Small Business Owners Victorious in their Selling Souls

Profit 101

Northern California booksellers are claiming victory to selling their souls to The Institution.  Sadly, I don’t think they see it that way, yet.   Most people don’t when they are in battle fighting against their own interest.

What’s worse is according to one literary blog, Andy Ross Agency, these business owners got in bed with the “devil” to win this battle against Amazon.com.

BackStory: Backed by Wal-Mart, Northern California Booksellers demanded Amazon.com to collect  sales taxes on internet purchases. This in an effort to level the playing field.   Amazon doesn’t have to collect sales taxes in states it has no physical presence.  Therefore, lawmakers used the affiliates program as proof of Amazon’s presence and then requested Amazon collect taxes. Amazon ended the affiliates program in each state this law went into affect. Illinois, New York now California.

I don’t know why I’m always amazed at the length people will go to give away their power. I guess we can chalk it up to “intellectual laziness and narcissism”.   Unfortunately from this perspective Northern California Booksellers are pawns in the  game called “Pledge Allegiance to the Institution”.

Lack of perspective, and through their actions Northern California Booksellers are helping us, the middle class, to further conform to the soulless institution run by corporations whose sole allegiance is to the faceless shareholder.

At the very least, Amazon and other large online retailers such as Overstock and EBay have a business/profit model that share power and profit with the small business owner and seeks to help the self-employed run business systems to which,  they would not otherwise had access.   Now not so much, thanks to a group of  people who sought to protect their limited interest but ended up selling out to the very big-box retailers; who now don’t even have Amazon to keep them in check.

When Wal-Mart, Costco, and other big box retailers saw  Amazon and other mega online retailers were beating them at their own game of cost cutting minus the tax collections, they rallied the very people who they were undercutting – the small business owner running brick and mortar shops in the state,  to take their concerns to government.

The sad part is those bricks and mortar small business owners didn’t see there were other small business owners and self-employed operating on-line who were benefiting from Amazon.com and others such as overstock.com.

Amazon doesn’t lose, the small business owners lose. Unfortunately, here in Illinois, the affiliates, (sellers & re-sellers) many, who were successful, can no longer participate in the Amazon profit-making machine.

Illinois’ also loses because many of us are self-employed. If there is less income, there is less taxable income. (Aside: Many other corporations who have their headquarters here are preparing to leave.)

Further, I don’t see how this is a win for mom and pop bookstores owners. Collecting taxes on discounted merchandise will always be less than collecting taxes on full suggested retail prices. See: Wal-Mart’s profit model. It is understandable why Wal-Mart had a dog in that fight – Amazon was their only competition.

Amazon.com will continue to evolve in various ways to make new and improved profit models. A possible back tax collection for the behemoth “Goliath” is legislative legerdemain intended to keep us “davids” in reactionary mode and off-balance.

As small business owners, our focus should be responding to the changing business landscape in an effort to participate –not tie up our resources in litigation. In fact, small business owners have the advantage over corporations when it comes to flexibility – we should use it.

Unfortunately there is nothing flexible about shortsightedness.  When confronted some of these business owners such as Andy Ross says

“It seems to me that tax policy should apply to everyone equally. Amazon is big enough that it doesn’t need special tax breaks.”

I agree but it seems Amazon should qualify for one since they are actually creating jobs where there were none.   Now thanks to this legislation those jobs and income are gone.   How much?  According to the WSJ

Illinois has about 9,000 affiliates, said Rebecca Madigan, director of an affiliate trade group called the Performance Marketing Association. She said the Illinois affiliates generated $611 million in advertising revenue in 2009 and tax revenue of $18 million.

She estimates that the state will lose 25% to 30% of that tax revenue because the affiliates will lose business, cut jobs or move out of the state

So Northern California Booksellers – I guess those former Amazon affiliates can go get jobs at Wal-Mart, and Sams Club – way to go.

~MH