Big government and big business conspire to restrain Internet sales

Adam Smith, the father of modern capitalism, loved the free market system but distrusted businessmen. Back in 1776 he said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Although this no doubt still happens, a more modern version of this phenomenon is big government politicians and big business executives conspiring against small business and the public to destroy competition and raise prices.

As recently as September 2011, Amazon, the giant online retailer, prevented state governments such a California from collecting sales taxes from online retail sales.

That was then.

In November 2011, Sen. Mike Enzi (R-Wyo) introduced The Marketplace Fairness Act, to allow states to collect sales taxes from out-of-state Internet sellers but exempted businesses making less than $500,000 in annual sales.

According to Amazon vice president Paul Misener, only one percent of online sellers sell more than $150,000 annually.

So Sen. Enzi’s bill would exempt 99 per cent of Internet retailers, pretty much everybody except Amazon, and that would be bad for Amazon. But with threats come opportunity and now instead of combatting the Internet retail sales tax, Amazon has jumped onto its bandwagon.

In his testimony to congress Mr. Misener said congress “should authorize the states to require collection, with the great objects of … leveling the playing field for all sellers.” By this he meant congress should not exempt small online businesses from collecting sales taxes in all states. Is that because he really cares about big government’s need to feed its spending addiction with more tax revenue?

Oh no.

Amazon is a big company with lots of lawyers and accountants so can easily absorb the added cost of collecting the spider’s web of sales taxes in 50 different states. Small mom and pop shops, on the other hand, would be forced out of business if they had to take on that additional cost.

Jim Estabrook, a small business owner near Gillette, Wyoming says, “I have had multiple small businesses that have mainly me doing all the work. I do not believe he [Sen. Enzi] understands the nightmare that would be created for dealing with sales tax collected for 49 states. Personally, I would have to spend a lot of time taking care of those requirements for about a month or two. Then I would be out of business because I wouldn't have had any time to sell products or services.”

Destroying competition will certainly help Amazon, but it will hurt small business, hurt the economy and as usual, hurt the consumer.