THE SUAREZ CORPORATION
4626 Cleveland Avenue N.W.
•
Canton, Ohio 44709
•
(216)494-5504
Corporate Owners of:
INTERNATIONAL HOME SHOPPING
METROPOLITAN MAGAZINES
LINDENWOLD'S FINE JEWELERS
MEDIA SERVICE CORPORATION
FUTi^EATlcHBROKERS REAITY co
OFFICE OF THE PRESIDENT
BENJAMIN D. SUAREZ, President
The Honorable John Heinz
Russell Building
Suite 277
Washington, DC 20510
Dear Legislator:
You will find enclosed a copy of a letter we wrote to Congress
last year concerning Federal Use Tax Legislation. We also have had
meetings with a number of representatives on this matter recently.
It was with great surprise and disbelief that we learned that
this bill is before the Monopolies and Commercial Law Judiciary
subcommittee and being given serious consideration. This bill is
clearly destructive, unworkable, and unconstitutional.
The passage and implementation of the Equity and Interstate Sales
Tax Collection Act H.R. 3521 will result in less tax revenues for the
federal, state, and local governments and greatly damage our nation's
direct marketing businesses. Many representatives with whom we have
communicated agree. We thank these responsible lawmakers who work in
the public interest. ^Unfortunately, certain representatives who work
for special interests, to the detriment of the public, are pushing
this bill, such as Congressman Jack Brooks.~~~~]
To summarize the enclosed copy of our former letter, here is why
this bill is not in the public interest and would result in less
government revenue:
1.
IT WILL COST MORE TO COLLECT THE TAX THAN THE TOTAL TAX
REVENUE COLLECTED:
The costs of collecting and paying sales tax to 50 states
will be enormous. Also, most companies in a given period
of time, will likely experience 50 state tax audits. Many
companies will be put out of business because of these
factors alone.
2.
THIS TAX WILL CAUSE HUGE MAIL-ORDER BUSINESS LOSSES AND
THUS REDUCE OTHER REVENUE-PRODUCING TAXES SUCH AS INCOME
TAXES FOR ALL LEVELS OF GOVERNMENT:
In a mail-order purchase, a consumer makes the decision to
buy or not to buy after the total price of the product with
sales tax is totaled. In retail sales, a consumer makes the
decision to buy in nearly all cases before the total price
is computed with sales tax. The rate of response in mail
order decreases proportionately as the total price a
prospect must pay for the product increases. Therefore, a
sales tax of 5% would increase the total price of the
product 5% and decrease sales by the same 5%. Since
printing and postage costs for the sales promotion would
remain the same, cost of sales would then increase 5%.
Therefore, this tax will result in a 5% loss right off the
top for direct marketing companies. Most mail-order
companies only average a 6% bottom line. That means many
companies will be put out of business, and the rest of the
companies will make little or no profit. Therefore, there
will be greatly reduced federal, state, and local income taxes
collected on the mail-order corporations. Additionally, the
drop in sales will result in layoffs, or in the case where
companies go out of business, permanent furloughs of
employees.
3.
THIS TAX IS UNCONSTITUTIONAL AND WILL BE CHALLENGED IN
COURT.
The Equity and Interstate Sales Tax Collection Act H.R. 3521 is
irresponsible. Those in Congress who sponsored it, or support it,
cannot make the excuse that they did not know the above facts, given
that we mailed the enclosed letter to all of Congress last year, and
the direct marketing trade associations have been providing numerous
educational presentations on this bill over the pcist several years.
Therefore, those who sponsored this bill and those who support it are
simply pandering to the special interest groups of government
employees' unions who want bigger paychecks and retirement benefits at
the expense of the public. We think this total lack of concern for
the public interest is intolerable.
We have formed a major non-profit citizens' group called the
United States Citizens Association (USCA). This group plans to do
something about the element in Congress who is not working in the
public interest on all matters, including this bill. In coming
elections, the USCA plans to take affirmative action against those who
sponsored this bill and against those who support it and to support
and help conscientious lawmakers who oppose it.
Our company has a great deal of direct marketing political
expertise in both campaigning and fund raising. We have been
instrumental in electing a number of candidates in our area, and these
candidates are amongst the highest vote getters. In addition, our
expertise and resources have allowed us, in the past, to defeat
incumbents, even ones who were considered invincible. This expertise
is being provided to the USCA.
We are already taking affirmative action to defeat Congressman
Jack Brooks in the next election. We will also take action on a
priority basis to defeat other incumbents in Congress who irresponsibly support this destructive and unconstitutional bill. As an
example, we have already taken action to recruit candidates to run
against JLajs^k Broods i" thf 1990 electio-n. Initially, we have
recruited by phone, and we will also soon start running newspaper, TV,
and radio ads in Jack Brooks' district (a draft of one of the
newspaper ads is enclosed).
In most cases, representatives like Jack Brooks who do not work
in the public interest but: who pander to special interests with big
lobbies and PACs can usually do so without facing consequences. This
will not be the case with this issue. This time, members of Congres
who support this irresponsible bill will face consequences from an s
opposition lobby and PAC, having great expertise and resources to
defeat them in future elections.
Sincerely,
&***s7~~«.
Benjamin D. Suarez,
President
BDS/lb
Enclosure