Lawmakers in the United States are considering a new bill that will allow states to tax online sales. The Marketplace Fairness Act would reform sales taxes across the country and level competition. Most experts believe the new bill will help states generate enough revenue to reduce their deficits.
Most consumers are opposed to online sales taxes. They often buy products over the Internet to avoid taxation. However, many business owners are also concerned the new law will threaten their sales. What are the implications of the online sales tax for entrepreneurs? Many experts feel that it will harm businesses, but others believe that it could be beneficial in the long run. Here are some arguments that have been raised.
Problems Associated With Online Tax
The online sales tax could create a number of problems for business owners. Here are some of the challenges that they will need to be prepared for if the law goes into effect.
Many business owners have protested the new taxes because of the increased costs. The head of a large ecommerce software provider said that online business is growing by about 30% a year. These businesses are often trying to operate more efficiently and reach new customers by selling their products online. Many entrepreneurs fear that the new law will make it difficult for them to generate the revenue needed to expand.
Forty-five different states have online sales taxes. Under the new law, businesses would be required to keep paperwork and file taxes for consumers in all of those states. They are worried that this is going to take a lot of time and resources.
Benefits of the Bill
Many people are concerned that the new online tax would unduly harm small businesses. However, online sales taxes could also create some benefits for businesses.
Sales taxes vary from state to state. This has made it more difficult for businesses to compete in some states. A number of businesses relocated from California to states with lower sales taxes. The federal law could make things fairer for businesses in all 50 states.
States may find that they raise enough money from online sales taxes that they don’t need to charge as much on other taxes. Some of the taxes could be used to pay subsidies to business owners to help in other ways.
Prognosis for the Bill
Many experts are still unsure whether or not the Marketplace Fairness Act will be passed. The vast majority of members of the Senate approved the new bill. However, Republicans in the House are still unsure whether or not they should support it. Many Republican lawmakers feel that the law is a huge burden to business owners. Others feel that passing it will serve the greater good even though it goes against many of their party principles.
House lawmakers will need to decide whether or not they support the bill before it can be passed. They are seeking input from business owners and consumers throughout the country.