Ron Paul Straight Talk: Internet Sales Tax Could Crush Small Businesses

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One unique aspect of my homeschool curriculum is that students can start and manage their own online business. Students will be responsible for deciding what products or services to offer, getting the business up and running, and marketing the business’s products. Students and their families will get to keep the profits made from the business. Hopefully, participants in this program will develop a business that can either provide them with a full-time career or a way to supplement their income.

Internet commerce is the most dynamic and rapidly growing sector of the American economy. Not surprisingly, the Internet is also relatively free of taxes and regulations, although many in Washington are working to change that. For example, earlier this year the Senate passed the Marketplace Fairness Act, more accurately referred to as the national Internet sales tax act. This bill, which passed the Senate earlier this year, would require Internet businesses to collect sales tax for all 10,000 American jurisdictions that assess sales taxes. Internet business would thus be subject to audits from 46 states, six territories, and over 500 Native American tribal nations.

Proponents of the bill deny it will hurt small business because the bill only applies to Internet business that make over a million dollars in out-of-state revenue. However, many small Internet businesses with over a million dollars in out-of-state revenues operate on extremely thin profit margins, so even the slightest increase in expenses could put them out of businesses.

Some businesses may even try to avoid increasing their sales so as to not have to comply with the Internet sales tax. It is amazing that some of the same conservatives who rightly worry over Obamacare’s effects on job creation and economic growth want to impose new taxes on the most dynamic sector of the economy.

Proponents of the law claim that there is software that can automatically apply sales taxes. However, anyone who has ever dealt with business software knows that no program is foolproof. Any mistakes made by the software, or even errors in installing it, could result in a small business being subject to expensive and time-consuming audits.

Some say that it is a legitimate exercise of Congress’s Commerce Clause power to give state governments the authority to force out-of-state businesses to collect sales taxes. But if that were the case, why shouldn’t state governments be able to force you to pay sales taxes where you physically cross state lines to make a purchase? The Commerce Clause was intended to facilitate the free flow of goods and services across state lines, not to help states impose new burdens on out of state businesses.

The main proponents of this bill are large retailers and established Internet business. Big business can more easily afford to comply with a national Internet sales tax. In many cases, they are large enough that they already have a “physical presence” in most states and thus already have to collect state sales taxes. These businesses are seeking to manipulate the political process to disadvantage their existing and future small competitors. The Internet sales tax is a bad idea for consumers, small Internet business, and perhaps most importantly, the next generation of online entrepreneurs.

For more information about the small business program well as all other aspects of the Homeschool curriculum please go here. And to purchase a copy of my new book, The School Revolution: A New Answer for Our Broken Education System please go here.

Personal Liberty

Ron Paul

Former Representative Ron Paul has maintained a steadfast consistency in speaking out against executive power, taxation and war. Unlike many of his Republican peers, as a Congressman, he voted against the Patriot Act and against the Iraq war. He has voted against farm subsidies and regulating the Internet, which is in line with his interest in reducing government spending and the role of the Federal government. Paul has also expressed his opposition to the war on drugs, saying that the government's efforts have actually been a war on doctors. These and other controversial opinions have often caused tension with his Republican counterparts. Paul is the author of many books, including End The Fed, Liberty Defined and Revolution: A Manifesto. Along with a lengthy political career as a Congressman and Presidential candidate, Paul has also worked as a respected obstetrician in his home State of Texas. Since his retirement from Congress in 2013, Paul has stayed busy encouraging Americans to fight for liberty by founding the Ron Paul Institute for Peace and Prosperity and his own news channel.

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  • bob arnold

    i am a consertive but i believe all business’s if paying taxes than none should be exempt,that definetely is an unfair practice

    • http://www.thefreedomtrainusa.com/ FreedomTrainUSA

      It appears that you have not been a business owner,,,.As a Business Owner…I know first hand that Government Paperwork takes up far too much time already…More time is spent on that than is left to run the business…

      • Wellarmed

        Agreed. As a former business owner the burden of paperwork was no less than overwhelming. Business owners should be financially compensated for the burden of tax collection, and reporting, not the other way around.

        Dr. Paul is spot on, this bill will have an incredibly negative impact on small business that largely rely on internet sales. The products do not ship themselves for free, despite what many large online retailers claim. The cost must be padded into the product to recoup the time and material investment.

        • http://www.thefreedomtrainusa.com/ FreedomTrainUSA

          If Business Owners could spend time running their businesses…we would have FULL EMPLOYMENT AND A BOOMING ECONOMY…

  • guy r west

    ive tryed twist to start a small bussiness on was on line. how ever to bee quite honest lost my shurt. there are so many advisterments for on line bussiness that most of the just sound foney . ime on ss and ssi and ide love to find a way to supliment and eventuaily replace that . but from what i see avaible it all looks like a scam . I do agree wiht dr paul . the new bills ive hurd about sound like a nother from of goverment power graping and putting thier nose where its not wanted or needed. Which this preticluar administration seems to have a real nack for . Among other things.

  • Michael Shreve

    The misnamed Internet Fairness Tax Bill is worse than a zombie. Even shooting it in the head doesn’t kill it. It IS both anti-consumer and anti-business, BUT it also provides a method for governments to get their hands on MORE money to squander.

    • TNS

      Correction it is about government enforced monopolies and snuffing out new competition.
      Crony capitialist that own Big businesses use special interest lobbying to get things like this passed because they know they can afford it but their up and coming competition can’t.
      I will bet my left testicle that Amazon and other big time sales sites have money going to this bill

      • Michael Shreve

        Amazon was PREVIOUSLY opposed, but current takes “no position” on the tax bill.

    • Betta

      That’s the whole idea. They forget the money made by these businesses is being spent in the communities in which they live. Nobody makes money then not spend it.