Imagine you opened a small business. You’ve secured a loan, leased or purchased a store front, assembled an inventory and hired employees. You’ve developed a marketing plan and have carefully studied prices and other cost factors and believe, after an inevitable period where you’ll operate at a loss, you can turn enough of a profit to make yours a viable business. The margin, at least in the early years, is likely to be small and you realize that any number of factors, some beyond your control, may be the difference in a profit or loss, success or failure. You understand that almost half of all new businesses fail within the first five years.
So you take a deep breath, cross your fingers and open your doors — only to find that your major competitor, a company whose headquarters are in some far-away city, can sell its products at a seven-percent lower cost than you can simply because that company doesn’t have to follow the same rules you are required to follow.
You raise that complaint to your elected officials, hopeful that they will understand how unfairly you are being treated and that they will intervene on your behalf. Their response: Indifference, if not outright hostility.
No wonder small businesses, new and established alike, are having a tough go of things.
Now, for the first time in more than 25 years, a glimmer of hope has emerged in correcting this unfair practice, whether “our” state legislators like it or not.
On Tuesday, the United State Supreme Court began hearing arguments in the case known as “Wayfair v. South Dakota.”
The case was presented to the court in hopes that it would overturn its 1992 decision in “Quill Corp. v. North Dakota,” which ruled that online retailers are not required to collect sales tax in states where they do not have a physical presence.
Much has changed in those intervening years. Today, online sales are booming. According to AdWeek, the 2017 Christmas shopping season was the first time more people made their purchases online than in brick-and-mortar stores (55 percent to 44 percent).
While there are many reasons consumers prefer online shopping, there is no doubt that cost is a factor — and when online sales do not have to collect the sales tax regular retailers are compelled to collect, local businesses are at a distinct disadvantage.
That inequity goes far beyond the local store owner and the store’s employees. In fact, it affects every resident and in myriad ways.
We rely on sales taxes to help provide services that all citizens depend on — from schools to police to parks to streets and roads and bridges and countless other services we sometimes take for granted.
Given the state of Mississippi’s economy, the tens of millions of dollars that would result from the sales tax applying to all companies who sell goods and services to our residents could make a real difference in the quality of our lives.
It will be months before the Supreme Court rules on this case.
Let’s hope the justices get it right.
We all have a stake in the outcome.
The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.
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