April 19, 2024

You are here: Home / Archives for street businesses

Senate Backs Bill to Force Tax Collection on Internet Sales

May 6, 2013 by Leave a Comment

WASHINGTON — A bipartisan coalition in the Senate easily passed legislation on Monday to force Internet retailers to collect sales taxes for state and local governments, sending the issue to the House, where antitax forces have vowed to kill it.

But the 69-to-27 vote in the Senate will give the measure significant momentum. Hundreds of retailers are flying to Washington this week to pressure House lawmakers and counter the arguments of small-government groups, including Grover Norquist’s Americans for Tax Reform, which wields great influence in the House.

“After 20 years, there is finally light at the end of the tunnel for our brick-and-mortar businesses,” said Representative Steve Womack, Republican of Arkansas, and the bill’s House sponsor. “Saving local retail business depends on it, and it’s now up to the House to act.”

The Internet sales tax bill — called the Marketplace Fairness Act — is a rarity in Washington these days, a significant tax measure that has split antitax groups in Washington from reliably Republican Main Street businesses beyond the capital. That divide has given the measure at least a chance to reach President Obama, who supports it.

With Republicans in Congress equally split, Senator Richard Durbin of Illinois, the Senate’s No. 2 Democrat, joked Monday that C-Span watchers would see something “historic” and “precedent-setting:” “The Senate is actually going to vote for a bill.”

The legislation would allow states to force online retailers with more than $1 million in annual out-of-state sales to collect sales taxes from all customers and remit those taxes back to state and local governments. States would have to provide software to help calculate the taxes for thousands of jurisdictions.

Its sponsors intentionally kept the bill simple — just 11 pages in length — to ease passage. In contrast, the Congressional Joint Committee on Taxation on Monday released a 568-page report to the House Ways and Means Committee on options for overhauling the tax code compiled by 11 bipartisan House working groups tackling that issue. The release was intended to push forward comprehensive tax reform, but it only underscored how difficult a task that will be in a divided Congress.

The Senate Internet tax debate revolved around advocates’ arguments that applying sales taxes online is only fair, since traditional brick-and-mortar retailers must levy such taxes already. Supporters said the bill was not a tax increase but a guarantee that taxes already owed would actually be paid. The Senate, they said, was standing up for the right of states to collect taxes as they see fit.

“The first thing we have to make sure everybody understands is this isn’t a tax issue,” said Matthew Shay, chief executive of the National Retail Federation, which pushed for the legislation. “States determine the level of sales taxes to be collected. All we want to do is make sure the taxes are collected that are due.”

But opponents say they will try to slow the process down in the House and shift the conversation to their issues: fears that the complexity of collecting the taxes will put many Internet retailers out of business or subject them to an avalanche of audits from state and local governments around the country.

In a “Memo for the Movement,” a coalition of 52 conservatives on Monday demanded that House Republican leaders not bring the Senate bill straight to the House floor and also said House conservatives “should reject any bill that expands the authority of out-of-state governments to regulate businesses with regard to online taxation.”

Signers included Mr. Norquist, the keeper of the no-new-taxes pledge that almost every Republican in Washington has signed, conservative luminaries including Phyllis Schlafly and Richard Viguerie, and the heads of Heritage Action, the Heritage Foundation’s political arm, the Tea Party Patriots, Americans for Prosperity and FreedomWorks.

“We’re fairly confident that at the very least, we will slow this down,” said Dan Holler, a spokesman for Heritage Action. “Then we have to make the arguments that can win.”

With conservatives in Washington organizing against it, the bill faces an uphill climb in the House, but not a steep one. The House bill already has 65 co-sponsors, almost half of them Republican, and those Republicans include veteran conservatives like Representatives Joe Barton of Texas and Spencer Bachus of Alabama. Proponents point to their own conservative supporters, including Al Cardenas, chairman of the American Conservative Union, and Arthur Laffer, a conservative economist.

The House Judiciary Committee chairman, Bob Goodlatte of Virginia, has said he will at least consider the measure. After the Senate’s passage, Mr. Goodlatte made it clear he would take his time with the legislation and would insist on significant changes. He suggested he may force more uniformity in sales tax rates and add legal recourse for Internet retailers facing multiple audits. But he did not indicate he planned to delay the issue in his committee. Conservative voices in Washington are being countered by reliably Republican business voices from home. Representative Tom Price, Republican of Georgia and a House conservative leader, said Monday that he was just starting to hear from both sides, including district retailers coming to his office.

Mr. Price said he was undecided on the issue, but he noted the bill would now go to the House Judiciary Committee, not the tax-writing House Ways and Means Committee. That itself could ease the bill’s passage.

