Alibaba may have become a darling of the Wall Street, but it’s a big threat to the U.S Main Street. Traditional brick-and-mortar retailers have warned Washington that the Main Street would be crushed if Congress didn’t close the tax loophole for online retailers. The Chinese e-commerce giant is yet to establish a strong foothold in the United States.

Alibaba Group Holding Ltd Could Crush U.S. Small Businesses

Alibaba could swallow the market share of small retailers

Amazon and Ebay have enjoyed special tax treatment for decades. Main Street retailers have been forced to charged sales tax, but online retailers aren’t required to levy sales tax. It gives them an “uncompetitive advantage” to e-commerce companies, says Dan Schneider of Fox News. Brick-and-mortar retailers are already competing against American online retailers on a tilted playing field.

Extending the same unfair advantage to overseas giants like Alibaba could deal a crushing blow to countless small businesses. It will swallow their share of the market. After raising $25 billion in its IPO, the Chinese company is expected to aggressively expand its business in international markets, including in the U.S. Congress must create a level playing field for traditional and online sales. The U.S. Senate overwhelmingly voted 69-27 last year to pass the Marketplace Fairness Act to close the e-commerce sales tax loophole. Even Amazon has come out in support of the Marketplace Fairness Act. 

The height of lunacy

Now, says Schneider, it is up to the House of Representatives to decide whether they want to “stand up for small businesses or cut them off at the knees” by kissing Alibaba. The Marketplace Fairness Act will authorize state governments to collect sales tax from online retailers. Kissing Alibaba means getting into bed with the Communist Party and Chinese government.

Unfortunately, China doesn’t care about the American economy. A report from The Wall Street Journal says that no business in China can grow so big without support from the Communist Party. Alibaba’s blockbuster IPO yielded billions of dollars in payouts for China’s sovereign wealth fund and private investment firms linked to descendants and relatives of the Communist Party leaders.

So, why would Republicans and Conservatives want to ruin the small businesses they represent in favor of Alibaba, which is backed by the Chinese Communist Party? A wet kiss for Alibaba would be “the height of lunacy,” noted Schneider.