3 Reasons We Shouldn’t Tax E-Commerce

Reason Number One: According to a recent survey, 61% of participants disagreed with the proposed Marketplace Fairness Act. That’s over half of our country’s population. If the bill goes through, 44% of voters say they will buy less online. Imagine the potential consequences! If people start refusing to buy online because they’ll have to pay sales tax, we’ll start seeing a serious decline in our recovering economy. Sure, they can spend that same money in a brick-and-mortar store, but they can also choose to go make their purchases in a state with no sales tax! It’s kind of a no-brainer for me, at least. Why pay sales tax if you can avoid it altogether? Nobody likes taxes, especially in our current economic situation.

Reason Number Two: Giant retailers such as Ebay and Etsy, with private seller communities, fear the MFA will hurt these smaller entities. The MFA requires online companies with annual sales over $1 million to collect state and sales tax on all purchases. Some of these sellers have net profits well below that $1 million mark (or no profit at all), yet on paper have surpassed it with their gross sales and they will still be required to collect those taxes (http://marketingland.com/online-sales-tax-whyecommerce-companies-are-on-both-sides-of-the-debate-43395). Ultimately, this could have a very negative impact on their financial well-being. Regardless of the MFA’s good intentions, it will still be hurting the little people.

Reason Number Three: One argument for the MFA is that it will level the economic playing field, giving smaller brick-and-mortar businesses a better chance at competing with the online companies which haven’t been charging sales tax. However, technically the playing field is already level. Brick-and-mortar businesses and E-commerce businesses each pay state and sales tax (as long as they have a Nexus), according to state and federal tax laws. The MFA will just impose more regulations and further complicate already complicated tax procedures and requirements. Additionally, The MFA requires all online retailers use specific software to assist with the new tax collecting requirements, which means hiring more specially trained employees – yet another drain on finances and human resources.

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