A New War Between the States

Thursday, 25 Apr 2013 07:38 AM

By Neal Asbury

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It is still galling that this nation’s entrepreneurs and small businesses — our country’s job creators — don’t get any support. Our political parties rail against each other, determined not to let either side win. This is a giant roadblock toward economic security.

But elsewhere in the world, differences are being hashed out that are designed to help small businesses thrive. And it’s happening in an area that’s the least likely to promote economic peace: Israel and Palestine.

That’s right. According to reports, economic collaboration between Israelis and Palestinians has been hobbled by the lack of a neutral forum for settling disagreements between Israeli and Palestinian businessmen when they arise. Palestinians and Israelis face restricted access to each other’s territory and have little trust in courts lying across the border. Without any legal recourse for problems like a bounced check, transactions become riskier and less attractive, cooling commercial ties.

So they created the “Jerusalem Arbitration Center,” which is sponsored by chamber of commerce associations on both sides and slated to begin its work by the end of 2013.

Can you imagine? Two states that have been fighting for some 65 years have come to the realization that what is good for business is good for everyone. How long will it take the United States to realize this?

One of the marvels of U.S. enterprise is our interstate commerce system, which allows unfettered access between states, with no tariffs or taxes. States compete with one another, but without animosity — until now.

As stated in The Wall Street Journal: “Many governors have been pushing for the power to force online retailers to collect sales taxes on purchases made by out-of-state customers. Currently, merchants don’t have to collect sales taxes in states where they lack a physical presence thanks to a 1992 Supreme Court ruling. The result is that states lose billions a year in sales taxes. In addition, brick-and-mortar retailers say they are at a competitive disadvantage as shoppers, hoping to avoid sales taxes, flock to out-of-state online stores that do not add sales taxes to purchase prices.”

Sen. Kelly Ayotte, R-N.H., said during the Senate debate: "What this does is force the Internet marketplace and online businesses to become tax collectors. There is nothing conservative about this. It is the long arm of the federal government punishing states such as mine that don't have a sales tax."

The existing Small Business Administration policy, prior to the new Internet laws, is that if a business has a physical presence in a state, such as a store, office or warehouse, the business must collect applicable state and local sales tax from customers. If they do not have a presence in a particular state, they are not required to collect sales taxes.

But now with the proposed Internet sales tax, which the Supreme Court has already ruled that a state cannot make a remote retailer pay local taxes, the drumbeat in Congress continues. They are oblivious to the compliance cost of collecting Internet taxes for 45 states while navigating between 9,600 unique tax jurisdictions.

It would be a devastating blow to our small Internet businesses — the one bright spot in this otherwise pathetic economy.

We will be punishing fledgling entrepreneurs who only wanted to follow their dreams by turning their garage or spare bedroom into a national and even global business with very little investment. Many small Internet businesses are owned by disadvantaged individuals, such as the disabled and parents with children with special needs. This includes the unemployed that have turned to the Internet to help restore financial stability for their families, while also bringing about an enormous sense of pride and dignity.

Let’s face it, states already tax enough. Now whatever benefit they would gain by collecting these taxes would be far outweighed by the businesses and jobs they would destroy.

I don’t buy into the “fairness” issue proposed by Congress and big retailers. People have always traveled to places to find a “deal.” The brick-and-mortar retailers are becoming some of the biggest Internet retailers themselves. Retail giants such as Macys, Best Buy and Barnes & Noble have very successful Internet stores.

The Internet has allowed thousands to pursue their entrepreneurial dream that they could not do otherwise. Why take this from them during an economic crisis?

If Palestinian and Israeli businesses can work together, against all odds, how can we allow the federal and state governments to build barriers that punish small businesses?

© 2014 Moneynews. All rights reserved.

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