Will the Marketplace Fairness Act hinder small businesses?
How would a small business be affected by the addition of online sales tax?
Recent news that the United States Senate has moved forward on the Marketplace Fairness Act, a piece of legislation designed to “level the playing field” between online and brick-and-mortar retailers, has brought up new questions about how small businesses are affected by legislation that seems to be designed around retail giants. The Marketplace Fairness Act would implement taxes on all online sales, which would create entirely new considerations for web retailers. Some online stores see the lack of taxation as an avenue to mark up prices; others see it as a form of customer satisfaction that helps drive business to their web stores. Whatever the case may be, the Fairness Act has struck controversy among analysts, politicians, and businesspeople in the retail industry around the nation.
Although the Act would generate an estimated $11 billion in tax revenue for State and local governments nationwide, many argue that its goal to create fairness in the marketplace is not being reached, and that, in fact, the Act would hinder fairness in a different way. The concern raised is that in the attempt to create fairness between brick-and-mortar and online stores, the Marketplace Fairness Act creates an entirely new divide between large and small businesses.
Small businesses in the retail industry are already at a significant disadvantage. There are far fewer regulations and incentives in place for small retailers to thrive than in other sectors, and with giants like Wal-Mart and Amazon having the capability to beat most competitors on pricing, convenience, and quality, it’s hard enough for a small business to stay afloat. With the Marketplace Fairness Act, many are concerned that new requirements to adhere to multiple state tax laws when shipping across borders would be altogether too much for a small business to handle.
Perhaps the Marketplace Fairness Act is a movement in the right direction; however, if the United States wants to promote market equality, it will be necessary to come up with a way for small businesses to remain competitive in retail.
