[Congressional Record (Bound Edition), Volume 159 (2013), Part 5]
[Senate]
[Pages 6180-6183]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        MARKETPLACE FAIRNESS ACT

  Mr. DURBIN. Mr. President, in the closing 10 minutes, the four 
proponents who will speak will be first Senator Heitkamp of North 
Dakota, followed by Senator Alexander of Tennessee, myself, and then 
Senator Enzi of Wyoming, who has for 11 years been fighting for this 
vote. I want him to have the last word.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Ms. HEITKAMP. Mr. President, this is a day that has been 20 years in 
the making. You have heard argument after argument here about how this 
bill has been rushed, how it is not ready, how we have not yet had 
enough debate or deliberation. I tell you on behalf of the small 
business owners in my State who have told me it is about darn time we 
do something, I stand today and congratulate this body for taking on 
this issue and taking a system that has been grossly unjust and 
incredibly unfair to Main Street businesses in our country and in our 
State and said, yes, the Senate will not stand back and wait any longer 
before we give you marketplace fairness.
  This bill could not be and could not have a better name than 
Marketplace Fairness. I got involved in this issue as a very young 
person--I like to say that because it was 20 years ago--litigating a 
case before the U.S. Supreme Court. I was moved to take that case to 
the Court by a woman who approached me and said: Look, I am trying to 
survive. I am trying to participate as a good businessperson in North 
Dakota, trying to support my community, trying to do everything right, 
collect my sales tax, but I am getting killed in the marketplace, 
because people are sending catalogs; people come into my store; they 
will look at my products. Then they order this stuff through a mail 
order business. Please help me.
  Those pleas have for the last 20 years gone unheard by this body and 
by the House of Representatives. But today we have a chance. We have a 
chance to say to all of those businesspeople throughout our country who 
have been unfairly treated by a tax system that does not recognize 
today's modern-day method of marketing, this modern-day way we do 
business and commerce in our country has not been recognized. They 
continue to struggle, continue to try. I congratulate the Senate. I 
congratulate all of the other Senators who have pursued this with such 
vigor and with such hope. I say today is the day that we say yes to 
America's small businesses.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I ask I be notified when I have 
consumed 2\1/2\ minutes.
  The PRESIDING OFFICER. The Senator will be notified.
  Mr. ALEXANDER. Mr. President, I congratulate the Senator from North 
Dakota on 20 years of work on this issue, Senator Enzi for 11 years of 
tireless work here, and Senator Durbin for his effective advocacy. I 
will make four quick points.
  The Senator from Texas said reinvigorating the economy should be the 
No. 1 priority for Federal and State leaders. That is precisely the 
first sentence of the column of economist Art Laffer in the Wall Street 
Journal where he says:

       States can cut their income tax rates if web vendors 
     collect the sales taxes that are legally due.


[[Page 6181]]


  In other words, if you want economic growth, vote for the Marketplace 
Fairness Act.
  No. 2, the idea that this is too complex to do--more than half of the 
sales now made on the Internet are by retailers that collect the tax 
when it is sold. It is a tax that is already owed, so how can it be too 
complex for anybody else to do? It is already being done. So that is 
specious.
  No. 3, it has been said this should have gone to committee. It did. 
It just never came out of committee because the chairman, and I say 
that with great respect, did not want it to. It should have had 
amendments. Yes, it should have had amendments. Why didn't it have 
amendments? Because the opponents to the bill resorted to objecting to 
every single amendment.
  Finally, I say this to my Republican colleagues: This is a 
conservative bill. I just mentioned Mr. Laffer. I read this earlier, 
but I want to read it again. The comments of the chairman of the 
American Conservative Union, Al Cardenas:

       Dear Senators, you continue work next week on the 
     Marketplace Fairness Act. I would like to call to your 
     attention what conservatives are saying about the issue. They 
     recognize, as I do, it is not the role of government to pick 
     winners and losers in the marketplace by requiring brick and 
     mortar stores to charge a sales tax while exempting Internet 
     sales.

  He then lists the comments of Charles Krauthammer favoring the idea, 
Representative Paul Ryan favoring the idea, and, of course, as we know, 
William F. Buckley did before he died. Many Governors do. This is an 
idea for conservatives and for our country.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, thanks to my colleagues who are on the 
floor, especially Senator Alexander. Senator Enzi and I owe the Senator 
a great debt of gratitude for his work on this bill, in helping us 
craft the bill and bring the support together.
  I ask unanimous consent that the following four editorials be printed 
in the Record, from the New York Times, the Idaho State Journal, the 
Green Bay Press Gazette, and the Northwest Herald of Illinois.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 [From the New York Times, May 1, 2013]

                        Fairness on Sales Taxes

                           (Editorial Board)

