[Congressional Record (Bound Edition), Volume 159 (2013), Part 4]
[Senate]
[Pages 5603-5604]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        MARKETPLACE FAIRNESS ACT

  Mr. HATCH. Mr. President, over the last few months I have come to the 
floor several times to discuss the need for the Senate to return to 
regular order. If the last several years taught us anything, it is that 
efforts to force legislation through the Senate without full and fair 
consideration tend to yield unsatisfying results.
  Complaints about the lack of bipartisanship have more or less become 
the norm around here, and we hear all the time about the desire for the 
so-called grand bargains. Bipartisan agreements don't just happen. I 
think we would all agree grand bargains cannot be made out of thin air.
  Luckily the Senate already has a system in place for fostering these 
types of agreements. It is called regular order. Yet today the Senate 
will vote on cloture on the motion to proceed to the so-called 
Marketplace Fairness Act, and in doing so, the Senate will once again 
abandon regular order in favor of the whims of the Senate Democratic 
leadership. This is a bill that falls under the jurisdiction of the 
Senate Finance Committee, but the committee has not had a markup on the 
bill. Instead the Marketplace Fairness Act is just the latest in a long 
line of bills brought before the full Senate without due consideration 
in the committee of jurisdiction.
  This has become far too common. I understand there are those who feel 
strongly about this legislation, and I admire them and respect the 
sponsors of the bill who worked hard to address what they see as a 
major problem with our Nation's tax policy.
  However, that simply is not enough to justify yet another abdication 
of the committee process here in the Senate.
  The Senate is organized into various committees of jurisdiction so 
Members are able to develop and utilize their own expertise on specific 
issues. When a piece of legislation goes through the committee process, 
it is thoroughly vetted and examined. This provides an opportunity to 
resolve technical issues and address various concerns before the bill 
is brought to the floor for a vote.
  Regular order is not a process designed to protect the power of 
committee chairmen and ranking members. We have regular order and our 
committee structure so we have an organized way of ensuring our 
constituents are fully represented and to make sure the legislation we 
pass is technically sound. The legislation we will be voting on today 
is a perfect example of the importance of regular order.
  The Marketplace Fairness Act is a bill that will have a significant 
impact on millions of consumers and businesses throughout the country, 
and clearly, this is no trifling matter.
  Most reasonable people would agree that a bill of this magnitude 
would benefit from full and fair committee consideration, including a 
markup with an open debate and an opportunity to vote on amendments 
before it is brought to the floor. However, being reasonable doesn't 
appear to be part of the equation on the floor today.
  I want to stress I am not fundamentally opposed to this legislation. 
My goal is not to stop it at all costs. Instead, I simply want to 
ensure it is fully vetted and examined. I know if all sides are able to 
look at this in a dispassionate way, we might find ways of bringing all 
sides together, and that is not going to happen the way it is being 
done now. Therefore, today's vote is, in my view at least, as much a 
vote on regular order as it is a vote on the underlying bill.
  That said, I do have specific concerns about the legislation as it is 
currently drafted. To begin with, the Marketplace Fairness Act in its 
current form is a fairly short 11 pages long. This bill essentially 
provides two avenues for States to compel remote sellers or out-of-
State businesses to collect and remit sales and use taxes. Under the 
bill, the State may either meet specified minimum requirements or be a 
member State under the Streamlined Sales and Use Tax Agreement, as long 
as the minimum requirements are met under the agreement.
  The Streamlined Sales and Use Tax Agreement is a good deal more 
complicated than the Marketplace Fairness Act. For starters, at 203 
pages, the agreement is about 18 times longer. Since its adoption on 
November 12, 2002, the Streamlined Sales and Use Tax Agreement has been 
amended 28 times, most recently last year. It is not a simple little 
problem here.
  The streamlined sales tax governing board has done excellent work in 
bringing States together to cooperatively and voluntarily address the 
issues of sales and use tax complexity and administration, just to 
mention a few issues.
  According to the streamlined sales tax governing board, 24 States 
have adopted the simplification measures in the agreement, representing 
31 percent of the population.
  The authors of the Marketplace Fairness Act hope to apply its 
measures to all 50 States and 100 percent of the population.
  However, the bill is comparatively short on details. For example, the 
Streamlined Sales and Use Tax Agreement contains provisions on rules 
for the sourcing of sales, along with exclusions to those rules. In 
order to levy the appropriate sales tax, the location and subject 
matter of the transaction must be determined. This level of detail is 
not present in the Marketplace Fairness Act.
  It is unclear if the floor established on sourcing requirements under 
this bill is sufficient to protect consumers from unintended 
consequences. For example, I have received a letter from the American 
Society of Pension Professionals and Actuaries which is worried that 
this legislation ``would allow states to impose a financial transaction 
tax that would apply to American workers' 401(k) contributions and 
other transactions within workers' accounts.''
  Another concern I have with the current version of the Marketplace 
Fairness Act is that it contains a preemption clause which could make 
it possible for States to expand the reach of their sales taxes through 
creative legislating. The Streamlined Sales and Use Tax Agreement at 
least provides an avenue for the input of multiple States. The States 
that are not subject to the agreement would, under this bill, be able 
to legislate knowing that the Federal Government will compel 
enforcement of their tax law on nonresidents.
  I am concerned with the transition costs that will come with this 
legislation for retailers who have been operating in an environment 
where they have not been required to collect and remit sales taxes for 
States where they do not have a physical presence. This legislation 
would change that almost in an instant.
  Before we enact a new sales tax system, we need to take into account 
the costs that system will impose on businesses of all sizes and the 
difficulties these companies will face as they adapt to the new regime.
  For example, there is the issue of vendor compensation. The 
Streamlined

