[Congressional Record Volume 143, Number 154 (Thursday, November 6, 1997)]
[Senate]
[Pages S11900-S11901]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    MAIL ORDER HOUSES AND SALES TAX

  Mr. BUMPERS. Mr. President, this morning, I was reading the New York 
Times and came across an article truly exhilarating to me. It dealt 
with a matter that the Presiding Officer is all too familiar with, too. 
A number of large States are in the process of negotiating an agreement 
with some of the biggest mail order houses in the country, under which 
those mail order houses will, in the future, pay sales tax on 
merchandise they send into States that have either a use tax or a sales 
tax.
  It was in the 1992 Quill decision the Supreme Court ruled that 
Congress could authorize the States to require collection of sales and 
use taxes by mail order houses shipping goods across State lines. But 
Congress would have to make that decision formally by legislation.
  So I sponsored such legislation because I was a former small town 
merchant--I practiced law, I ran cattle, I had a small hardware retail 
and appliance store, and I even owned a cemetery one time, Mr. 
President. I did anything I could do to make money. Even back in those 
days, a lot of people ordered things from catalogs. I resented it. I 
was on Main Street collecting sales taxes, paying a corporate franchise 
tax to the city, paying all the taxes that make a decent place to live, 
and I was being competed against by people from other States who paid 
nothing.
  In 1994, and again in 1995, I introduced legislation to authorize the 
mandated collection of interstate sales taxes. I got a vote on it and, 
of course, didn't get nearly enough to pass. Everybody got up and wept 
and wailed and said, ``This is another tax, all you tax and spenders.'' 
As I say, I did it because I am a former retailer and I resented having 
to compete against people who did not have to collect a sales tax, 
which gave them a big competitive advantage on big-ticket items like 
refrigerators, television sets, and so on. So I admit I came into the 
debate because of my personal experience. But I also felt very strongly 
that equity was on my side.

  I never will forget the distinguished junior Senator from Utah, in a 
Small Business Committee hearing one day, making a point, after having 
heard several mail order catalog executives talk about how this was 
going to be a terrible burden on them and some of them would go broke, 
and it was an impossible administrative nightmare to collect taxes for 
50 different States and a lot more jurisdictions than that because 
cities and counties also have sales taxes. I will never forget the 
little lecture that the Senator from Utah delivered, describing his own 
personal experiences, and that it had not been a burden for his 
company. I will always be grateful to the Senator for having helped out 
so magnificently that morning.
  Now, Mr. President, annual catalog sales are approximately $210 
billion. Now, there are a few good citizens like Home Shopping Network 
who collect sales taxes on everything they sell. But most do not 
collect the taxes except when their physical presence creates a nexus 
with the State which requires that collection activity.
  Let me explain that requirement. If a mail order firm has a physical 
presence in a State, the State may require that firm to collect sales 
taxes on the goods it sells in the State. If a company has a presence, 
for example, in the State of Arkansas and sells something through their 
mail order catalog to an Arkansan, the physical presence of that shop 
in Arkansas requires them to collect sales tax on any mail order sales 
to the

[[Page S11901]]

Arkansas resident. But if they do not have a presence in Arkansas, they 
can send all the merchandise they want to into the State and not 
collect a dime in sales tax.
  It is also unfair to the State and local governments which bear 
increased burdens because of mail order activity. For example, every 
year million of tons of catalogs go into the municipal landfills of 
this country, and State and local governments must pay for that. I 
think much of that comes to my house every year, frankly. Here it is, 
getting close to Christmas, and every night when I go home, I can't 
open my front door because there are so many catalogs behind it. But 
yet mail order companies pay virtually nothing to help States dispose 
of those millions of tons of waste.
  So, Mr. President, I have always felt that this was terribly unfair 
to Main Street merchants in America. There is not a great incentive to 
avoid taxes on small ticket items, but on big ticket items there is a 
huge incentive. A few States, like Wisconsin and Maine, have put a 
provision in their State income tax return for taxpayers to list the 
value of merchandise purchased through mail order. Last year, Wisconsin 
collected $1.3 million from that provision. But there is no telling 
what the State should have collected had all mail order sales taxes 
been collected. The $1.3 million came from people who were honest and 
voluntarily put on their State tax return what they purchased by mail 
order catalog and paid the sales tax on it. But there is no way the 
States can enforce an effective sales tax collection system on mail 
order goods. Forty-five States impose sales taxes on mail order 
purchases, but they have no effective way to collect it.

  Sometimes the States do collect the taxes on big-ticket items, 
however, and then the customer gets a rude awakening. I remember the 
story of a family in Florida which went up to North Carolina and bought 
some $25,000 worth of furniture because that company in North Carolina 
had advertised no sales tax. The family furnished their entire house 
all with new furniture, loaded it onto a van, and took it back. And, lo 
and behold, they were stopped at the Florida border and had sales tax 
assessed against them. The tax came to several hundred dollars, and it 
was a rude shock to that couple. There are a number of illustrations 
like that.
  But I do not want to take up too much of the Senate's time on this 
issue. All I want to say is that when mail order companies fail to 
collect sales taxes on their sales, it is unfair for the Main Street 
companies who do collect such taxes. It is not right for some to do it 
and the rest to be exempt. Now this agreement, which will reportedly be 
announced tomorrow between the largest States and the largest mail 
order houses, is a giant step in the right direction. I do not want to 
say anything tonight that would in the least hinder those people 
negotiating that agreement from finishing it. On the contrary, I 
applaud them, I thank them for doing what is right.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. COATS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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