       Twenty-one years is a long time to wait. But that is how 
     long local retailers have waited for Congress to undo a 1992 
     Supreme Court decision that exempted many online retailers, 
     like Amazon.com, from collecting most state sales taxes. The 
     exemption has given online sellers a 5 percent to 10 percent 
     price advantage over Main Street stores.
       The wait, however, may soon be over. Next week, the Senate 
     is expected to pass the Marketplace Fairness Act of 2013, a 
     bipartisan bill that would authorize states to require out-
     of-state sellers with more than $1 million in sales to 
     collect sales taxes. The states, in turn, must simplify their 
     sales-tax codes and give retailers free software to calculate 
     the taxes--steps already taken by most states. An identical 
     bill in the House also has bipartisan support.
       Lawmakers have raised the issue for years, to no avail, 
     and, in the meantime, many brick-and-mortar stores have gone 
     out of business. The willingness to act now is driven in part 
     by the fact that Amazon, which fought hard to preserve the 
     exemption, recently gave up the fight. That's not because the 
     company suddenly developed a belief in sales taxes. Its 
     business model--especially its emphasis on same-day 
     delivery--is changing in ways that would soon cause it to 
     lose the exemption anyway.
       Main Street needs a level playing field to compete with the 
     exploding online industry. So do large retailers, like Best 
     Buy, that have cut jobs as shoppers have increasingly tested 
     electronics at local stores and then gone home to buy them 
     online without paying sales tax. Equally important, states 
     need the revenue to help recover from the recession. 
     Noncollection of sales tax on online purchases costs states 
     an estimated $11 billion a year. Another $11 billion goes 
     uncollected on mail-order catalog sales, which would also be 
     covered under pending bills.
       In the past, most bills that deal with revenue, no matter 
     how justified, have fallen victim to the knee-jerk refusal 
     among many Republicans to even talk about taxes, urged on by 
     anti-tax groups like Grover Norquist's Americans for Tax 
     Reform. But, as reported in the Times on Monday, lawmakers 
     from both parties have come to see that the argument for 
     sales-tax collection is airtight.
       Sales taxes for any state are already legally due on online 
     purchases that would be taxable if the items were bought in a 
     local store. If the retailer does not collect the taxes, the 
     buyer is supposed to send them to the state voluntarily. As a 
     practical matter, however, if the taxes are not collected by 
     retailers, they are virtually never paid.
       The proposed law would close that loophole, not impose new 
     taxes. It's a matter of efficiency and fairness, of necessity 
     and competitiveness. If those really are bipartisan values, 
     the Senate will act without further delay to pass the 
     Marketplace Fairness Act, and the House will follow suit.
                                  ____


              [From the Idaho State Journal, May 6, 2013]

      There's a reason This Is Called the Marketplace Fairness Act

                           (Editorial Board)

       The Marketplace Fairness Act making its way through 
     Congress is well-named. It would allow state governments to 
     force Internet retailers to collect sales taxes from their 
     customers and remit the proceeds to state and local 
     governments--like, you know--brick-and-mortar retailers are 
     required to do.
       The shoppers who buy merchandise off the Internet are 
     supposed to calculate sales taxes on their income tax forms, 
     but the fact is most people don't do that. So it might be 
     said that Idahoans pay an extra 6 percent when they buy from 
     stores at home. That's money that pays to operate schools and 
     other public services, and it's estimated that Idaho would 
     collect about $35 million if Internet sales were taxed.
       Because some states, like Idaho, have refused to authorize 
     collection of sales taxes on online purchases, Congress is 
     acting on behalf of hometown merchants with a federal law. 
     The legislation cleared its first procedural hurdle Thursday 
     on a bipartisan Senate vote, 63 to 30. Final Senate passage 
     is scheduled for Monday and that tally is likely to be even 
     more strongly in favor, according to The New York Times. 
     Earlier test votes won as many as 75 yeses, and House action, 
     once seemingly unthinkable, may be unstoppable.
       Tax opponents like Grover Norquist and the Heritage 
     Foundation have long opposed any legislation that would 
     require collection of levies on Internet purchases, calling 
     it a tax increase. But Congress is hearing from their 
     hometown constituents, and the tide has turned. Even public 
     officials who signed Norquist's antitax pledge now are 
     changing their minds. Typical is Rep. Scott Rigell, 
     Republican of Virginia, who calls the struggling retailers 
     back home ``the hardworking men and women who have mortgaged 
     their homes to buy or rent a little brick-and-mortar shop.'' 
     Six percent may actually amount to their profit margin.
       ``I have some concern about the legislation,'' concedes 
     Rep. Bob Goodlatte of Virginia, chairman of the House 
     Judiciary Committee, which has jurisdiction on the issue, 
     ``but we also recognize the fairness issue--certain items 
     being taxed in certain circumstances, other items being not--
     is a problem, so we're going to try to solve that.'' It can 
     be done.
       Norquist should not complain, though he characterizes the 
     bill as a ``money grab by cash-poor state and local 
     governments that would get the power to tax consumers who do 
     not have the power to vote them out of office.'' After all, 
     consumers are already supposed to pay sales taxes even if an 
     Internet merchant does not collect them.
       The new law would rectify that, and that's why it is called 
     the Fairness Act.
                                  ____