Article source: http://www.nytimes.com/2013/05/07/business/senate-backs-wider-internet-tax-collection.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Fair Game: A Fed Voice, Asking to Cut Megabanks Down to Size

January 19, 2013 by Leave a Comment

This is nonsense, of course. Whatever regulators and lawmakers say, the Dodd-Frank financial overhaul lacks any guarantee that taxpayers won’t have to come to the rescue again.

So it was refreshing to hear a member of the Federal Reserve Board debunk the bailouts-are-gone theory last week.

The official was Richard W. Fisher, the president of the Federal Reserve Bank of Dallas and a longstanding truth-teller about too-big-to-fail banks. On Wednesday, in a speech in Washington, Mr. Fisher laid out a compelling proposal for shrinking financial giants in order to protect taxpayers. He suggested that megabanks be chopped into pieces, so that no one of them could endanger the financial system if it ran into trouble.

That may sound like a return to the Glass-Steagall Act, the Depression-era law that separated investment banking and commercial banking until it was dismantled in 1999. But Mr. Fisher’s plan is more sophisticated than Glass-Steagall, in that it recognizes how complex big financial institutions have become. Glass-Steagall concerned only old-school banking businesses, like making loans, and Wall Street businesses, like trading stocks. Today’s financial behemoths are in so many different businesses that a top-to-bottom restructuring is required.

Why? Mr. Fisher argued that megabanks not only threaten taxpayers with bailouts, but that their continuing failure to lend is also thwarting the Fed’s efforts to jump-start the economy by keeping interest rates low. “I submit that these institutions, as a result of their privileged status, exact an unfair tax upon the American people,” he told his audience. “Moreover, they interfere with the transmission of monetary policy and inhibit the advancement of our nation’s economic prosperity.”

Smaller institutions, by contrast, have continued to lend in the post-crisis years, especially to the kinds of modest-size businesses that create so many jobs across the country. According to figures compiled by Mr. Fisher’s colleagues at the Dallas Fed, community banks — defined as those with no more than $10 billion in assets — hold less than one-fifth of the nation’s banking assets. Nevertheless, they hold more than half of the industry’s small-business loans.

Huge banks must be restructured and their access to the safety net scaled back, Mr. Fisher said, because neither regulators nor market participants have proved effective in monitoring risks at these institutions.

The manic years before the credit crisis proved that regulators can’t police financial institutions appropriately. And while market discipline has worked to keep smaller institutions on the straight and narrow, it has been ineffective with megabanks, Mr. Fisher said. He noted, for example, that community banks typically have a few large shareholders scrutinizing the risks in their operations. But too-big-to-fail institutions, with millions of disparate shareholders, don’t benefit from this kind of concentrated policing mechanism.

Big banks’ creditors — like bond holders — don’t impose discipline, either. They know they will be protected by a taxpayer rescue should a large institution teeter.

Fairness is at the heart of Mr. Fisher’s argument. Large institutions, he said, are “financial firms whose owners, managers and customers believe themselves to be exempt from the processes of bankruptcy and creative destruction.” In other words, small institutions must submit to the rigors of the free market. Those too big to fail do not.

There are roughly 5,600 commercial banking institutions in the country, Mr. Fisher noted. Some 5,500 of them are community banks. While these organizations account for 98.6 percent of all banks, they hold only 12 percent of total industry assets. They are routinely allowed to fail if they get into trouble. Few of them did during the crisis.

Contrast these figures with those of the nation’s 12 largest banks, whose assets range from $250 billion to $2.3 trillion. They account for 0.2 percent of all banks but hold 69 percent of industry assets. These are the banks that enjoy all the perquisites of the federal safety net: significantly lower borrowing costs and a taxpayer backstop, for example.

Understanding that it will be a tough battle to break up the megabanks, Mr. Fisher suggests that in the meantime, only commercial banking operations receive protection from the federal safety net in the form of federal deposit insurance. An institution’s other activities — securities trading, insurance operations and real estate, for example — should fall outside any backstop. Furthermore, he recommends that these banks require customers and trading partners to sign an agreement stating that they understand the business they are conducting is not covered by any federal protection or guarantees. That would begin to reduce the perception that all of these institutions’ counterparties would be protected in a disaster.

“Financial stability rests on a level playing field that rewards sound judgment and integrity and penalizes excessive risk and complexity financed by taxpayer dollars,” Mr. Fisher said in his speech. “Government must retain its role as the financial system’s watchdog, but it should render no institution immune to market discipline.”

IN an interview after the speech, Mr. Fisher said he believed his plan could appeal to both liberals and conservatives. “It’s politically palatable on both sides of the aisle,” he said. “This is one thing that both Republicans and Democrats can agree on.”

