Hold your rotten tomatoes for a minute ok. There are important reasons why we need to level the playing field when it comes to internet sales, and gun sales in particular. I will primarily address guns. But beware that this isn’t a “soundbyte” explanation. Our attention spans have grown so thin that anything longer than a Facebook status tends to fall on deaf ears, and lazy readers. If you care about the future of 2nd Amendment freedom, you should support a nationwide internet sales tax. It will force merchants to do some work collecting taxes for states in which they do not reside, but remember, these are internet merchants who have very little if any other overhead. We have organized 20 points, but they are not to be taken individually. However you can jump to the end if you have to check your Facebook.
- Guns are mostly commoditized. Except for rare instances like we what we just experienced after Sandy Hook, everyone knows what guns go for, and rarely if ever does the actual retail price of a new firearm waver by more than 5%.
- Guns are a unique product, in that not only can they only be sold by licensed dealers who need a physical location for their business, there is no instance where a gun can be shipped for transfer to anyone but an actual dealer. Guns can never be shipped to the door of an unlicensed person.
- With guns, for over a decade now, consumers have treated the interstate sales tax exemption as a “replacement” for having to pay a transfer fee to their local dealer. They are oftentimes close in cost.
- This has led to “online gun retailers” who are able to charge a very low margin for their guns, because they do not have to finance the overhead of inventory, like you find in a stocked brick and mortar store.
- Brick and mortar stores are unable to compete with retailers that have no comparable overhead of inventory and employees.
- This has, in normal times of demand for guns, led to a “race to the bottom” with gun prices. But even in the recent artificial boom, it was mostly the brick and mortar stores that did not charge a premium for guns that were in danger of being banned.
- Local stocking gun dealers have become internet showrooms for guns, with many savvy consumers going to the stores to fondle the guns, then buying them online, only to ship them to a local “tabletop dealer” who carries an FFL license for a hobby.
- Stocking dealers do make money from transfers as well, but this is not close to anything resembling a “standard retail margin” of 20% – 50% that you see in most other retail environments. Margin for other retail hobbies, like bikes, boats, musical instruments, camping gear and even scrapbooking is in the 50% range.
- All of those industries have reacted to online sales with what is called “MAP” or “Minimum Advertised Price” to protect their brick and mortar stores. Except for a few gun companies, by and large the gun industry has not protected their stocking gun dealers in this manner, because we use a middle tier of distribution that is outside the control of the manufacturers themselves.
- Some of these wholesale distribution companies have been using direct online sales to consumers to drop ship guns for some of the more recognized online retailers.
- If you can imagine this with the only other product that must be shipped to a licensed “dealer,” pharmaceuticals, this would be like Pfizer allowing their warehouses to send your Lipitor to a neighbor tabletop dealer so you can avoid the sales tax at Walgreens.
- The difference is that the pharmaceutical industry is mostly made up of huge corporations, whereas the FFL gun dealers are for the most part Mom and Pop stores, or at best a small chain. Even our biggest chains like Cabelas only have stores numbering only in the dozens.
- Also, pharmaceuticals can be bought over state lines, whereas guns cannot in the case of handguns Federally, and many states prohibit the purchase of any guns outside the state at all.
- This is only the tip of the iceberg when it comes to the legal disadvantages that a gun dealer has as compared to other forms of retail. The BATFE can walk into a gun dealer at any time, with no appointment, and completely examine all records. Gun dealers have been forced to close for such things as abbreviating state names and allowing customers to use a middle initial instead of a full middle name. These particular issues have eased in past years, but abuses of gun dealers happen all the time without consumers ever knowing about them.
- WITHOUT ACTUAL BRICK AND MORTAR GUN DEALERS, YOU CAN’T BUY GUNS! Since the Gun Control Act of 1968, unlicensed individuals cannot sell guns as a business. Buyers have to fill out a form, #4473, that has to be kept on file at the dealer, and now the dealers have to perform background checks.
- You may feel that we only need “transfer dealers,” but if you look back to 1993, when the Brady Bill came into effect, we went from 300,000 gun dealers to under 50,000 almost overnight. This was caused by an increase in the FFL license fee from $30 to $600, and having to make a phone call (NICS) to sell a gun.
- If the FFL fee was again multiplied by 20x, or even 5x, the vast majority of remaining “tabletop” local dealers would shed their license. All that will be left standing are the brick and mortar dealers. This type of legislation could be passed OVERNIGHT right now with zero repercussions, and don’t think GunsAmerica is the only people who have thought this up. Bloomberg has a plan, and it is a virtual guarantee that something in that plan is going to create more hoops and expenses for FFL gun dealers.
- Before this crazy demand created by first the re-election of President Obama then Sandy Hook, gun dealers were fighting to keep their doors open. Demand had sunk to a low after the artificial boom of demand created by the 2008 elections, and a lot of big gun shops closed, unable to compete with online retailers while maintaining a respectable level of inventory and employees. Overall, gun sales were up, but a lot of this growth came from online. Growth in guns since 2008 was squandered on retailers that contribute little to the NRA, NSSF and the overall infrastructure of the gun purchase process itself, at the expense of brick and mortar dealers who generally do.
- Because our manufacturers and distributors have not been able to agree on a MAP pricing system like other retail industries, guns have become a devalued product, going for much less than they should with proper retail margins. There are most likely less man-hours of work that go into a Cannondale bicycle or a Gibson guitar than a Ruger firearm, yet the Ruger Firearm is 1/4 the price of the bike and the guitar. Cannondale and Gibson both have very strict MAP.
- Gun dealers have to exist if we want to buy guns . Stocking dealers are the only FFL dealers who will be around should the government raise FFL fees and record keeping requirements. The gun industry has no MAP to protect its brick and mortar retailers. We must remove the additional sales tax incentive to buying guns online instead of at our local stocking gun dealers.
You see, save your tomatoes for Bloomberg. This is a fairly cut and dried case for guns. And as for the rest of retail, again, remember that online retailers have no other real overhead, and it won’t kill them to play on a level playing field when it comes to taxes. We all pay taxes, and the states have been getting killed by the loss in revenue from online sales, while Ebay sellers, Amazon, Newegg and Buds flourish in low rent warehouse districts. Guns are one of the few things we buy that are mostly made in America, but a good percentage of America’s GDP consists of selling crap made outside the US to each other. Sales tax, for the last five years or more, has been unfairly weighted on the not so internet savvy, and these are usually the elderly and less well off in our society. The time has come for this to change and for everyone to pay their fair share of state tax burden that is based in sale tax.
Sales tax is not a new tax. It is already something that you are supposed to be paying on internet purchases in most states, but almost nobody pays it. Some states, like Washington, already collect sales tax from out of state purchases through “use” tax laws. And some states, like New Hampshire, still don’t have sales tax at all. The internet has changed retail, and there will be no going back, but the internet was originally exempted from sales tax to build it as a marketplace. Now that the internet has come of age, it is time to level the playing field. If you want to sell out of your own state, collect the sales taxes for the states in which you sell. The business in that state that you are selling against have to collect the tax and it is only fair.
America could eliminate income tax and sales tax entirely and put tariffs on foreign goods, the same tariffs that those countries put on our goods. But that would be a real benefit to working class Americans, and the politicians certainly don’t want that. A level playing field for sales tax is a start, and it might help our state governments get out of bankruptcy, while bringing fairness in paying sales tax to all ages and classes of Americans. But it is time to level the whole playing field, and bring real jobs back to America for good. End the failed free trade agreements. Tax foreign made goods. Slash corporate regulation and fees, and let America go back to work.