[Congressional Record (Bound Edition), Volume 159 (2013), Part 4]
[Senate]
[Pages 5594-5596]
[From the U.S. 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 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

[[Page 5595]]

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 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.

[[Page 5596]]

  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 shoe store 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 shoe store 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.

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