Mike Smallwood has a simple solution for the loss of local sales tax caused by the internet—charge all sales tax at the point of origin.
Smallwood is quite knowledgeable about the issue. He is the owner of Smallwood Lock and Supply and serves as the Legislative Committee chairman of the Kansas City, Kansas, Area Chamber of Commerce.
Smallwood has testified before Kansas legislative committees in Topeka, noting that he owns a 106-year-old, fourth generation Wyandotte County company that does business all across the country. He opposes House Bill 2756 which is based on a destination model. Smallwood said there are more than 12,000 sales taxing districts across the United States. He said it is impractical to keep track of all the sales tax rates of these many jurisdictions.
Smallwood said his first recommendation is to wait for the U.S. Supreme Court’s decision in the South Dakota versus Wayfair case, expected in June this year.
Smallwood said that destination sales tax is anti-small business as pointed out in a letter to Joe Eannello, the policy director for U.S. Rep. Kevin Yoder (R-Third Dist.) Smallwood said large companies, such as Wal-Mart, already collect and remit sales tax in every state in the union.
U.S. Rep. Bob Goodlatte (R-Va.) has introduced a bill entitled “The Online Sales Simplification Act.” Although Smallwood is not entirely comfortable with this proposed legislation because it is not a “pure origin” model, it is the best solution compared to destination proposals. This proposal would have a single tax rate for each state; taxes would be remitted by the vendor’s home state.
The Legislative Committee also heard a report on racetrack gaming. Proposed legislation favoring the race tracks is in the State and Federal Affairs Committee of the Kansas House of Representatives. Pari-mutuel track operators want to keep about 60 percent of the revenue instead of the present 25 percent.
Phil Ruffin, a former resident of Wichita who now lives in Las Vegas, owns the three pari-mutuel tracks in Kansas including The Woodlands. Ruffin, who also owns the Treasure Island casino in Las Vegas, is a business partner with Donald Trump in a Trump Tower.
Kansas casino operators point out that changes in the rules for the division of revenue for race tracks would be a breach of contract with the state. When this issue came up in 2016, Jeff Boerger, president of Kansas Speedway Development Corporation, said that the Hollywood Casino was required to pay a $25 million “privilege fee” and to make a minimum $225 million investment. In addition, the casino was required to make about $4 million in charitable donations.
There was also discussion during the Legislative Committee meeting about the prospect of sports betting. A U.S. Supreme Court case that could open such wagering in Kansas and other states is also expected June. The American Gaming Association estimates that $150 billion in sports betting goes unregulated and therefore remits no taxes. Casinos and race tracks could become sites for legal sport betting.
Murrel Bland is the former editor of The Wyandotte West and The Piper Press. He is the executive director of Business West.