[Congressional Record Volume 159, Number 55 (Monday, April 22, 2013)]
[Senate]
[Pages S2823-S2825]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MARKETPLACE FAIRNESS ACT
Mr. ENZI. To return to the discussion on marketplace fairness, I
mentioned that most consumers are aware they are supposed to pay the
tax on purchases that the retailer does not choose to collect at the
time of the purchase, so I would like to provide some highlights of
what the Marketplace Fairness Act actually accomplishes.
The bill gives the States the right to decide to collect or not
collect taxes that are already owed. The legislation would simplify and
streamline the country's more than 9,000 diverse State tax
jurisdictions and provide 2 options by which States could begin
collecting sales taxes from online and catalog purchases.
The bill also carves out small businesses so that they won't be
adversely affected by the new law by exempting businesses with less
than $1 million in online or out-of-State sales from the collection
requirements until they have had a year in which they have had more
than $1 million worth of sales. This small business exemption will
protect small merchants and give new businesses time to get started. As
has been mentioned, when they meet that level, then they have to be
provided with a program that will do the calculations for them, provide
for submitting the revenues, and also hold them harmless for any errors
there might be in the program.
So don't let the critics get away with saying this type of
simplification can't be done. The different tax rates and jurisdictions
are no problem for today's software programs. When you order something
online, you have to put in your ZIP Code. The ZIP Code will tell what
the tax is from whatever jurisdiction.
As a former mayor and State legislator, I strongly favor allowing
States the authority to require sales and use tax collection from
retailers on all sales for each State that chooses to do so. We need to
implement a plan that will allow States to collect revenue using
mechanisms already approved by their local leaders. We need to allow
States the ability to collect the sales taxes they already require.
If enacted, it would provide approximately $23 billion in fiscal
relief for States for which Congress does not have to find an offset.
This will give States less of an excuse to come knocking at the Federal
door for handouts and will reduce the problem of federally attached
strings.
A lot of people don't realize that the Federal Government is out of
money, and that is shown by what was done through the sequester because
the Federal Government usually pays property tax to States and
localities that have Federal property. That amount has never been equal
to what other people would be paying in their property taxes, but it
has been a show of good faith that they recognize that with the
government there, there is a loss of revenue and that the Federal
Government should do something. So there is a tax level they have been
paying. It hasn't gone up much and it hasn't gone down much until this
year. Then, as part of the sequester, they decided they would hold 5.3
percent from all the States and all the local governments. That is
called payment in lieu of taxes, and that is one way the States and the
counties have lost money and a way they are going to have to make up
for it if that continues. But there is also the possibility that the
revenue they take in from this can reduce something like property
taxes.
For many years I have worked with all the interested parties to find
a mutually agreeable legislative package to introduce and ultimately
enact into public law. This year Senators Durbin, Alexander, Heitkamp,
and I worked together with 25 of our bipartisan Senate colleagues to
produce a bill that assists sellers and State and local governments to
simplify taxes and use collection and administration. We are working
with our House supporters--Representatives Steve Womack, Jackie Speier,
Peter Welch, and John Conyers--and have found common ground on this
important issue to move forward with a bipartisan, bicameral bill in
this Congress. I wish to publicly commend all of my Senate and House
colleagues in taking a leadership role and working on this important
issue.
The Marketplace Fairness Act is about States rights, and it is about
fairness on the budget bill. We had a vote on this, and I was very
pleased that 75 of the 100 Senators voted in favor of making the
marketplace fair. So I strongly encourage my colleagues to vote for the
motion to proceed on S. 743, the Marketplace Fairness Act, tonight at
5:30 when we have that vote. I
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am hoping we will be able to duplicate what we did before and support
the goals of States rights and a level playing field for all
businesses.
I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. ROCKEFELLER. I ask unanimous consent that the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROCKEFELLER. Mr. President, we have an important opportunity this
week, or before, to help small and local businesses all across our
country. We have an opportunity to help the kinds of local businesses
that make our small towns and rural States so warm and inviting. These
businesses attract tourists because of the nature of their smallness.
Everything is not big. Everything that is big is not necessarily
friendly. Small businesses are almost always friendly. Today these same
small and local businesses are competing on a very unfair playing
field. This is an issue I have cared about ever since the Internet was
created. I felt strongly about it then and I feel strongly about it
now--except even more so.
For over 20 years States have been unable to enforce their own sales
tax laws on sales by out-of-State catalog and online sellers due to
something I am familiar with only because of the specificity of the
issue to the 1992 Supreme Court decision Quill Corp. v. North Dakota.
