February 14, 2013
New Marketplace Fairness Act would allow state to close tax loopholes that distort the market for small businesses
A bipartisan group of 53 Senators and Representatives today introduced a bill that resolves the differences between bills introduced in the Senate and the House of Representatives last Congress that would allow local brick-and-mortar retailers to compete more effectively against out-of-state internet sellers. The Marketplace Fairness Act of 2013 would give states the option to require the collection of sales and use taxes already owed under State law by out-of-state businesses, rather than rely on consumers to remit those taxes to the States—the method of tax collection to which they are now restricted.
Under the current tax loophole, while brick-and-mortar retailers collect sales and use taxes from customers who make purchases in their stores, many online and catalog retailers do not collect the same taxes. Under the Marketplace Fairness Act of 2013, states would have the option to require the collection of sales and use taxes by out-of-state sellers if states simplify their sales and use tax systems.
The attached documents provide more information on the specifics of the bill including a copy of the bill, a section-by-section analysis and a summary with a list of supporters.
The effort in the Senate has been led by U.S. Senator Mike Enzi (R-WY) joined with Assistant Senate Majority Leader, U.S. Senator Dick Durbin (D-IL) and U.S. Senator Lamar Alexander (R-TN) who introduced the Marketplace Fairness Act in the Senate during the 112th Congress.
U.S. Senator Mike Enzi (R-WY): “For over a decade, congressional inaction has created one of the largest tax loopholes of our lifetime. The federal government should not favor some businesses over other businesses and some taxpayers over other taxpayers. It’s time to stop discriminating through the tax code and put local and Main Street retailers on a level playing field with their out-of-state and online counterparts. The Marketplace Fairness Act does this without raising taxes and without burdening small businesses. It’s time to let states make their own fiscal decisions without having to first ask Washington.”
U.S. Senator Dick Durbin (D-IL): “Businesses in Illinois aren’t looking for a handout from Washington. They don’t want special treatment. All they want is a level playing field. By giving states the authority to enforce existing tax laws, the Marketplace Fairness Act of 2013 eliminates the competitive advantage currently enjoyed by many internet retailers at the expense of local businesses. Every day we don’t act to pass this bill, we risk another small business closing its doors because they can no longer survive.”
U.S. Senator Lamar Alexander (R-TN): “This is an 11-page bill about a two-word issue: states' rights. States have a right to decide what taxes to impose and whether they're going to collect those taxes from some or all of the people who owe them, and whether they're going to subsidize some businesses at the expense of others.”
U.S. Senator Jack Reed (D-RI): “Rhode Island businesses and workers suffer from an unfair tax disparity that harms many local small businesses and benefits large out-of-state e-retailers. This bill would correct that inequity and help Main Street businesses compete. At a time when states like Rhode Island are struggling with their budgets, this bill would be a significant boost. It has bipartisan support in Congress and broad support from both mom and pop shops and even large online retailers.”
U.S. Senator Heidi Heitkamp (D-ND): “This is a strong, bipartisan bill that addresses a problem I have worked on since I was North Dakota’s State Tax Commissioner. For too long, the small brick-and-mortar businesses on main streets across our country have faced a competitive disadvantage from catalog and internet businesses that don’t have to collect sales taxes. I am committed to working with my colleagues to get this legislation passed.”
The effort in the House of Representatives has been led by U.S. Representative Steve Womack (R-AR) and U.S. Representative Jackie Speier (D-CA) who, during the 112th Congress, introduced the Marketplace Equity Act of 2011 and U.S. Representative John Conyers, Jr. (D-MI) and U.S. Representative Peter Welch (D-VT) who, during the 112th Congress, introduced the Main Street Fairness Act.
U.S. Representative Steve Womack (R-AR): “Small businesses and states alike are suffering from the inability to collect due – not new – taxes from purchases made online. The Marketplace Fairness Act is the bipartisan, bicameral, common-sense solution that promotes states’ rights and levels the playing field for our Main Street businesses rather than continuing to allow the government to pick marketplace winners and losers.”
U.S. Representative Jackie Speier (D-CA): “Congress talks a good story about protecting small businesses—here's a chance to show we really care. The Marketplace Fairness Act of 2013 represents a fair and workable solution to a problem that has been growing since online retailers opened their virtual doors. As a result of an outdated Supreme Court ruling that hasn’t kept up with modern technology and the 21st century marketplace, our local brick and mortar retailers are struggling to stay afloat. With the MFA, my colleagues and I have found a way to level the playing field for all retailers while still protecting small online sellers. It’s time for our tax laws to catch up with the modern marketplace and take government out of picking retail winners and losers.”
