A square deal for the little guy
By Mark Shields
To listen to the language of American political campaigns, you could reasonably conclude that “big” is bad and “small” is good.
Who has too much power and influence in Washington? Of course, Big Business, Big Banks and Big Money, in general. Some on the right might make a case for Big Labor. Small, by contrast, is good. We honor Small Town values, admire the Small Farmer and, almost without dissent, claim to revere the Small Business woman and man who, we hear repeatedly, are the backbone of our national economy, who create the great majority of the nation’s jobs.
Now Congress has a rare, virtually painless opportunity to prove that it really means what it has said about how much it loves American small businesses and, at the same time, to help cash-strapped state and local governments without raising taxes by a dime. The bill, appealingly, and not inaccurately, titled the Marketplace Fairness Act, would enable states, counties and towns to require big Internet retailers to charge — as every Mom-and-Pop store on Main Street already must do — the applicable sales taxes on the big Internet companies’ transactions.
Think about our own experiences. To whom does the community turn to sponsor the Little League teams, to buy full-page ads in the high-school yearbooks, to help underwrite the costs of town celebrations? That’s right, to the local merchants who sell shoes, shirts, basketballs and shampoo. These are the small-business people who hire our neighbors, who pay local and state taxes and, by law, collect, for our public treasuries, all the sales taxes owed.
More than 20 years ago, the Supreme Court ruled that, without congressional approval, a state could require out-of-state companies to charge that state’s sales tax only if that business had a physical presence in that state, such as a warehouse, a factory or a store.
This was long before the near-universal arrival of the personal computer and the explosion of Internet sales.
By not having to charge and collect state sales taxes, the Internet companies have had an unfair pricing advantage — often approaching 10 percent — over the country’s “brick-and-mortar” hometown retailers. Local sales have suffered with the resulting loss of local jobs.
Lower sales and fewer jobs have meant that local and state governments, with lower revenues, have been forced to defer repairs to roads and public places. Teachers and police officers have been laid off. Community services have been curtailed.
The best estimate is that, because of the loophole and free ride given to Internet retailers, state and local governments are not collecting $23 billion that is owed to them. This is not, let me emphasize, a tax increase. It is simply leveling the playing field so that local small businesses and the citizens who own them can compete and are not unfairly exploited by rampant tax evasion that benefits big Internet retailers.
The lead Senate sponsors of the Marketplace Fairness Act (which the Senate is expected to pass in early May) are Wyoming Republican and former small-businessman Mike Enzi and Illinois Democrat and Majority Whip Dick Durbin. Support is bipartisan, and the battle looks to be in the Republican-controlled U.S. House.
There are two questions members of Congress must answer: Was it just empty rhetoric when they extolled the virtues of local small-business people? And when did widespread tax evasion become a patriotic act?
To find out more about Mark Shields and read his past columns, visit the Creators Web page at http://www.creators.com.