Businesses Look to Marketplace Fairness Act to Help Restore Local Economy

For most of Union Hardware's 99-year history, its biggest challenges were other hardware and appliance stores.

But since the recession, a new competition has emerged, stronger than any of its predecessors: online businesses that don't collect sales tax.

David Goldberg, co-owner of Union Hardware (7800 Wisconsin Ave., Bethesda), represents the third generation of his family to own and operate the store. To compete with online retailers not collecting state sales tax, he started stocking European imports not readily available online. He'd rather be stocking and selling American-made products.

The Marketplace Fairness Act of 2013—which would require online retailers to charge sales tax just like bricks-and-mortar stores must do—recently passed in the U.S. Senate. If it passes in the U.S. House, Goldberg says it could have an immediate effect on his business.

Savvy shoppers who had been shopping online to avoid paying Maryland's 6 percent sales tax would no longer have that excuse to stay away from "Main Street."

Maryland Comptroller Peter Franchot, who visited Goldberg's showroom on Wisconsin Avenue on Thursday morning, called the act a "fairness bill." It would not be a new tax, as it would collect what is already owed. 

"We're doing it just for fairness. ... I just can't tell you how much abuse goes on in those billion-dollar [businesses]"—the online retailers that do not collect sales tax, Franchot said.

Franchot's office has estimated that Maryland loses about $173 million a year from non-taxed online sales.

Rep. Christopher Van Hollen (D-Kensington), a co-sponsor of the legislation, agreed with its necessity, calling it a "common-sense policy to ensure that small brick-and-mortar businesses in our community are not at a competitive disadvantage to online businesses."

Since the recession, Goldberg has had to lay off about half of his employees, and hasn't been able to offer much in the way of salary increases to remaining staff members. He hopes that the Marketplace Fairness Act can help change that.

Fellow small business owner Andy Stern, chair of the Greater Bethesda-Chevy Chase Chamber of Commerce and owner of Andy Stern's Office Furniture (in business since 1948, and with showrooms in Rockville, Vienna, McLean and Washington, DC), agreed.

"The last five years have been a devastating five years for small business owners. ... So many have suffered in the last five years from this horrible recession," Stern said.

Meanwhile, Goldberg has kept his business alive—he's hoping to steward the store to its 100-year-mark and beyond—by finding a niche for it: designer hardware. To help give the store more of an artistic, designer vibe, he created a mural—Starry Night—on the outside wall of his store. The mural uses a variety of hardware pieces—door knobs, levers and back plates—to recreate Vincent van Gogh's iconic Starry Night painting.

Occasionally, a few handles or knobs will go missing from the mural, but Goldberg has plenty of replacement stock—the American-made stuff he can't sell because it's available online, sales-tax-free.