Will Congress put coal in Main Street's stocking this year?
Small business owners across the country have been urging Congress for years to create a level playing field that will allow community stores to compete fairly with our online-only competitors. Last year, the Senate overwhelmingly passed bipartisan legislation that would accomplish this goal, and yet more than 16 months later, we're still waiting on the Republican-led House of Representatives to do the same.
Thanks to an antiquated tax loophole, large out-of-state online running retailers can avoid collecting state sales tax on purchases, which gives them a significant competitive advantage over your favorite local stores. For independent running retailers like the ones we represent, this is akin to the government subsidizing our competitors. That isn't fair to the small entrepreneurs that make up the fabric of our communities.
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Thanks to an antiquated tax loophole, large out-of-state online running retailers can avoid collecting state sales tax on purchases, which gives them a significant competitive advantage over your favorite local stores. For independent running retailers like the ones we represent, this is akin to the government subsidizing our competitors. That isn't fair to the small entrepreneurs that make up the fabric of our communities.
To fix this unfair system, a bipartisan group of 69 senators last year passed the Marketplace Fairness Act, a common-sense reform that would ensure all businesses play by the same rules.
Yet, as each week passes with no action by the U.S. House, brick-and-mortar businesses continue losing sales to a common practice known as "showrooming," in which customers browse and test items at local stores and then head home to buy them online knowing they will not have to pay state sales tax. This is a serious problem for our members, who often spend hours working with a customer to determine the right kind of running or athletic shoe to purchase, only to lose the sale because of government tax policy.
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For most independent running retailers, every sale counts and losing this revenue harms their ability to grow and hire new employees. We cannot wait any longer for a federal solution to this problem. It's time for the House to act.
Local running store business owners are not asking for a handout, and we're certainly not afraid of competition from the big boys. But it simply does not make sense for online running retailers to enjoy such a big competitive edge over local businesses that give back to their communities.
This reform is long overdue, and local running store businesses cannot wait any longer for help. For those who believe in states' rights and the basic principle of limited government, we should all agree that Washington, DC, should no longer be in the business of picking winners and losers in the marketplace. If this were a foot race, the government would be giving our competitors a ten second head start. That's fundamentally wrong and nonsensical for anyone claiming to support free enterprise and small business.
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It's time for the House of Representatives to stand up for the small businesses in their districts, follow the Senate's lead and finally pass legislation that gives all of us a fair shot.
Commentary by Parker Karnan, executive director of the Independent Running Retailers Association.