Sales tax is not collected for most Internet transactions, so
consumers know they can benefit from a 5- to 10-percent discount
online, and they know that before they go into a store. In fact,
something that is even more discouraging--because I have made a point
of watching it--also takes place, and that is what cell phones can do
for shoppers. I have seen shoppers in various small shops, such as
craft shops, tool shops, and other various kinds of Main Street shops,
come in and look at the merchandise. They pick over the merchandise,
compare it, decide what they like, and take a picture of it. While
still in that small store, they go online and buy it, thus avoiding
having to pay a sales tax. They never have to leave the store--or they
can. They can just look at their cell phone when they get home and then
buy it if they want to.
This strikes me as profoundly unfair, so profoundly unfair that it is
one of the easiest issues I think I have ever dealt with since I came
to the Senate some time ago. It is profoundly unfair to traditional
shops and small businesses to end up serving as the display case for
consumers who see the product in person but buy it online to avoid
paying sales tax--or maybe they aren't doing it deliberately to avoid
paying sales tax. If they are well versed in the ways of life, they can
do that because they know they will get a nice little discount. On the
other hand, it is just a habit because States don't have the money--
particularly small States such as mine--they don't have the money to
possibly collect that or go after that.
I feel very strongly about sales taxes. For the most part sales taxes
are used, about 70 percent of them are used in my State for boards of
education, public education. I think that is probably true in most
States. But, frankly, I just don't know. It is true in my State, so I
care about it. My State, because of what I have just described--simply
buying online and not having to pay a sales tax or anything--my State
lost about $103 million last year alone. That is a pretty big chunk of
our budget. That sounds silly to California. On the other hand,
California loses about $4 trillion-plus because of this, and this
simple bill would correct that situation and allow them to be able to
have the software to do all this.
In West Virginia we are fighting to keep our small towns vibrant, and
I think the good Presiding Officer understands what I mean by that. His
State has a couple of big cities, but it has a lot of small towns. My
daughter lives in one. Those small towns are the heart and soul--towns
such as Newtown are the heart and soul of America, with good people,
honest people, doing honest commerce.
We need local retailers to keep our small towns vibrant. I believe we
can have both a vibrant Main Street economy and e-commerce businesses
together, but we have to have them both. Let's be honest. Allowing
States to collect sales tax for online purchases is not going to stop
the growth of e-commerce.
My Commerce Committee held a hearing on this issue a couple of years
ago, and we had a bunch of folks who made all kinds of claims, but then
a lot more folks who said this isn't fair. It is not a fair way to do
business.
Today's technology, with the tremendous advances made in recent
years, makes tax collection simple, makes it cheap, makes it reliable.
In many ways, the Internet is the perfect environment to collect sales
taxes because it can be automated.
If Congress does nothing, we will end up with States forced to raise
income or property taxes to offset the growing loss of sales tax
revenue. That doesn't seem right or fair to me, and I feel strongly
about it.
I know the Congress has worked on this issue for a long time. I
recall Senator Enzi's original bill on this issue was referred to the
Commerce Committee. Senators Enzi, Durbin, and Alexander are, from my
point of view, to be enormously commended for their commitment on this
issue, keeping up the good fight. I have always thought it was the
right idea, and I cosponsored the very first bill just as I am
cosponsoring this current bill.
When Senator Enzi first introduced this bill, it was not a popular
idea. Over time more people have come to understand that this is an
issue of basic fairness--really just that word, ``fairness''--to make
it possible to allow people to compete on a correct basis, and it is
terribly critical to our States' fiscal health. So that is why I stand
here excited to see a growing bipartisan consensus in this Chamber to
pass the Marketplace Fairness Act. I commend its authors. By a vote of
75 to 24, the Senate recently supported the inclusion of this bill in
the budget resolution. I hope we can finish the bill soon and level the
playing field once and for all.
I wish to close by saying this bill is ultimately about fairness. It
would allow small and local businesses--the kind that dot every town
all across the United States--a chance to play on a level playing field
and, in fact, in some cases a chance to operate, to be in business. By
passing this bill in the next several days, we can restore fairness to
small and local businesses.
I thank the Presiding Officer. I yield the floor and note the absence
of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. WHITEHOUSE. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WHITEHOUSE. I am here on the floor today just to say a few words
to follow the distinguished chairman of the Commerce Committee in
support of the Marketplace Fairness Act.