            [From the Green Bay Press Gazette, May 5, 2013]

       Congress Must Level Playing Field on Internet Sales Taxes

                           (Editorial Board)

       How many of you have entered a dollar amount on Line 36 of 
     the Wisconsin income tax Form 1?
       That's the line where you self-report ``sales and use tax 
     due on Internet, mail order, or other out-of-state 
     purchases.'' In other words, if you've ever purchased 
     something from Amazon, for example, you should have entered a 
     dollar amount here when you filed your taxes.
       But very few people do. About one of every 100 state 
     taxpayers did when they filed their 2010 income taxes, 
     according to a 2012 story by Steven Walters of WisconsinEye, 
     a nonprofit public affairs channel.
       Currently, all retailers in Wisconsin collect sales tax on 
     purchases and pay that money to the state. If you buy 
     something, the state and county sales taxes are part of what 
     you pay.
       If you purchase something online from a business that has a 
     physical presence in Wisconsin, you pay sales tax. But if 
     that business doesn't have a store or warehouse in Wisconsin, 
     it doesn't charge a sales tax.
       For example, if you went online and purchased a shirt from 
     Lands' End, based in Wisconsin, you'd pay sales tax. If you 
     purchased a similar shirt from L.L. Bean, based in Maine, you 
     would not.
       The loophole is courtesy of a 1992 U.S. Supreme Court 
     decision that exempts companies from collecting sales tax 
     from purchasers who live in a state where the business has no 
     physical presence.

[[Page 6182]]

       A bill that the Senate is expected to vote on Monday would 
     change that. The Marketplace Fairness Act give states the 
     ability to require online and mail order retailers to collect 
     state and local sales tax based on the address of the 
     purchaser.
       Wisconsin retailers say this would level the playing field. 
     In a meeting with Press-Gazette Media, area retailers said 
     they don't have a problem competing against other businesses, 
     as long as all play by the same rules and all charge a state 
     sales tax.
       Without that level playing field, area businesses find 
     themselves answering a consumer's questions and concerns only 
     to have that consumer order the same item online and not have 
     to pay a sales tax. It reduces local businesses to showrooms. 
     They do all the work; the online retailer collects the money.
       What's at stake is millions of dollars as well as the 
     fiscal health of the local community.
       The state Department of Revenue estimates that Wisconsin 
     lost $157 million in revenue because taxes were not collected 
     on mail order and other remote sales in 2012--$78 million of 
     that from e-commerce sales.
       Also, the health of area businesses is important. They pay 
     taxes, provide jobs and donate to local charitable 
     organizations yet lose sales and money when tax-free 
     purchases are made. The out-of-state online-only retailers 
     aren't invested in your community.
       The bill before the Senate sets a threshold of $1 million 
     in online sales so small businesses will not be hurt and 
     calls for the state to provide free software so businesses 
     can comply.
       One aspect of the bill calls for the state to ``establish a 
     uniform sales tax base for use throughout the state.'' That 
     concerns us because many counties, like Brown, have a 0.5 
     percent county sales tax. We wouldn't want to lose out on 
     that money because the state must charge a uniform sales tax. 
     And it's hard to believe that the software will not be able 
     to determine the correct state and local sales taxes. The 
     technology that has given us the ease of online shopping 
     should also be able to clear that hurdle.
       So far, the bill has bipartisan support in the Senate, but 
     faces a much more unclear fate in the House.
       However, Congress needs to pass this bill. Local businesses 
     are willing to compete as long as it's a fair fight. Also, 
     the bill is not asking for a new tax; it's asking that the 
     existing tax is applied fairly and uniformly and doesn't put 
     the burden on the consumer to reimburse the state. That's not 
     too much to ask.
                                  ____


                [From the Northwest Herald, May 2, 2013]

                        What's Fair For Business

                           (Editorial Board)

