Pointlessly Harming Online Businesses Isn’t “Fair”
If you thought debates over Benghazi and immigration were contentious, just wait until you see Congressmen Derek Kilmer (D-WA) and Steve Daines (R-MT) duke it out on the hotly debated Internet sales tax.
Rep. Daines provided several great reasons to oppose this bill, but let’s respond to this notion of “fairness” from Rep. Kilmer.
Kilmer says that back home in his state of Washington “you see some [retailers] that are hanging on for dear life right now, and some who have lost that battle.”
Presumably, he is placing the blame on small online businesses who are trying to start up and hire people – you know – rather than the Obama administration’s liberal policies, higher taxes, and red tape. And he thinks that competition from small online companies isn’t “fair.”
But can Rep. Kilmer really claim that brick-and-mortar retailers in his state are suffering as a result of having to compete with online businesses?
Recent research suggests that the business of online retailers – the very behavior the Marketplace Fairness Act is designed to crush – isn’t actually hurting brick-and-mortar companies.
The retail lobby insists that imposing sales taxes online will put an end to “showrooming,” a practice in which consumers use physical stores to browse and online stores to purchase. But a January report from PricewaterhouseCoopers suggests that showrooming not only may not exist, but that consumers in fact seem to act in the opposite way. They found that 23 percent of online consumers—in a survey of more than 10,000—researched consumer electronics online and then bought products in-store, while only 2 percent did the opposite. Shoppers were attracted by the ability to get products immediately and to see and try them in the store, the report’s authors write.
The report adds:
We also can’t emphasize enough that the physical store remains the centerpiece of the purchase journey for many categories. (emphasis added)
If that is true, what else besides misperception is driving this debate? Over at Real Clear Markets, Jason Hughey suggests it’s something more: the desire of big companies like Amazon to eliminate competition from smaller online businesses.
Amazon[’s] … executives feel confident they can bear the costs while other smaller competitors cannot.
This is a smart bet for Amazon. As noted above, Amazon earned $61.09 billion in revenue last year-the company has the money to develop the processes necessary to comply with this law. But smaller companies most likely will not have that capability.
Amazon will capture the benefits of the regulation by enjoying less competition from smaller online sellers who will not afford the compliance costs associated with this bill.
The Marketplace Fairness Act is about harming online businesses and taxing Americans more. Bottom line, this is cronyism, not “fairness.”