[[Page 5604]]

Sales and Use Tax Agreement currently includes a provision giving 
States the opportunity to voluntarily compensate remote sellers ``as a 
measure of good faith'' for registering to voluntarily collect and 
remit sales taxes into States where the seller has no physical 
presence. This is included in the agreement because under the current 
law remote sellers are generally not required to collect and remit the 
sales tax, and they incur a cost when they do so.
  The Marketplace Fairness Act does not include any provision for 
compensation of remote sellers. I believe this is something we must 
take into account and examine even more thoroughly. I am also concerned 
about the small-seller exemption in the bill which would exempt sellers 
with national remote sales of less than $1 million from the new 
requirements to collect and withhold sales taxes. This seems like an 
important concession, but it is not without its problems.
  First of all, the cap on the exemption is not indexed to inflation. I 
think anyone who has observed any part of the roughly 50-year process 
where the alternative minimum tax has grown from a fairness measure 
targeting the rich to an ever-increasing burden on the middle class 
should understand how inflation can radically distort policy outcomes 
over a period of time. In addition, there are many who argue that the 
$1 million exemption may be too low. In my view, these are concerns we 
need to fully consider before bringing the bill to the floor.
  Finally, I want to point out that the bill does not include a 
provision for a dispute resolution venue. Ideally the bill would give 
Federal district courts exclusive jurisdiction in matters concerning 
the implementation of this legislation. Policy changes with such far-
reaching effects inevitably lead to unexpected issues and consequences. 
Giving Federal courts this jurisdiction would ensure greater uniformity 
and application of this legislation across the country.
  These are only a few of the concerns I have regarding the Marketplace 
Fairness Act. I don't believe these are necessarily fundamental 
concerns, but they are issues that need to be addressed.
  I am quite certain that, if given an opportunity, the Finance 
Committee could address these issues without inexorably changing the 
underlying purpose of the bill. However, if we proceed with floor 
debate on the Marketplace Fairness Act as is, we will not have that 
opportunity.
  The Senate simply cannot continue to operate this way. Once again, we 
need to restore the deliberative traditions of the Senate, and that 
means a return to regular order.
  I know a number of my colleagues have expressed similar concerns 
about the need to restore the committee process in the Senate. I hope 
they will join with me in voting no on cloture on the motion to proceed 
to the Marketplace Fairness Act. This doesn't necessarily determine how 
I am going to vote on the final analysis of this, but I sure as heck 
would like to approach this in a much more intelligent and 
legislatively profound way than we are doing here tonight.
  By the way, we can talk about the fairness of this thing, but there 
are a lot of stakeholders that are not quite convinced this is as fair 
as those who are supporting the bill actually claim.
  I hope we can have a more deliberative process to examine these 
matters. The distinguished chairman of the committee has offered to 
have a hearing on the bill, mark up the bill, and consider it in a 
regular-order approach in the immediate future as soon as we get back 
from this next recess. Frankly, I think that is a pretty good offer, 
and it is one we ought to honor if we honor our committee structure in 
the Senate.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I understand that unanimous consent was 
given earlier to have printed in the Record an op-ed from the Wall 
Street Journal by Arthur B. Laffer entitled ``Tax Internet Sales 
Stimulate Growth.''
  Mr. ALEXANDER. Mr. Laffer, as most Americans know, is a distinguished 
economist. People sometimes said he was President Reagan's favorite 
economist. He makes the argument that many conservatives and many 
Governors across the country make, which is: Give us the authority to 
make these decisions for ourselves. We will collect taxes from 
everybody who already owes the taxes by requiring sellers to collect 
the taxes whether they are in State or out of State, and then we will 
lower the tax rate.
  Mr. Laffer says fairness legislation that collects taxes from 
everyone who owes it and then lowers the tax rate is better for 
economic growth, which is something our country desperately needs.
  Mr. President, I also ask unanimous consent to have printed in the 
Record the comments supporting specifically the legislation from Al 
Cardenas, chairman of the American Conservative Union, Governor Mike 
Pence of Indiana, and former Governor Mitch Daniels of Indiana.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               Conservatives Support Marketplace Fairness


