Wyden: Online sales tax hurts small business

The efficient, low-cost model of online sales is scattered across a growing spectrum of retailers and wholesalers in the Rogue Valley.

Such firms stand to absorb a financial blow if the Marketplace Fairness Act becomes law, forcing online sellers to collect sales taxes imposed by 9,600 taxing jurisdictions across the nation.

U.S. Sen. Ron Wyden met with executives whose companies transact much of their business online Tuesday morning at the Motorcycle Superstore headquarters on Chevy Way in Medford. The Democrat heard an array of economic hardships such a law would unleash for retailers, wholesalers, telecoms and others and enlisted their support to halt the bill that already has passed in the U.S. Senate.

The bill would require companies to acquire addresses, personal data and where the products will be consumed from buyers. "In a nutshell," Wyden said, "it forces small businesses to become Internet tax collectors. It's coercive and discriminatory."

Ben Smith, chief financial officer at Fire Mountain Gems in Grants Pass, said traditional brick and mortar stores — major national big box retailers — don't carry the vast selection online sellers offer. "Customers want variety and the best products in general," Smith said. "They need to go online because the big box stores don't carry those products any more."

Smith said selling one product in each state would cost roughly $100,000 per year for the 500-employee firm, where all operations are handled, including fulfillment, warehouse, shipping and call center duties. He told the senator that employees earn $12 to $14 per hour, some much more.

"You would have to now register in 50 states where you've never applied for a business license before," Smith said. "You hope you fill out your paperwork in all 50 states accurately the first time, because it could take you months to get your license approved."

It's going to be a challenge, he said, but Fire Mountain Gems is determined to make it work even though the 122,000 products it sells results in 54.4 billion potential tax rate combinations.

The impact, Wyden said, would trickle down to wholesale customers.

Michael Marans, whose MV Pro Audio company has grown to eight employees, could only shake his head considering the potential costs.

"We aren't even at the point to be considered a small business; we're still at an entrepreneurial level where every waking minute is spent on the business," Marans said. "We're just trying to find enough money to bring in the next bookkeeper or that next piece of software. The idea that somehow a small business has resources that we could draw on at any point in time for additional government compliance is just utter nonsense."

Motorcycle Superstore President Don Becklin, who hosted the event, said the push is by major retailers to gain a competitive advantage against upstarts, including the small operators, the moms and pops of Jackson County, and elsewhere, who have limited resources to handle new requirements.

Major retailers already leverage their size to the hilt from a competitive standpoint, Becklin said. "They are saying everyone needs to fall in line with what (they) are doing so (they) can have additional competitive advantages."

Wyden pointed out Amazon was protected by laws passed by Congress in the 1990s and now backs the legislation that targets upstart competitors.

"Amazon was with you until they got really big and they had physical presence and when they had physical presence, they had to pay taxes," Wyden said. "It matured because we adopted policies that made it possible for small businesses not to get killed in the crib. Big businesses are trying to get through legislation what they aren't able to do through innovation."

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