Keep Entrepreneurs Free from Internet Sales Taxes

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Today, the Competitive Enterprise Institute released a new video on Internet sales taxes in which Center for Technology and Innovation Associate Director Jessica Melugin explains why Congress needs to keep states from unfairly burdening small business owners online.

For more background on the issue, see the links below. A transcript of the video follows. 


From yesterday’s brick and mortar “Mom and Pop” shops, to today’s online small businesses, in the past few decades we’ve seen entrepreneurs flourish on the Internet.

Whether it’s buying school supplies or laundry detergent… in the last few years, online businesses have made our lives much more convenient. Things have changed a lot!

This is in large part because they’ve been “untied” from heavy tax burdens and red tape. But government regulation and cronyism threaten to destroy this progress in the blink of an eye.

I’m talking about the Internet Sales Tax. Let me explain.

Imagine you sell jewelry online. You make the jewelry, advertise, pack it and ship it by common carrier from your state, perhaps across state lines to your customers.

An Internet Sales Tax would force you to calculate, collect, and pay sales taxes for every buyer’s home state, not just where your business is. That’s right. In addition to everything else, you’d have to figure out the sales taxes for every sales tax jurisdiction that you sell in—that involves nearly 10,000 different jurisdictions. What a nightmare.

And it gets worse. Some big companies are lobbying for an Internet Sales Tax because it gives them an advantage over small businesses. They have an army of accountants and they know you don’t. To make up for the costs, they know you’ll either have to raise prices or go out of business.

This isn’t fair. It’s Congress’ job to regulate interstate commerce, and federal lawmakers should address this issue, NOT leave it up to the Supreme Court or the states.

CEI has voiced these concerns in the Supreme Court case, South Dakota v Wayfair, arguing that according to the Constitution, a state cannot force a business to collect, calculate, or pay sales taxes if it’s not physically located in that state.

There are solutions that would treat all retailers fairly and keep small businesses untied from tax burdens and costly red tape. The Constitution puts Congress in charge of commerce that crosses state borders and that’s who should find a solution to online sales taxes, not lobbyists and state legislators looking to cash in on online retailers!