        AL CARDENAS, Chairman of the American Conservative Union

       ``When it comes to state sales taxes, it is time to address 
     the area where federally mandated prejudice is most 
     egregious--the policy toward Internet sales, the decades old 
     inequity between online and in-person sales as outdated and 
     unfair.''


                          GOVERNOR MIKE PENCE

       ``I don't think Congress should be in the business of 
     picking winners and losers. Inaction by Congress today 
     results in a system today, that does pick winners and 
     losers.''


                         GOVERNOR MITCH DANIELS

       ``Sales taxes that states impose ought to be paid, and paid 
     by everybody equally and collected by everybody in the retail 
     business . . . We're not talking about an additional or new 
     tax here--we're talking about the collection of a tax that's 
     existed a long time.''

  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, what is the parliamentary situation?
  The PRESIDING OFFICER. We are in morning business for 1 more minute 
and then morning business will be closed and we will proceed to the 
motion under the agreement.
  Mr. BAUCUS. Mr. President, I will take that 1 minute, please.
  This is pretty simple. This legislation is new and only recently 
introduced. It has never been vetted. Others have but not this 
legislation. This bill is fraught with all kinds of problems, some of 
which have already been enumerated on the floor. There are many 
unintended circumstances.
  The only right thing to do is to permit this to go back to the 
committee so the committee can take it up. As chairman of the 
committee, I have made that promise many times. We have already had 
hearings. We will have a markup on this bill in the next work period. A 
markup means there will be a vote. I stand here ready to abide by the 
vote. I submit right now that the majority of the Members of the 
committee maybe will let us work this thing. I don't know. But that is 
the process. That is what we should be doing, not just ramming this 
thing through, which is so complex. There are so many unintended 
consequences. Many of the consequences have been enumerated and not 
addressed but could be addressed and would be addressed in a proper 
committee forum.
  I yield the floor.

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