Andy Logan, a resident of Stillwater and owner of Performance Product Technologies, an online business based in Stillwater, recently penned an op-ed for the Stillwater News Press that argued the Marketplace Fairness Act would seriously hurt small businesses. The Senate passed Marketplace Fairness Act would force Internet enabled small businesses to become tax collectors for every state in the nation. In addition, it would make businesses vulnerable to audits from tax enforcement agents from states where the business is not even located. Senate leadership has indicated their intent to move this bill after the midterm elections on November 4th.
“One of the many issues we are facing with the upcoming elections and voting schedule is the Marketplace Fairness Act, which would implement an Internet sales tax on all online sales, regardless of whether a business has a physical presence in that state, “ wrote Logan. “As a small business owner I am concerned with the potential consequences that this legislation could have on small business.”
Hundreds of thousands of small businesses like Logan’s would be affected if the Marketplace Fairness Act were to become law. Logan argues that the “small seller exception” included in the legislation does nothing to protect businesses across the country that are just trying to compete. “In today’s marketplace, $1 million is simply far too low to properly protect small businesses from the burdens of collecting tax in states where they have no physical presence. The number is also well below what the Small Business Administration defines as a small business. In fact, renowned economist Jon Orszag released a study proving that the $1 million exemption is a baseless number that would not properly cover small businesses. As a rough estimate for a business that generates $3M in annual revenue, if they operate on a 20 percent gross margin that leaves $600K to cover salary, rent, utilities, etc. Most businesses under $10M are operating with a limited number of employees as it is. As you can clearly see this does not leave the necessary margin to cover the cost of adding new software plus an additional salary for an additional finance person plus lower sales margins, etc.”
Learn more about the Marketplace Fairness Act and its impact on businesses like Performance Product Technologies.