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Internet Sales Tax Winners and Losers

Last week, the National Bureau of Economic Research released a report that identifies the real winners of a new online sales tax regime. To the surprise of no one, the study found that small businesses struggling on MainStreet should not expect the taxman to be their savior.

Everyone likes and roots for small entrepreneurs. We know the people in our community who run local retail and we respect what they do. Their efforts are felt and admired on a daily basis. That is why the generic idea of supporting Main Street is so powerful.

But, in the case of online taxation, we now have proof that Main Street won’t see a boost in sales if the Marketplace Fairness Act (MFA) is passed.   In fact, most Main Street sellers are harmed by MFA’s complexity as they try to open their virtual doors to the online marketplace.

So, if small businesses aren’t going to benefit from the MFA, who will? Well according to the study’s author it’s the big box stores.  He told the New York Times:

Money that had been spent at Amazon is mostly being redistributed to other online giants — and that will very likely intensify if Congress allows broad taxation of Internet sales. “This legislation is being pushed as a kind of savior to brick-and-mortar stores and a boon to local economies,” he said of the Marketplace Fairness Act, “and it doesn’t appear to be the case to me.”

There you have it. The largest retailers in America, who are no friend of Main Street, stand to make immediate gains from the MFA. These are the very same big box retailers that fund the Alliance for Mainstreet Fairness.

So lets all agree that, moving forward, we can add the “MFA is a savior for Main Street” argument to the rubbish pile. It will be in good company.