reasoning here would be the outrageous cost to implement the law for Internet retailers.

Can you imagine having to manage the collection of hundreds of different sales taxes and ensuring the correct dollar amounts get to the right jurisdictions? How absurd would it be to be an Internet retailer who sold one item to a Colorado resident for $9.95 and having to send the state 29 cents?

Small businesses must do a lot of things to ensure success and there are endless ways they can fail. Remember, you’re not competing on price alone, which provides you an opportunity to blow us all away with the quality of your product and the service you provide.

As an update, I’d like to reference Article 1, Section 9, Clause 5 of the United States Constitution.

No Tax or Duty shall be laid on Articles exported from any State.

From the Heritage Guide to the Constitution.

Although the original purpose of the Export Taxation Clause was to prevent sectional favoritism by Congress, the Court has chosen to enforce the flat ban that the Framers placed into the Constitution’s text, rather than seeking to measure an export tax’s discriminatory effect. Under the Commerce Clause, Congress retains the power to regulate exports, even to the extent of creating embargoes. It may not, however, utilize export taxes as a means of regulation.

It seems clear the Constitution would need to be amended to allow for states to collect taxes on purchases made online from out-of-state retailers. That said, I also want to make the point the push here is not really to make things “fair” for local businesses competing with out-of-state Internet retailers, it’s to get more tax revenue.

18 replies
  1. Norwalker
    Norwalker says:

    Sorry, but your opinion seems way off-base, in my opinion.

    Before getting to the merit (or lack of merit) in most of your arguments, I am compelled to first challenge the assertion thrown out in the middle of your piece:
    “… the world is not fair, and you can’t make it fair through legislation.”

    Out of all the statements made in your piece, this one deserves the most immediate response. I understand you are paraphrasing a common parental admonishion, but taking such a cavalier tone to singularly dismiss the entire role and purpose Congress is at once both irresponsible and reckless.

    Although you clearly dislike the term “fairness,” you should not dismiss this noble goal which lives at the core of our democracy. It is through the pursiut and defense of fairness that Congress has enacted important legislation since our founding, including allowing women to vote, the abolotion of slavery, ?the right to bear arms, and even the right to freedom of speech. Fairness is such a fundamental aspiration of our democracy that the concept is carved in 15 foot tall letters above the entrance to our Supreme Court, which says: “Equal Justice Under Law.”

    When discussing/editorializing on matters of interstate commerce and…

    • PaulBartomioli
      PaulBartomioli says:

      “Fairness” most certainly IS NOT at the “core of our democracy.” Democracy at its core is the tyranny of the majority over the minority. ?IF the majority of the people, 50% + 1 favor a certain goal, it becomes the rule, law, whatever.?

      IF life were “fair” could Sam Walton have built his company? ?I remember when he was still building Wal-Mart in size. He was quoted as saying that one day, he would be bigger than Sears. ?At that time, Sears was the largest retailer in the world. ?Now, they are facing bankruptcy.

      Congress does not vote in the interest of fairness. ?By the way, mixing rights and privileges does nothing to bolster your argument. ?Even the election of Obama was inevitable; personally, I thought we would see a woman as president first.

      Life is not fair; suck it up.?

  2. Norwalker
    Norwalker says:

    It cut me off, but don’t worry, I’m almost done…

    When discussing/editorializing on matters of interstate commerce and federal law, no one should underestimate or dismiss the aspirational importance of “fairness.”

    • Steve McGough
      Steve McGough says:

      “Fair” enough. I certainly do not “dislike” the term fairness, I just don’t want the federal government getting involved in every little thing to try to make things “fair.” The federal government is there to ensure Life, Liberty and the?Pursuit?of Happiness. At what point do you draw the line with the government getting involved? We are not talking about equal justice here, we’re talking about the price of products.

      This entire scheme has it’s final end-point to simply try to get more tax revenue. ?It has nothing to do with fairness simply because the online industry is not going away and local businesses will still need to compete with them on many other levels including base price, quality and service.

    • Dimsdale
      Dimsdale says:

      How can “fairness” be aspirational with the progressive tax code?? You earn more, they don’t just take proportionately more away from you, they apply “social justice” to make you pay even more “because you can afford it”.
      ?
      The government directly or indirectly crushes aspiration.

  3. Dimsdale
    Dimsdale says:

    What about the other side or the coin? ?States that house, and therefore take their measure of taxes from the online business and the residents of their state benefit quite nicely. ?

    Perhaps if CT was more business friendly (or at all, for that matter), they could attract the brick and mortar end of online business and take their piece of the action fairly instead of through absurd “use” taxes. ?Attract the businesses instead of chasing them away.

