This is a letter I have recently sent to Representative Paul Ryan of Wisconsin's 1st Congressional District:
May 6, 2013
Representative Paul Ryan
Sir
I would like you to NOT vote for any Internet sales tax
such as H.R.684. Smaller retailers will be hurt due to the
complex tax codes and numerous jurisdictions (around 10,000). This
will not create a more level playing field, but attack the small
businesses we need for job creation. $1 million in sales is not all
that much. With competitive pricing and shipping costs, gross profits
may be under $250,000 and net profits could be much less. Clearly
with drop shipping such a company could be a one person operation
that will need to manage thousands of tax forms or pay expensive fees
to others to do it for them.
The states cannot come together to
agree what is food for goodness sake. Businesses will need to have
multiple different tax categories for virtually everything they sell.
For example, a Snickers bar is a sugary confection and is obviously
candy, right? Maybe not for some states will note the peanuts in it
and call it a food item. So, the simple definition of the item is not
simple at all. Plus some states will tax food and others may not.
My experience in Wisconsin alone offers
a glimpse of how complex this will be. I have a very small IT
consulting business. I can drive in southeast Wisconsin and northeast
Illinois which provides me with 5 different taxing jurisdictions.
Illinois does not tax labor while Wisconsin does. Sounds simple, but
wait! Each of the 4 counties in Wisconsin I have served has a
different tax rate. Walworth has only the state sales tax. Kenosha
adds in the county sales tax. Racine omits the county tax, but gets
hit for the stadium tax. Milwaukee has both the county and stadium
taxes. Wow, but not too bad you may say.
Oh but there's more. When I resell
software which is prepackaged it is taxable, but if I custom write
some code it is not. Then, we have the issue of where the PC resides.
If, I replace a hard drive in a person's desktop PC, it is taxable
labor. Yet, when I replace it in a PC used to automate a home and
that PC would be sold with the home, it is not taxable. It gets more
enjoyable still when I have to break out the time I take to back up
and restore the data on those hard disks, if for personal use as data
services are not taxable in Wisconsin.
I would love to expand into Internet
services, but the fear of this type of law makes me reluctant.
Extrapolating the complexity to 10,000 jurisdictions is mind
boggling. If I was already in that type of business, this bill would
be making me take a break from this letter to go vomit. It would be that
scary! Small businesses without multi-billion dollar budgets cannot
cope with this burden.
If the concept of a sales/use tax is
where the item will be used, then I feel this is not fair at all for
the brick and mortar stores will not be required to ID all their
customers to be sure they actually reside in their state. They get
the privilege to “assume” the tax should go to their local tax
jurisdiction, but what if a tourist buys a big ticket item to take
back home with them? I understand states lose revenue, but if a
business is not within its borders, it is a compliance issue with
their residents, not that of the business. Businesses will be forced
to comply with complex rules, collect taxes, get fined for errors and
much more without any representation in those states. It is simply
wrong.
Brick and mortar stores have many
benefits which online retailers do not have like the ability to
provide immediate sales and to have product samples available. Online
retailers have the burden of having to charge shipping on top of the
price of the product or service. Let's just admit each business model
is unique and leave both alone.
I also feel most state governments are
spending too much money. Finding additional revenue for them provides
incentive for them to continue their foolish behavior.
Just vote NO on Internet sales
taxes! They are a burden to small businesses. They are immoral to
apply to out of state businesses.
Sincerely
Joseph Kexel
7616 – 33rd Avenue
Kenosha WI 53142
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