eBay Contends That Sales Tax Proposal Will Hurt Small Businesses

A new bill introduced to the Senate this week, which would finally require Amazon and other online retailers to pay local sales taxes, has one major objector: eBay.

ebay_signThe company’s opposition to the proposal is a little surprising, since the bill itself would not substantially change the way it conducts business. But eBay is arguing that it could affect the lives of some of its largest marketplace sellers.

“No small business should face new taxes,” said Brian Bieron, eBay’s senior director of global public policy. “There’s no benefit compared to the harm that would be done.”

The Marketplace Fairness Act, reintroduced to the Senate this week, will allow states to collect sales tax online, as long as they have simplified their tax laws.

Hundreds of companies support the proposal, including Amazon, Best Buy, Barnes & Noble, Gap, Home Depot, J.C. Penney, REI, Sears, Target and Walmart. Many brick-and-mortar retailers, in particular, are throwing their weight behind it because they believe that, for years now, Amazon has had an unfair advantage because it did not collect sales tax at the time of purchase.

The two organizations listed as being in opposition are eBay and the Heritage Foundation, a Washington, D.C.-based think tank, according to materials supplied by the supporters. Other organizations, however, are against the bill.

EBay says it worries about the law’s impact on small businesses in particular. If passed, retailers that have less than $1 million in out-of-state sales in the prior calendar year can apply for exemption.

But Bieron says that number is not nearly high enough and is completely arbitrary. He says that the U.S. Small Business Administration has definitions for what constitutes a small business, and that it has determined that a company that deals in “electronic shopping” is small until it reaches $30 million in revenue — or 30 times the exemption level.

EBay declined to say how many of its sellers would have to start paying taxes if the law was passed. It said that its largest customers are usually also selling on other platforms, so they don’t know how many would be above the limit. “We do know that we have a couple hundred thousand folks who are small businesses and entrepreneurs; they are more than casual sellers,” Bieron said.

The whole point of the law is for states to simplify the tax-collection process, but Bieron argues that the the proposal would still be too onerous for a company with limited resources.

“Our view has always been that a small business exemption should protect a small business,” he said.

In a letter sent to the Senate on Thursday, Paul Misener, Amazon’s VP for global public policy, applauded the bill: “I am writing to thank you for your bill, which will allow states with simplified rules to require sales tax collection by out-of-state sellers who choose to make sales to in-state buyers.”

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— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus