Member Profile: Hilary and Brad Scott persevere through government and economic obstacles
Hilary and Brad Scott’s experience with governments state and federal would have caused many to simply give up and walk away from it all. Not them. Their determination to navigate their small business through the strongest storm in everyone’s lifetime is a shining example of why small-business owners remain the lighthouse of this nation’s economy. The Scotts are further proof that if economic recovery is ever to come, it will run down Main Street before it does Wall Street.
Long before the coronavirus infected all walks of American life, the Scotts had been grappling with 50 states’ online sales tax requirements. Their Prescott, AZ-based Halstead is a wholesale distributor to the jewelry trade. “Our customers are small jewelry businesses,” said Hilary of the company established by her parents in 1973. “We serve thousands of these small operations across the country and around the world.”
When the U.S. Supreme Court issued its South Dakota v. Wayfair decision in 2018, that allowed states, for the first time, to begin taxing the online sales of companies that had no physical presence in the state. Absent a national standard or law, the court’s ruling created a multitude of taxing jurisdictions not only from states but many local governments within them.
“We have no issue with remote sales taxes,” says Hilary, “but the devil is in the details and the complexity.” The Scotts, after receiving nasty threats from a few states for violations not of their creating, and for minuscule amounts of supposed missed remittances, decided to take their cause for simplification national. Last year, Brad, who estimates Halstead has spent $205,000 in compliance costs to collect less than $84,000 in taxes to remit to governments as of April 2020, even testified before Congress about the crying need for simplification if everyone is to benefit. Halstead refuses to do online business with retail buyers from Colorado with its more than 700 taxing entities.
And now, the coronavirus …
A trait common to successful small-business owners everywhere — that is by an equal degree completely lacking in big business and large corporations — is a loathing of having to ask government for help of any kind. After all, it’s mainly from the taxes contributed by small business that government is able to help anyone at all.
But the coronavirus has violently upended life’s card table, and the Scotts, like every small-business owner willing to stay open for the sake of their employees, applied for a Paycheck Protection Program loan … and waited … and waited.
Hilary Scott thinks she was one of the first to wind up withdrawing the loan application, and is going ahead without any help, but with eyes wide open. “It’s going to be a long year,” she said. “This isn’t going away in a month. I don’t think recovery will be fast.”
The Scotts have had to lay off some of their 30 employees and are considering suspending their annual grant competition after 14 years. It was set to award $7,500 in cash and $1,000 in supply credit to the winner as well as prizes for nine other finalists in the small jewelry business.
Halstead is not just any small business, it’s the kind manifestly vital in so many ways. “We have an in-house working jewelry studio where we offer metalsmithing, design and repair workshops to our employees as part of job training. This helps them to understand our products and customers so we can serve them better,” says Hilary.
“Halstead is one of the businesses that will tell me everything I need to know about the prospects for an economic recovery,” said Chad Heinrich, Arizona state director for NFIB. “The Scotts embody the creativity, care and grittiness of the very best small-business owners, and now they will try to go it alone without government loans. If they can’t make it, I will be in despair for this nation’s future.”
First photo: Brad Scott testifying before Congress about the need to simplify and streamline online sales tax collections. Second photo, from left to right: Jonathan Williams of the American Legislative Exchange Council, Hilary Scott, Brad Scott.