[Congressional Record Volume 162, Number 176 (Wednesday, December 7, 2016)]
[Senate]
[Pages S6827-S6828]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       MARKETPLACE FAIRNESS BILL

  Mr. DURBIN. Mr. President, this past Thanksgiving marked the 
beginning of the holiday shopping season.
  In an effort to find deeply discounted electronics, toys, and other 
Christmas gifts for family and friends, bargain-hunting shoppers 
searched for Black Friday and Cyber Monday deals.
  While these deals provided great savings for shoppers, Main Street 
retailers and States did not reap the same benefits.
  Because we have let another year and holiday season come and go 
without closing the online sales tax loophole, States missed out on 
millions of dollars in sales tax revenue owed to them from online 
purchases. And Main Street retailers continued to lose business.
  However, this was not without trying.
  Around this time last year, Senators Enzi, Alexander, Heitkamp, and 
myself opposed the air dropping of legislation in the customs 
conference report that would have taken away a State's right to collect 
taxes on accessing the internet unless we gave States the ability to 
collect taxes on internet sales that were already owed, and we leveled 
the playing field for brick and mortar businesses.
  Despite our opposition, the customs bill passed, and Majority Leader 
McConnell promised to give us a vote later this year on the Marketplace 
Fairness Act or similar e-fairness legislation.
  This would give House Republicans the opportunity to go through 
regular order, a process they said was necessary to address the issue.
  Yet, unfortunately, here we are, at the end of the Congress, and 
House Republicans have still refused to act.
  The Marketplace Fairness Act levels the playing field for retailers 
by allowing States to treat brick and mortar retailers the same as 
remote retailers in the collection of State and local sales and use 
taxes.
  Internet retailers benefit under our current system with a 5-10 
percent price advantage over their Main Street competitors.
  This is because customers visit local retailers, browse goods, use 
their phone to take a picture of it, and go online to purchase the item 
tax-free.
  Products sold online seem cheaper when sales taxes are not collected 
at the point of sale. But they are not because the tax is still owed, 
though not paid, by the customer.
  This is not fair, and it is not right.
  Thousands of Main Street businesses have worked hard to grow their 
businesses, but have become showrooms because of this price advantage, 
making it difficult, and, in some cases, impossible for them to 
compete.
  I have come to this floor in the past to share the stories of Main 
Street businesses, such as Play It Again Sports in Naperville and 
Soccer Plus in Palatine, that have gone out of business due, in large 
part, to the unfair advantage of their online competitors.
  Since then, Sports Authority has met that same fate, and many 
department stores and big-box retailers have closed a number of stores 
because of the increase in online shopping.
  These are local jobs and community anchors that no longer exist.
  There is nothing we can do now for these shuttered retailers. But we 
can,

[[Page S6828]]

and should, still help thousands of retailers avoid the same fate by 
leveling the playing field for Main Street retailers.
  For the first time in history, consumers said they made more of their 
purchases online than in stores.
  This trend is evidenced by an increase in online retail spending, 
which grew 14.6 percent last year, to $341 billion, and is projected to 
reach $523 billion in 2020.
  During the weekend following Thanksgiving--the biggest shopping 
weekend of the year--online retail spending was over $9.3 billion, a 
16.4 percent increase from 2015.
  As online sales increase, the potential sales tax revenue that States 
lose increases.
  The longer we delay in closing this loophole, the longer we 
perpetuate an uneven playing field between local and online retailers 
that erodes the revenues needed by State and local governments to fund 
essential public services.
  Despite the looming budget deficits State and local governments are 
facing and the competitive disadvantage experienced by brick and mortar 
businesses, House Republicans have refused to address the issue for 
more than a decade.
  This year is no different.
  Numerous requests to the chairman of the House Judiciary Committee to 
markup e-fairness legislation from the ranking member and other 
bipartisan members on committee, Main Street retailers, State and local 
governments, labor, and the sponsors of the Marketplace Fairness Act 
remain unanswered.
  Instead, Chairman Goodlatte drafted his own proposal that created 
more problems than it solved.
  I didn't support the chairman's proposal, but I supported the process 
and his calls for regular order and encouraged him to work with his 
colleagues in the House to send us a bill so that we can resolve our 
differences.
  We are still waiting.
  The chairman has continued to refuse to work with us on reasonable 
compromise legislation that didn't turn 100 years of sales and use tax 
law on its head, even though he doesn't have the support of the 
majority of the House Republican Caucus on his approach.
  It is apparent that these calls for compromise and regular order are 
nothing more than veiled attempts to delay and obstruct, which have so 
far been successful.
  If Congress continues to ignore this issue and fails to act, the 
courts will.
  Because States are missing out on an estimated $23 billion a year in 
potential sales tax revenue, they are looking to the courts for a 
solution, heeding the call from Supreme Court Justice Kennedy to 
reexamine the Court's precedent on the issue.
  This year alone, 16 States have introduced over 40 sales tax bills, 
and others have enacted legislation that have triggered legal 
challenges that would help States collect sales tax without 
congressional action.
  This week, a Federal court in South Dakota will begin hearing oral 
arguments on a South Dakota law that requires remote retailers to 
collect and remit sales tax.
  And we may know, as early as next week, if the Supreme Court will 
grant review of a law Colorado recently enacted that imposes reporting 
and notification requirements on remote retailers.
  Let me be clear. This is not the approach I prefer. I would rather 
Congress do its job to pass a uniform, comprehensive Federal solution 
instead of the States moving forward individually so we don't have a 
patch work of laws that small businesses have to navigate.
  But I understand that, in the absence of Congressional action, the 
States have no other options. They must either raise taxes or cut vital 
public services if Congress continues to sit on the sidelines.
  As you can see, the States are no longer waiting for Congress to get 
its act together.
  But there is still time for us address this issue.
  And I hope my colleagues in the House will work with me to do that 
before it is too late.

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