Or, as he said more pointedly in his speech: “If the administration and the Congress could agree as recently as two weeks ago on legislation that affects 1 percent of taxpayers, surely it can process a solution that affects 0.2 percent of the nation’s banks and is less complex and far more effective than Dodd-Frank.”

The response to Mr. Fisher’s proposal has been resoundingly positive, he said. Immediately after the speech was posted Wednesday evening on the Dallas Fed’s Web site, heavy traffic caused the site to shut down.

“I do think that this is something that can actually bring people on Capitol Hill together,” he said.

Wouldn’t that be nice?

Article source: http://www.nytimes.com/2013/01/20/business/a-fed-voice-asking-to-cut-megabanks-down-to-size.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

You’re the Boss Blog: Amazon Denies It Has a Small-Business Problem

December 12, 2011 by Leave a Comment

The Agenda

How small-business issues are shaping politics and policy.

For years — since its inception — Amazon has been at implicit war with local brick-and-mortar stores. Last week, the implicit seemingly became explicit when Amazon began a promotion that encouraged customers to check out prices at local retailers and use a specially designed “Price Check” smartphone app to report what they found back to Amazon. Customers who then purchased the same item from Amazon received a 5 percent discount, up to $5. (The deal was available only from Friday night through Saturday, and only for certain kinds of products.)

For its initiative, Amazon has been greeted with a barrage of rotten tomatoes, from the press and from small businesses and their sympathizers. (Gawker, for one, described it as “a Christmas attack on local shops” and a “cheap, sad thing.”) On Thursday, Senator Olympia Snowe of Maine, the top Republican on the Small Business Committee, joined the fray. “Incentivizing consumers to spy on local shops is a bridge too far,” she said in a statement. “During the busiest shopping season of the year, we should remember that our local restaurants, bookshops and hardware stores are the economic engines in our communities.” Ms. Snowe urged Amazon to cancel the promotion.

Of course, stores have long encouraged shoppers to snoop on competitors, and rewarded them for doing so. Amazon has just found an extraordinarily efficient way, one befitting its behemoth status, to do it. And shoppers, for their part, hardly need an app to exploit Main Street businesses; in fact, a recent study found that nearly 40 percent of book buyers on Amazon window-shopped at a bookstore first. (My colleague Jay Goltz recently wrote about consumers who take a shopkeeper’s time and then brag about going home to buy the same item online.)

Still, Amazon’s promotion does seem tone-deaf, considering the mood of the times. The idea that small businesses are both valuable and vulnerable, battered by an economic crisis that was not of their making, seems to have won the public’s sympathy, in theory if not always in practice.

Moreover, Amazon in particular seems to be on the wrong end of public opinion — as measured by editorials and columns in local newspapers across the country — in its battle against states seeking to collect sales tax on online purchases made by their residents. (Under current law, retailers have to collect the tax only in states where they have a substantial presence, known as nexus; otherwise customers are supposed to pay it.) Amazon’s opponents — led, paradoxically, by retail giants like Best Buy and Wal-Mart — have successfully framed the issue as a battle between cyberspace and Main Street.

But an Amazon spokeswoman, Sally Fouts, said in an e-mailed statement that the promotion was not directed toward small competitors. Instead, she said, it was “primarily intended for customers who are comparing prices in major retail chain stores.” She added that Amazon’s third-party sellers — “more than two million individuals and businesses of all sizes that sell on Amazon” — also benefit from the Price Check app.

Meanwhile, Amazon appears to be conceding, gradually, in the sales tax fight, a shift that at least in part may have something to do with the fact that as it expands, it is establishing a physical presence in more and more states. The company will begin collecting sales tax in California next year, instead of fighting a new state law aimed at forcing the company to do just that. In Tennessee, where the retailer is opening two new distribution centers, Amazon has agreed to begin collecting sales tax in 2014. Initially, it had sought an exemption from state tax rules. In South Carolina, where Amazon is building another distribution center, it will collect taxes in 2016. This fall, it came out in support of new bills in Congress that would allow states to collect sales taxes from online sellers that do not have a presence in those states. (Another Amazon spokesman, Ty Rogers, said by e-mail that the company had long supported “a national approach to sales tax.”)

Curiously, Ms. Snowe, who spoke out so forcefully against Amazon’s promotion, has not signed on to the leading Senate sales tax bill, the Marketplace Fairness Act, although Amazon itself has. “I am absolutely committed to protecting small businesses and keeping Main Street positioned to flourish once again, and I am carefully examining these and other legislative proposals on this issue,” Ms. Snowe said in a statement provided by a spokesman. But, she said, “the need for comprehensive tax reform also must be considered, since the current overall tax system is its own source of problems for small businesses.”

Article source: http://feeds.nytimes.com/click.phdo?i=3ca2e4ab919617ffed3da24adccc5f3e

Filed Under: Small Business Tagged With: , ,