John Donahoe: Taxing Internet sales would hurt New Hampshire more than most other states

US Tax News
11/01/2010

PRIVATE SECTOR job creation is our number one national priority. At eBay, we believe that new job growth can start with small business retailers. Small businesses have been the primary engine for U.S. job creation for decades, and they should be a top priority for policymakers. Department of Commerce statistics reveal that small business employers account for a remarkable 70 percent of new jobs over the past 15 years.

At first glance, shoppers might say that small stores have taken a nosedive as big box retail giants have grown to dominate the playing field. Main Street businesses have been shuttered and replaced by acres of parking lots fronting mega-stores on the edge of cities and towns. But, that's not the whole story. Internet technology has become the lifeline for small retailers.

Hundreds of thousands of small businesses and entrepreneurs are using eBay to compete and grow. In some cases, these entrepreneurs are creating one job to support their family. Others are doubling in size, maybe growing from two workers to four, or even six to twelve. The creation of millions of jobs is accomplished through thousands of these success stories, not only by building one big factory.

As important as job creation is the spirit of entrepreneurship, which is also flourishing online. As a proud alum of Dartmouth, I know that the "can do" spirit of individual accomplishment is a hallmark of small business and runs deep in New Hampshire. eBay's numbers prove this; more than 2,250 small eBay businesses and entrepreneurs call the Granite State home.

One example is TradePort USA of Somersworth, which sells new and refurbished electronics like LCD/LED TVs, digital cameras and computers. Over the past two years, during the toughest economic environment in decades, TradePort USA created three new jobs and now employs eight individuals.

Small businesses like TradePort USA and its owners, David Lahme and Sam Biddle, are engaged in a tough business and face brutal competition from mega-retailers. Today, over three-quarters of the top online retailers are the Web stores of giant retailers like Walmart, Target and Best Buy.

Additionally, small retailers face a growing political challenge: a tax-policy lobbying battle over the appropriate role of sales tax collection on Internet retail. Many state governments face revenue problems. Some people claim that new sales tax collection on Internet retail is the answer. Given that less than 5 percent of retail sales today are online, that's obviously not true. Nevertheless, there is a big push to expand online sales taxes, and small business retailers are in the crosshairs.

A coalition of 23 states and giant retailers are actively lobbying across America to impose sales tax burdens on small Internet retailers as if they were the same as giant businesses. It is unfair and frankly a mistake to treat a small business like a retail giant with stores in every state and armies of bookkeepers and tax lawyers.

In practical terms, it would force a New Hampshire business, like TradePort USA, to collect sales taxes for buyers based on the state in which they reside. If TradePort USA sold a camera to a buyer in Arkansas, the company would have to determine the buyer's local sales tax jurisdictions and send the taxes to those jurisdictions. Imagine the increased costs and burdens placed on David, Sam and their employees if this was required for every sale.

As a sales-tax-free state, New Hampshire is uniquely positioned in this debate and has the most to lose. Small retailers in the state are not currently burdened by the complexities of the sales tax system. To change federal law and force small businesses to start collecting taxes for thousands of jurisdictions nationwide will be a job-killer that puts New Hampshire's online businesses at a distinct disadvantage.

I'm pleased to report that this threat is not going unseen. New Hampshire Congressman Paul Hodes is leading the fight in Congress against this anti-small business tax. He has sponsored H.Res.1570, a bipartisan resolution to exempt small businesses from any new Internet tax burdens. This is a pro-small business, pro-Internet proposal, and more than 40,000 Americans have already signed a petition supporting the protection of small businesses from new sales tax burdens.

New tax policies should not target small online businesses and threaten job growth. Small business retailers can succeed online, but the new Internet sales tax being pitched to Congress would betray our proud history of giving the little guy a fair chance to compete.

About TradePort:
For a decade, TradePort has offered an outsourcing service for asset recovery, third-party logistics, and reverse logistics for consumer electronics. Our New England warehouse and headquarters offers reverse logistics, consumer electronics test and repair, manufacturer warranty negotiation, Internet marketing and resale.

We have established our own quality standard for preparing merchandise for resale called TradePort's Product Evaluation Process (PEP). Our expertise lies in consumer electronics asset recovery, reverse logistics, merchandising and marketing. Our trade-in and recycle program delivers value to your customers by providing sustainable options while being environmentally responsible. TradePort is ISO 9001 : 2008 certified. For more information visit: www.tradeportusa.com

Media Contact:
Allyson Kimball, Director of Marketing & Communication
TradePort
22 Canal Street, Suite 125
Somersworth, NH 03878 603-692-2900
akimball@tradeportusa.com
TradePort

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