An online sales tax would kill small businesses jobs

By Lance Trebesch
May 9, 2013

Harlowton, Montana (population 984), is home to TicketPrinting.com, where we create tens of thousands of tickets a day for hundreds of customers across America. Like millions of small businesses around the country, our company leverages the power of the Internet to transcend location and do business on a national level. But our small business, like millions of others, is threatened by the Internet sales tax bill under consideration by Congress.

The legislation, which passed the Senate and now awaits action in the House of Representatives, claims to eliminate an unfair advantage for those who do business online. Instead, its effect will be to reduce e-commerce overall.

Currently, every person in America has the opportunity to do business on the Web. If the current Internet sales tax bill passes, this opportunity will be denied to many entrepreneurs and small business owners.

Small business accounts for more than half of all sales and jobs in the United States. While big business slashed employee rosters, small business created 66 percent of all net new jobs since the 1970s and more than 8 million new jobs since 1990, according to the Small Business Administration, a federal agency. Small businesses keep our economy growing, and Internet opportunities encourage small business, allowing almost anyone to pursue the American dream by reaching beyond a local market to do business on a national level and in the process create jobs.

An Internet sales tax that isn’t one rate, with one filing, accountable to one government agency, will kill this dream.

This legislation would conscript every small business with a website, requiring them to collect taxes for more than 9,600 sales tax jurisdictions and 45 states. It would do so with zero restrictions on the states and zero protections for small businesses.

This is a job killer for small businesses like mine. Internet sales have offered small business owners like me a chance to develop innovative business models. Being less dependent on my local market meant I could build my business, create more jobs and find long-term success. Hiring accountants and lawyers to deal with new regulations means the opposite.

But if small businesses are required to collect Internet sales taxes for remote jurisdictions, the cost and the risk will be too high for millions. The cost will be too high to set up a website, to comply with the legislation and to face the real risk of being audited by scores of state tax collectors. The Internet – for all businesses – has been this country’s innovation engine. Soon, the price of innovation may become too high.

Filing tax returns is costly and time consuming. The proposed Internet sales tax will necessitate my filing up to 45 returns a month, more than 500 a year. Each state has different filing laws and procedures. Needless to say, my risk of audit (along with the risk of lawsuit and bank account seizure by aggressive out-of-state tax agents) will increase 45 times. I’ll have to hire one to two full-time bookkeepers, plus an outside CPA. I’ll have to implement software (which is not guaranteed for accuracy or protection from audits) costing me tens of thousands of dollars, maybe more, and devote extra days each month to additional paperwork, communications and hassles with 45 state tax departments.

From this perspective, creating e-commerce websites – making our small businesses stronger ‑ is a lot less attractive. Do I still stand to gain by serving customers outside my state? This legislation puts me and millions of other small business owners at risk. Compliance costs, along with the costs of accounting and auditing, will cut growth investment. The result will be a less robust market and the death of many small businesses. In addition, consumers will have fewer choices and higher taxes.

Regardless of how you feel about an Internet sales tax in principle, this bill is deeply flawed ‑ yet another unfunded mandate from Congress, with broad language that offers no concession to or protection of small business owners across America.

The proposed Internet sales tax levies a toll on e-commerce, marooning small businesses in their local markets if they lack the time or funds, or simply cannot afford the risk of compliance. In the age of the Internet, it represents an enormous dinosaur step backward for small business growth, jobs creation and the economy.

As our economy’s job engine for the last 40 years, small business gets a lot of lip service from politicians. But if Congress and state governments truly cared about small businesses, they would let this Internet sales tax die a quick death before it derails thousands of businesses, if not the economy, and instead focus on ways they can help small business continue to be the net creator of jobs in America.

755 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

magnificent publish, very informative. I’m wondering why the opposite experts of this sector do not notice this. You should continue your writing. I am sure, you have a huge readers’ base already!

Just wish to say your article is as amazing. The clearness in your post is just great and i could assume you are an expert on this subject. Well with your permission let me to grab your feed to keep updated with forthcoming post. Thanks a million and please continue the gratifying work.

Hello! I realize this is somewhat off-topic but I needed to ask. Does building a well-established blog such as yours take a lot of work? I’m brand new to running a blog but I do write in my journal daily. I’d like to start a blog so I can share my personal experience and feelings online. Please let me know if you have any recommendations or tips for new aspiring blog owners. Thankyou!|

Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest twitter updates. I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.|

Posted by best seo service | Report as abusive

There is certainly a great deal to know about this topic. I really like all the points you’ve made.

This site certainly has all the information and facts I wanted about this subject and didn’t know who to ask.

Nice post. I was checking continuously this weblog and I’m impressed! Very useful info specially the remaining section :) I take care of such info a lot. I used to be seeking this certain information for a long time. Thank you and good luck. |

It’s very trouble-free to find out any topic on net as compared to books, as I found this paragraph at this web site.|

I’m not sure where you are getting your info, but great topic. I needs to spend some time learning more or understanding more. Thanks for fantastic information I was looking for this info for my mission.|

I relish, result in I discovered exactly what I was taking a look for. You’ve ended my four day long hunt! God Bless you man. Have a nice day. Bye|

Hello there! This article could not be written much better! Reading through this post reminds me of my previous roommate! He always kept talking about this. I most certainly will send this post to him. Pretty sure he’ll have a good read. I appreciate you for sharing!

Wow, superb blog layout! How long have you been blogging for? you make blogging look easy. The overall look of your website is magnificent, let alone the content!

If you want to improve your knowledge only keep visiting this site and be updated with the most recent information posted here.|

bookmarked!!, I really like your web site!

Peculiar article, totally what I was looking for.|