“He taxes me!” To paraphrase one captain quoting another. In this case, it's not a white whale, or a maverick starship captain to be blamed, but the government. In this case, I mean state and local governments with the assistance of the United States Congress. Or at least, that's what they're trying to do.

 

In a previous blog entry, I brought up the topic of the Marketplace Fairness Act. To briefly recap, the MFA would empower states to collect sales taxes on internet sales originating from out of state but sold within that state, and place the burden of collecting it on the seller. To rephrase that, someone in Richmond, Virginia could be a server off our website, here in Georgia, and Virginia could force us to collect the sales tax on the transaction and pay it to Virginia.

 

The way things currently work, a business only has to collect sales tax on internet sales if they have an actual presence within that state. To put it another way, if you buy an anvil from Acme's online catalog, Acme only has to collect the sales tax if they also have a store in your state, or distribution center, or other presence.

 

As I said in my previous posts, here at EZ Trade Live, we're strongly opposed to this legislation, which has passed the Senate, and is currently in the House of Representatives. This legislation is bad for numerous reasons, but I'm going to focus on two in particular, and I hope you'll be convinced to contact your Representative and urge them to vote against this bill.

 

The first of these is related to a slogan that's near and dear to the heart of many a patriotic American, and ironically enough, it's paraphrased on the license plates issued by city of Washington DC. The phrase is “No taxation without representation.” In practice, that's what happens when a business is forced to collect sales tax for other states, and we would be answerable to those states' departments of revenue, without any recourse to elected representation. Another state could audit us, and we wouldn't be able to respond at the ballot box by voting for a candidate who would try to control the bureaucracy. This seems wholly unjust to me.

 

The other consideration I want to bring up is the issue of compliance. If this were to pass, we would now be responsible for collecting sales taxes in all of the other states that assess such taxes. We would have to invest time, money, and energy into knowing the different rates, collecting the taxes, sending them to the appropriate agencies, documenting it, keeping records, and so on. This is a huge burden on a small business like ours. There are several major corporations who support this legislation, and this is the dirty little secret behind their support. These companies already have resources dedicated to this task, due to having stores or other facilities in different states, so there won't be any added compliance cost for them. It would make it much harder for smaller businesses, like ours, to compete against them. The regulatory structure in this country already favors large, established businesses. Why should we permit our government to further aid them?