Op-ed: Online Tax Fairness Act Will Hurt Small Businesses

An innocuous-sounding bill before Congress, the so-called Marketplace Fairness Act, has the potential to crush many of Connecticut's small businesses and stifle entrepreneurs.

The bill was handily passed in the Senate by a bipartisan majority and is now before the House. Under the measure, all "remote sellers" (including online stores and print catalog merchants) must collect sales taxes in every state and all taxing entities where they have customers. Businesses with less than $1 million in revenue would be exempt.

I'm all for fairness, but this bill will make the work of small businesses difficult and likely eliminate a key source of their revenue.

Here are three reasons for serious concern:

1. Perhaps you purchase via mail, filling out an order form, calculating your total and then mailing in a check. Guess what? Under this bill, that would become so complicated you probably won't do it anymore. As senior citizens have the highest propensity to shop this way, this legislation effectively disenfranchises them.

2. Perhaps you seek out unique products not available in the mass market — or you simply like supporting the "little guy" — the artisan who made the item, the small store, or catalog, or special web merchant. Unfortunately, if this bill passes, they soon may be unable to continue to be there for you, because the cost of becoming a remote sales tax collector for some 10,000 different jurisdictions nationally simply makes it impossible for them to be in business.

3. Perhaps you live in one of Connecticut's many wonderful towns with a vibrant but quaint downtown and you "Love Your Local." Supporters of this legislation would have you believe it will help preserve the local Main Street, which makes your town a great place, by forcing online sellers to charge the same sales tax customers pay when they shop in person. This bill will have the opposite effect. That's because most of those local businesses that have survived this past decade have done so because they are innovators.

Take DelMonico Hatter for example: It has been in New Haven for more than a century. Or ToolsPlus, a Waterbury hardware store that found a way to survive when Home Depot opened across the street. These fine businesses are able to maintain their local stores because they've grown their presence nationally by selling remotely, offering selection or service, or both. The big guys just can't match them.

Read the complete op-ed here