Republican state senators, like politicians everywhere, extol the virtues of small businesses – the goods they offer, the services they provide, the property taxes they pay, the residents they employ, the civic and religious organizations they join.
So why are the Republican state senators continuing to give out-of-state online competitors an unfair competitive advantage over these small businesses by allowing them to sell merchandise without charging sales tax?
For legal reasons?
In 2008, New York passed a so-called Amazon tax that levies sales taxes on items sold through the Washington state-based retailer as well as other major online retailers.
But the sales tax hasn’t applied to items sold on other sites, including Amazon’s “marketplace,” which is described as a platform or conduit for thousands of other online retailers.
So perhaps the question may have remained in the minds of some. Until June.
That was when the U.S. Supreme Court reversed a ruling it had made 20 years before to uphold a law passed by the state of South Dakota.
That law requires all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 transactions in the state.
How about finances?
Justice Anthony Kennedy said the court’s previous decision caused states to lose annual revenues of up to $33 billion.
A 2017 state report said that $500 to $900 million was not being collected annually by New York because of sales-tax exemption for online businesses.
Estimates for Nassau County range between $50 million and $100 million in lost revenue.
And for those who believe this is some kind of partisan issue, South Dakota’s appeal was made by the state’s attorney general, Marty Jackley, a Republican.
South Dakota’s appeal also drew bipartisan support, including attorney generals in 35 states and the District of Columbia.
And President Trump wrote on Twitter that the decision was a “great victory for consumers and retailers.”
Anticipating the Supreme Court’s ruling, several states passed laws modeled on South Dakota. But not New York.
State Senate Republicans killed a plan this year by Gov. Andrew Cuomo to require online marketplace providers that process a minimum of $100 million in sales a year from New York buyers to collect sales tax on behalf of third parties from outside New York.
Senate Majority Leader John Flanagan (R-Northport) said he opposed the plan because it raises taxes.
This is, to be polite, nonsense.
If Flanagan was concerned about raising taxes, he could simply have tied his support for taxing out-of-state doc.coms to reducing property taxes or increasing support to local school districts.
Or, he could have called for the elimination of the state sales tax and proposed another tax to replace the lost revenue.
Either step would give what retailers across the state are asking for: a level playing field.
A more likely reason for Flanagan’s opposition – perhaps the only reason that makes sense – are campaign contributions from out-of-state doc.coms.
In March, Nassau County Executive Laura Curran joined Suffolk County Executive Steve Bellone and business owners to call for the state Senate to approve legislation to require online retailers to pay the same taxes as brick-and-mortar stores.
And on Monday, Long Island small business leaders including the Nassau Council of Chambers of Commerce – the umbrella organization for all chambers of commerce in the county – held an event in Plainview to demand that the state Senate vote to “level the playing field” for all Long Island retailers.
Francesca Carlow, president of the NCCC, said the state should stop “perpetuating the government-sanctioned preference for out-of-state businesses over Long Island and New York state businesses.”
Carlow went on to call on prominent e-tailers such as Amazon, Wayfair and Overstock.com to voluntarily comply with the spirit” of the Supreme Court’s decision in the absence of the Senate GOP acting.
This is both reasonable and sad.
Sad because it asks out-of-state e-tailers who profit from the current system to show a greater sense of civic duty than New York’s elected leaders. Reasonable because they have seen enough of Senate Republicans to believe that may be their best chance.
It shouldn’t be.
Flanagan has frequently thwarted the democratic process by not putting legislation that he opposes but which has widespread public support to a vote in the state Senate.
Voters shouldn’t let him get away with this again. They should press Republican state senators such as Elaine Phillips to get Flanagan to allow the online sales tax legislation go to a vote.
Then we can really see where our legislators stand on small business.