John Paczkowski

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eBay’s Donahoe: “We’re Not Against an Internet Sales Tax”

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Asa Mathat / AllThingsD.com

E-commerce giant eBay has been an outspoken critic of the Marketplace Fairness Act, a new national online sales tax bill that would allow all states to collect sales tax from online merchants, whether they have operations in that state or not. But CEO John Donahoe would like everyone to know that eBay’s stance is specific to that particular piece of legislation, and not to the broader idea of an Internet sales tax.

Speaking at the Fortune Brainstorm Green conference Tuesday, Donahoe said eBay would support a national Internet sales tax plan — as long as it worked. And the company is simply not confident that the Marketplace Fairness Act will.

“We’re not against an Internet sales tax,” Donahoe said. “But the Internet sales tax has to work.”

And right now it doesn’t, according to Donahoe — at least not the way eBay would like.

Donahoe says that the Act, which seems likely to pass the Senate next week, will negatively impact small businesses, including millions of small eBay sellers. The reason: Right now, the act proposes a tax threshold of $1 million in annual out-of-state sales. That’s a relatively low bar for small retail businesses that, if the Marketplace Fairness Act is approved, would suddenly be obligated to collect sales taxes from the more than 9,600 tax jurisdictions nationwide.

So Donahoe and eBay are pushing for the threshold to be raised to at least $10 million, with an exemption granted to any retailer with sales below that.

“We believe the tax burden that’s going to be put on the smallest businesses is going to disadvantage them,” Donahoe said. “And so we’re just asking for a small business exemption so that what happens online mirrors what happens offline. At the end of the day, it’s not going to impact our company one way or another, because the marketplace will still sell, but larger sellers will benefit at the cost of smaller sellers.”


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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work