All In   |  May 06, 2013

Big box stores fight e-commerce giants over internet sales tax

The new internet sales tax is pitting big box stores against e-commerce giants. Chris Hayes talks about the internet sales tax with Ryan Grim, Rachelle Bernstein, and Brian Bieron.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> the internet sales tax bill passed in the senate today. reaction to the vote tells you a lot about the reality of washington lobbying. brian buron of ebay. ebay worked hard to defeat this legislation. they even sent out e-mails to customers trying to rally customer base . big question for you is, look, everybody has got to pay sales tax when buying in a physical location. the technology exists. when i order something, they know they're shipping it to my address in new york, new york is a sales tax , shouldn't we just level the playing field and have everybody paying taxes? why have this imaginary distinction between, you know, the places that exist on the internet and the places that have to, you know, maintain a storefront?

>> i totally agree, chris . we're against all imaginary distinctions. the ebay position on this is actually really clear. and that is that it is the problem with this bill is that it is unbalanced right now. it treats very, very small businesses the same way that we treat multibillion dollar retailers. there is no level playing field between really small businesses that are often using the internet to grow including through marketplaces like ebay and giant multibillion dollar retailers that have facilities all over the country. this bill only tries to, quote, level the playing field just on one tax law that happens to be something that is a small burden on small businesses . and the larger burden on giant businesses. what we're saying is that to make this bill really work there ought to be a reasonable small business exemption so that when you're a small business operating in one state, that it is not possible for you to be audited and have to go to court honestly to fight the tax authority 3,000 miles away . and that is a possibility with this current bill and that's going to have to get fixed before this thing really moves.

>> michelle what is your response to that? there has been a lot of lobbying about how big the car battle will be for the small businesses , which is a favorite washington undertaking. what is your response to brian ?

>> well, here's my concern. the problem is that we have brick and mortar stores, small businesses , in every community. and those people have to collect taxes on the first dollar that they receive. and if there is a very large small business exemption for remote sellers that is also not permitted for brick and mortar sellers, then those small businesses are still at a competitive disadvantage. and they cannot compete with remote sellers that do not have to pay taxes. they have that problem now. and we want have fixed the problem if we don't address it. i think the way to address it for the remote sellers that brian is talking about that are small is through simplifications so that it is not a difficult burden for them to collect the tax, but not to -- not to treat one group of businesses better than another.

>> brian , i'll get your response. michelle, is there evidence, empirical evidence that in the states without the sale taxes, oregon for example, that people are more inclined to buy at brick and mortar stores? do we have any evidence suggesting that's the case?

>> no, i don't have any evidence of that case. and as a matter of fact, i have to say when we survey consumers to determine whether they would spend less on the internet , if sales taxes are imposed, in fact, they say that they would probably maybe about 10% of them say that they think that they might spend less, but most think they would continue the current spending habits because of the convenience of the internet . we're just trying to level the playing field .

>> everyone wants to level the playing field . brian , here is my question for you. it is i think a little known fact to folks, i only only just found out, that you're supposed to pay these taxes. you're supposed to file in your tax return everything you bought over the internet , you're supposed to record what you bought over the internet , sales tax wasn't applied to, and literally -- not literally, that's not true, almost literally no one does this. the numbers are laughable. the point is, this tax, it already exists. what exactly is the policy rational for having a tax that exists that is in the law that is in the letter of the law and it goes completely uncollected when there is $23 billion of revenue for states laying on the table?

>> chris , there really isn't $23 billion as you saw from your statistic, there is about $225 billion of e-commerce that goes on. almost half of it already has sales taxes because giant -- no, no, no. but, chris , this gets the key thing, is that there is sales tax collection on the internet . this isn't about the internet versus noninternet. large retaretailers who have facilities in each state have to collect. this is fighting about how tiny of a business are we going to treat like a giant business. and that's where this bill is out of whack.

>> can i say this?

>> sure. a mom and pop proprietor in new york , one employer, has to pay sales tax . it is not like the policy is something we scale to the size of --

>> here is the difference is that the small proprietor in new york state is only able to -- by the state of new york . but that's not the case with this bill.

>> right.

>> that same small proprietor could be taken into court by 46 states. that is a nightmare for small business . and these $10 million or $5 million or $2 million businesses, they're like a month of sales in a big box .

>> can i get a sense from you whether this will see a vote in the house?

>> we'll see. it is going to -- it has become a bit of a conservative litmus test. so for the first time, one of these issues is actually become a bit partisan. it is getting referred to the judiciary committee . the chairman there said he's not sure about it. so we'll see where it goes.

>> and norquist is rallying the army against it. ryan grim, rachelle bernstein and brian biuron of ebay, thank you.

>>> "the rachel maddow show" starts right now.

>> good evening, chris . thank you,