I represent Rhode Island and I have to say my Governor, a former
member of this body, Lincoln Chafee; the president of our State senate,
Senator Teresa Paiva; our speaker of the house, Gordon Fox, and
numerous other Rhode Island organizations have ardently urged us to
pass this legislation. The reason for that is twofold. No. 1, they are
losing immense amounts of tax revenue that is swirling down this
loophole of noncollection. Actually, the number I think is $23 billion
for 2012. Rhode Island is not the biggest State, so we don't have a
huge chunk of it, but it is about $70 million for Rhode Island, which
is pretty significant. So it is important to all of us, while the
States are struggling, to make sure tax revenue that is due and just
not being collected is put into the revenue equation.
The second thing is that it really just plain is not fair to the
local businesses that have shops on Main Street, that have shops in the
local shopping malls, to have competition with electronic delivery
companies, with companies that exist on the Internet and with Internet
shopping, that are subsidized, in effect, by the government.
Very often my colleagues come to the floor to say government should
not
[[Page S2825]]
pick winners and losers. Government should not pick winners and
losers--how many times have we heard that? If I had a nickel for every
time somebody on the other side of the house said government should not
pick winners and losers, I would probably be a wealthy man. But
``government should not pick winners and losers'' is a principle that
really applies in this area because those companies that are operating
a brick-and-mortar storefront are paying their taxes--they are paying
their taxes--and the noncollection on the Internet sales puts them at
an unfair disadvantage.
There are conveniences to Internet sales. Nobody wants to get rid of
that. It is an important, growing part of our economy. I am all for
that. In fact, I think I have family members who shop that way,
including a daughter who is one of the more ardent eBay shoppers in the
country, I suspect. But in any event, it is very important that we not
add to the natural advantages Internet shopping has by creating this
additional, manufactured tax advantage.
It comes down to a point that I think you could appreciate if you can
put yourself in the shoes of a small business owner. Imagine that you
own an electronic goods store and you sell televisions--imagine that
you are a shoestore owner and you sell shoes for kids and adults--and
somebody comes into your electronics store and they look at all the
TVs, they call over your salesperson and they get the whole briefing on
what is best and how you hook it up and all of the technical details
about it, and they see exactly what they want. Then, when they have
decided what they want, that is the moment when they should reach into
their wallet and pull out their credit card and say: I will take that
one. I will buy it. Instead, they reach into their pocket and they pull
out a notepad and they write down the details of the television they
were looking at, and they say thank you very much to the store owner,
and they walk out and they buy it off the Internet.
The brick-and-mortar store has put all the expense into having the
overhead, into having the television there, and into having the expert
salespeople there, and a consumer takes advantage of that but then does
not buy it, goes outside. That may still happen, but it will happen
less if we can take out the unfair disadvantage that brick-and-mortar
store owner has and put that back into balance.
I have had a shoestore owner say the same thing. A parent comes in,
sits the kids down, and has the sales clerk bring out boxes of shoes.
They try them all on, see which ones the kids like, see which ones fit
best. Then, when they are all done and they are ready to make their
purchase, again, out with the notepad. They write down the brand of the
shoe, the size of the shoe, and then walk out of the store, and there
is the sales clerk left to box up the shoes, wrap them back up in the
paper, take them back in the back again, and they took all that effort
and all that expense and they never made the sale.
Again, there are advantages to shopping on the Internet, and there
are probably times when that kind of behavior by consumers will
continue. But why add the subsidy of uncollected taxes to the
advantages the Internet shopper has? Our local stores, our local small
businesses need to have this set right and set into balance.
There has been a concern raised that the Marketplace Fairness Act
would create all this immense bureaucracy and it would be so difficult
to do this. That is really not true. The computer and billing systems
that exist right now make this a virtually seamless transaction, and
States are obliged before they can do it to come into compliance with
the Streamlined Sales and Use Tax Agreement, which is a compact among
States, developed by them, that has coordinated the different State tax
laws so that this process can be easy and streamlined.
So I think this is a good moment coming for us after a very lousy
week last week. We have the chance to get together on a bill that in
the budget process I think gathered 70 votes--maybe more than 70 votes.
I do not remember the exact count, but it was a very strong majority in
this body. It was a completely bipartisan vote, with proponents and
opponents on either side.
But I think that in the interest of fairness, in the interest of
economic efficiency, in the interest of not picking winners and losers,
and in the interest of helping to move our economy forward and
protecting our stores that are on our Main Streets and in our shopping
centers and shopping malls, this is a good thing to do. So I hope we
will come together and pass this bill and show that we can act
productively and in a bipartisan fashion and that we will do so this
week.
I thank the Presiding Officer and again thank the chairman of the
Commerce Committee for his leadership and enthusiasm.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. COONS. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. King). Without objection, it is so
ordered.
Mr. COONS. I ask unanimous consent to speak for up to 20 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________