       The scenario described by Play It Again Sports' owner Bob 
     Ruer happens all too often in local businesses.
       A customer comes into his Crystal Lake store, looks around, 
     maybe tries out the wares, and then heads home to buy the 
     same product online. Why? Because Internet retailers aren't 
     required to collect sales tax at the buyer's local rate.
       U.S. Sen. Dick Durbin, D-Ill., is pushing to end that with 
     the Marketplace Fairness Act. We support Durbin's effort and 
     encourage lawmakers in Washington to pass the act.
       The legislation would put the initial costs on the states 
     to provide retailers with the appropriate software to collect 
     taxes. Internet retailers with less than $1 million in annual 
     sales would be granted an exemption.
       Opponents of the bill, including large online retailers 
     such as eBay and Overstock.com, have taken issue with the $1 
     million exemption and suggested it should be bumped higher.
       The bill has the support of big-box stores such as Walmart, 
     Best Buy and Target and online giant Amazon.
       Beyond the unlevel playing field for businesses, the 
     situation causes the state of Illinois to lose out on a great 
     deal of revenue.
       Now, Illinois taxpayers are on an honor system when it 
     comes to paying state sales tax for online purchases. 
     Residents are supposed to note the sales tax they owe from 
     Internet purchases on their state income-tax return. Durbin 
     estimates that only 5 percent of Illinois taxpayers do so. 
     Gov. Pat Quinn said the state stands to collect an additional 
     $200 million annually in sales-tax revenue if the bill 
     passed.
       This is not a tax increase. It's not a new tax. These sales 
     taxes and tax rates are already in place.
       This is a needed law to level the playing field for local 
     businesses who've been good corporate citizens, hired local 
     employees and paid property taxes that support local schools 
     and other taxing districts.

  Mr. DURBIN. Mr. President, what is happening with Internet sales? 
They are growing dramatically. Listen to these numbers. In 2012 online 
sales accounted for $225 billion in sales in America. In the next 5 
years it will double to $435 billion. It is an endeavor that has become 
part of our lives. What we are asking in this bill is that those 
selling on the Internet be treated the same as those selling on the 
corners of our streets, to make sure the brick-and-mortar businesses 
have a level playing field. That is all we are asking.
  This bill contains no new Federal tax, no new State and local tax. 
What it does is collect taxes already owed. It simplifies the system by 
saying there will only be one taxing entity that identifies the taxes 
to be charged in every single State, one audit from each State. It 
tries to provide for the retailers the basic software they need to get 
the job done.
  This is a fascinating bill. For those who follow the Senate, it is a 
rare opportunity for us to have Republicans and Democrats together on 
the floor supporting a bill that has the endorsement of business and 
labor and local officials all across the United States. It is clearly 
an idea whose time has come. I hope we can pass it with a good strong 
vote and encourage our friends in the House to take it up quickly.
  I close by thanking my colleague from Wyoming. He has been a great 
partner in this effort. He came to it before I did. I replaced Senator 
Dorgan after Senator Dorgan's retirement and tried to keep this moving 
forward. Today is our day for a vote. I thank him for all of his hard 
work on his side of the aisle.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Mr. President, I thank all of the people who have 
participated, particularly Senator Durbin who has helped to coalesce 
things, Senator Alexander who came up with the idea for having a 
shorter bill, only 11 pages--never see it in the Senate--written in 
plain English, and it is States rights.
  This does not cause the Federal Government to do anything. What it 
allows is for the States to do what they have already passed laws on. I 
can see this from the standpoint of an individual. I know in Wyoming if 
you buy something on the Internet and you are not charged a tax, you 
are supposed to fill out a form and send it in. That is a difficult 
thing to do, hard to even keep track of. This will eliminate that 
problem of individuals wanting to pay the tax but not knowing exactly 
how to do it.
  I know it from the standpoint of a small businessman, if they had the 
experience of somebody coming in, trying on the goods, finding out 
exactly what they want, the color, the style, the feel, everything, and 
then ordering it on the Internet. The even more ironic part of it is 
when they have a problem with it, they bring it back to the local 
retailer to fix it.
  I have seen it from the standpoint of a mayor. I know in Wyoming at 
least 30 percent and up to 70 percent of the revenue of the 
municipalities comes from the sales tax. That is on a declining basis 
at the moment. That is not only what they run the city's streets and 
snow removal on; a lot of the police, the fire protection, even 
education is affected by the sales tax.
  I have seen it from the standpoint of a legislator as well. I know 
when we passed those taxes, we did not say: Okay, we want to 
discriminate against the local business that pays the property tax, 
hires people locally, and participates in all the community stuff. If 
you are out of State, we are going to let you off the hook.
  No legislator ever passed a bill like that. This is one that corrects 
all of those things and brings fairness to the marketplace. I think it 
will make a significant difference, particularly in communities where 
they will still be able to help out some of the charitable 
organizations and activities that would have to go by the wayside if 
this bill were not to pass.
  I look forward to working with people on the House side. I wish to 
thank Senator Durbin, Senator Alexander, and Senator Heitkamp, 
particularly, for all of their efforts on this bill. I thank Senator 
Heitkamp for her persistence over 22 years and knowing the intricacies 
of how it works on the Canadian border, as well as having been involved 
in the original case where the Supreme Court challenged us to fix this 
problem.
  Today we have a chance to fix this problem. I ask my colleagues to 
vote for the bill.

[[Page 6183]]

  I yield the floor.

                          ____________________