It’s a running joke on a cartoon show, and one that’s been picked up with a sort of derisive sneer in marketing department meetings.
It works like this, the story of “underpants gnomes” who go out at night at steal, well, underpants. (it’s a cartoon, remember?). As one gnome explains it: “Step one, we get all the underpants, step three, profit.”
Get it? You corner the market, then you just wait for the money to roll in. The “That’s all you have to do” is the implied punchline, hence the joke. It’s become such a pervasive punchline, itself as a takeoff on all the dot com millionaires when that was a thing, that “step three, profit” has become the shorthand for “you left a step out of your plan, an important step” for the hip sort of people who make pop-culture references at marketing department meetings.
While I’ll leave it to the reader to decide if I am hip or merely reporting on the speech patterns of the hip, I am reminded of the “step three, profit” joke in considering the Arkansas debate over Internet sales tax. I was - to be more direct than a punchline - glad to see the legislation in consideration of it be shot down at this most recent session.
It’s not that Arkansas sales tax shouldn’t be collected on Internet sales. Of course it should. But the “do it or else” logic of any of the proposed legislation to date would do more to stifle development in the state as anything else.
A lot to unpack in that last paragraph. First is the legislation which was passed earlier in the year requiring that Ecommerce monster Amazon to charge for tax for sales in Arkansas. That’s fine. Amazon has floors of developers and implementing something like that, while not a small deal, is relatively easy compared to the typical Arkansas online seller.
But we’re talking about development. Right now, if you have an E-business in Arkansas you have to set up to charge state, city and county taxes for sales to Arkansas residents. That, of course, is also law. That, and here’s what nobody seems to realize, is a monstrous undertaking if you’re running on your own website. “Arkansas modules” to plug into existing commercial website packages simply aren’t there if you’re going to have, say, over 500 items for sale. In which case you have to hire someone, a developer or development shop, to install your Arkansas tax module. It gets expensive (and can be a headache to keep updated, but that’s a separate issue).
Two alternatives exist: One either uses one of the web store packages which don’t allow as broad a range of goods, or, two, one hosts their product line with a third party website, like, say, Amazon.
Now we’re getting into “stifle” country. Because right here we’ve told the prospective Ecommerce business person to either go small, pay a fee to a third party for every sale, or spend a lot of money to have a sales tax feature on your own site. This is bad news any way you look at it.
Or, alternatively, one could establish their business out-of-state, taking your employment (and, yes, tax revenues) out of Arkansas to some place which would not force you to add expensive software to your website in order to do business.
And of course the argument is “What about the Mom and Pop businesses who are paying sales tax on their cash register sales? Isn’t this unfair to them?” And you’re not unfair in making this point. But look, look at the modern world, look at what’s happening to retail space. If you’re going to get into business today, would you, Mom and/or Pop, look at setting up as a storefront or as an Ecommerce outlet? Or would you not at the least have online sales as part of your business model?
And of course, you would choose “online component,” and if poorly considered legislation gets in your way, adding “but not in Arkansas.”
Just to be clear, it’s important to collect sales tax. For the sake of further clarity, however, it’s more important to generate jobs, it’s more, still, important to generate innovation which leads to job growth, and it’s important that this innovation be able to act in its own space, and not on the software backbone of some distant conglomerate.
It’s a question of meeting the times, not making all the profit.