    What a novel concept! ?One the feds would do well to consider.?

  4. JBS
    JBS says:

    This has been in the works for years. It is all about government getting more money. To spend. A direct analogy would be giving more booze to an alcoholic. It is not going to make him/her better, the alcoholic will guzzle your booze and hit you up for more. So it is with the government. Plus, it will not make government any smaller!
    The Regime, CongressCritters included, has shown NO real interest in in cutting spending. Their only interest is in pandering to constituency groups. Show a Critter a tax dollar and he/she will spend it twenty or more times, before it is even collected. Resistance to this onerous tax is not about fairness, it is about what is legal under the Constitution.
    If businesses can participate in electronic debiting, it can be figured out how to split the take and send it to the government. Which brings me to on-line businesses (on other state sales) already having to pay taxes to individual states. California, Connecticut, etc., come to mind. How can that be legal? Didn’t Amazon move out of Connecticut because of a taxing dispute?
    We need local businesses, I need their product knowledge. I rely on a small business person’s integrity. A big box store can sell mass quantities of an…

    • JBS
      JBS says:

      . . . item for a lower price but it flunks on giving accurate advise.
      Or, try to get installation information, for example, from the FedEx or UPS delivery person! NOT!
      Prediction: This online tax may pass with some Constitutional rewriting. What I think will eventually pass is national sales tax (however you want to name it!). The federal government will get a cut of every transaction, everyone will pay and pay. And, the Critters, will spend and spend!!!!! It’s open season on small businesses and individuals.
      Blogging tax next?
      ?

      • chetisyourbet
        chetisyourbet says:

        They have effectively rewrote and taken away all of our other constitutional rights despite Article 9’s clear statement.?
        Basically Article 9 says they cannot pass a law that removes one of our rights.? We have no rights any more as they were taken away by amendment after amendment.

  5. chetisyourbet
    chetisyourbet says:

    “Fairness” is one of those Agenda 21, Trilateral commission, Progressive phrase terms that embody socialistic confines on the people

  6. kateinmaine
    kateinmaine says:

    a few things are getting lost here–1) most shop online for convenience (avoiding crowds, insufficient inventory and ignorant staff are an added plus), 2) collecting/non-collecting of taxes make no competitive difference in the quality/viability of business (it’s far more disturbing that businesses willingly allow themselves to be (and actually finance being)? collection agents of the state/local gov’t [while paying hefty business taxes for the privilege, i might add]) and 3) as steve says, it’s all about revenue–gobs and gobs of it.

  7. kateinmaine
    kateinmaine says:

    ok, now let’s delve into congress’ prime directive being ‘fairness’ (a term i abhor).? um, wha?? used to be that grade schoolers learned that the federal gov’t was made up of 3 branches–executive, legislative (congress) and judicial.? gov’t was privileged to function on behalf of the people, per constitutional constraints (including the right/duty of the people to dissolve said gov’t when it ceased to meet the standard).? the function of the legislative branch was to make laws in line with constitutional protections.? ‘fair’ is a schoolyard term, inherently emotional and subject to interpretation.? who gets to decide what is ‘fair’?? what is the basis/method used?? ‘equitable’ is the adult, pragmatic equivalent.? the nature and function of gov’t has to be devoid of emotion–otherwise it does not serve all equitably.? the ‘noble’, ‘aspirational importance’ of ‘fairness’, along with ‘social justice’ do more to harm the common good than elevate special interests–this is proven time and again.? ‘equal protection under the law’ means that no one/group is special, or has greater/fewer rights/privileges. this is also off topic–but that’s what o’s cyberstalkers mission is–recognize it when you see it.

  8. joe_m
    joe_m says:

    “Fairness” is the excuse to raise more money. We have run away governments and a lack of will by the people to rein it in. We are all just slaves, most, with the illusion of freedom.

    It’s all fun and games until the collapse.?

    • Dimsdale
      Dimsdale says:

      “Fairness” is just a dog whistle for “social justice”, or, more precisely, more of the usual class warfare rhetoric the left ascribes to. ? They all want to sock it to the rich because “they can afford it”.
      ?
      Well, I think everyone, repeat, everyone, can afford to pay taxes and participate in our republic.? No more free rides; skin in the game time.

  9. yeah
    yeah says:

    Since when does the government exist to “make things fair?”?
    This is all about “we’ve exhausted our revenue streams and we need more in order to keep up the unsustainable levels of spending” which is what US governments at all levels are ALL ABOUT.? (Dont worry, Europe and many other places abuse it, too.)? Promises and vote buying, even running up debt is not enough to keep this beast running?!?
    Governments need to GTFO of people’s lives.

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