Ebay’s CEO does not like the so-called Internet Sales Tax bill sponsored by Republican Senator Mike Enzi (Wyo.).
In a mass e-mail on Thursday, President and CEO of Ebay John Donahoe urged Americans to say “No!” to the new legislation and the taxes that will come with it.
“Whether you’re a consumer who loves the incredible selection and value that small businesses provide online, or a small-business seller who relies on the Internet for your livelihood, this legislation potentially affects you,” Donahoe wrote. “For consumers, it means more money out of your pocket when you shop online from your favorite seller or small business shop owner.”
“For small business sellers, it means you would be required to collect sales taxes nationwide from the more than 9,600 tax jurisdictions across the U.S.,” he continued.
Donahoe also noted that business owners could possibly be audited by tax collectors from a state a customer lives in that isn’t necessarily the state where the business is located.
“That’s just wrong, and an unnecessary burden on you,” he wrote.
Big retail businesses are behind the legislation “aggressively lobbying Congress” to pass the Marketplace Fairness Act, says Donahoe, including Amazon.
“And, as they compete with big retail, Amazon is advocating for this legislation too, while at the same time they are seeking local tax exemptions across the country to build warehouses,” he wrote. The National Retail Federation and the Retail Industry Association also support the bill.
The Marketplace Fairness Act gives states the power to collect taxes on internet sales.
It aims to bring “marketplace fairness” because according the bill’s chief sponsor (Enzi) states like his “subsidize” out of state businesses due to businesses not paying their sales taxes in one state but not in others.
“Wyoming shouldn’t subsidize out-of-state and online retailers that operate and sell to people in our state” said Enzi in a statement. “Right now, these retailers can offer lower prices than our local businesses simply because they do not have to charge the same sales tax that all of our local merchants do.”
The bill will receive a vote on May 6 in the U.S. Senate.
Enzi says the bill will not send one dime to Washington, which is true.
However, it may send $20 billion out of the economy and to state
governments, according to estimates in The Hill newspaper. In other words, states believe via estimates that they have foregone $20 billion in new taxes.
Exemptions are available for businesses that make less than $1 million a year in out-of-state sales. It also requires states where the business is located to provide tax software to help business owners calculate taxes based on the consumer’s zip code.
As mentioned before, this could lead to complications and the slowing of business as business owners would calculate up more than 9,600 different tax jurisdictions.
Donahoe thinks that the above-mentioned $1 million exemption should be expanded to businesses with “less than 50 employees or less than $10 million in annual out-of-state sales.”