U.S. Representative John Conyers, Jr.: “After more than twelve years of work to ensure a level playing field for all, the coalition supporting the Marketplace Fairness Act has grown to include labor and business interests, state and local governments, small as well as large retailers – both on and offline. This legislation is bicameral and bipartisan, and will help the bottom lines of our state and local governments while protecting our local retailers. With support for this legislation coming from all corners, it is imperative that Congress promptly consider this important legislation.”
U.S. Representative Peter Welch (D-VT): “Our bill gives Main Street businesses a fighting chance. When a consumer can walk into a store, try out a product and then go home and buy it online without paying sales tax, Main Street businesses and downtowns lose out. Our bill will level the playing field and bring much-needed fairness, strengthen our Main Street businesses, create jobs, and revitalize our downtowns.”
Additional cosponsors of today’s legislation in the Senate include: Tim Johnson (D-SD), John Boozman, (R-AR), Jack Reed (D-RI), Roy Blunt (R-MO), Sheldon Whitehouse (D-RI), Bob Corker (R-TN), Mark Pryor (D-AR), Jay Rockefeller (D-WV), Amy Klobuchar (D-MN), Al Franken (D-MN), Ben Cardin (D-MD), Dianne Feinstein (D-CA), Mary Landrieu (D-LA), Manchin (D-WV) and Heidi Heitkamp (D-ND).
U.S. Senator Tim Johnson (D-SD): “Small businesses create jobs for thousands of South Dakotans and are vital to our state’s economy. Unfortunately, these businesses are often at a disadvantage when competing with Internet vendors that are not required to remit sales taxes. Today, I cosponsored legislation to level the playing field for brick-and-mortar businesses by allowing states to collect sales tax on remote purchases. In addition to giving small businesses a fair shake, this measure will provide much needed resources to state governments, which could prevent the need for states to raise taxes or make cuts to critical programs and services. Governors across our country, including Governor Daugaard, support this bipartisan legislation.”
U.S. Senator Mark Pryor (D-AR): “Consumers today are just as likely to shop online as they are on Main Street,” Pryor said. “This bipartisan bill would help level the playing field, and ensure states are able to collect much-needed revenue that they’re already due.”
U.S. Senator Jay Rockefeller (D-WV): “This bill would help level the playing field for small businesses all across the country that too often lose business to online companies or can’t compete because of the unfair tax advantage online companies receive. Small businesses are the engine of our economy. In West Virginia, they account for 95 percent of the state’s workforce. We need to support them and make sure that they have the same ability to grow, thrive, and hire more workers that online companies have. That’s exactly what this bill would do.”
U.S. Senator Amy Klobuchar (D-MN): “Businesses in Minnesota want a level playing field to compete on and it is time we give it to them,” Klobuchar said. “This bill would get rid of the loopholes in our tax code that hurt brick-and-mortar businesses and cost our state money.”
U.S. Senator Mary Landrieu (D-LA): “This legislation is about fairness to small retailers in Louisiana and around the country that should not be put at a disadvantage against large, online businesses. I will continue to be a strong voice in the effort to pass this bipartisan legislation so that we can level the playing field for all our businesses.”
U.S. Senator Ben Cardin (D-MD): “Our tax system should be fair for all businesses. Maryland retailers aren’t looking for special treatment but simply a fair way to compete against large Internet sellers who charge similar prices but get away without collecting sales tax. The Marketplace Fairness Act treats every business the same and would not require a single penny in additional taxes to be paid that is not already owed to each state. In fact, if Maryland could have collected an estimated $375 million owed from remote online sales last year, we likely would have been able to reduce the tax burden for most Marylanders.”
U.S. Senator Sheldon Whitehouse (D-RI): “This legislation will help ensure that large web-based retailers play by the same rules as small businesses in Rhode Island and around the country. Small businesses are the backbone of our economy, and they deserve to compete on an even playing field.”
Additional cosponsors of today’s legislation in the House of Representatives include: U.S. Representative Aaron Schock (R-IL), Dennis Ross (R-PA), Chris Gibson (R-NY), Steve Cohen (D-TN), Mario Diaz-Balart (R-FL), Judy Chu (D-CA), Ander Crenshaw (R-FL), Chellie Pingree (D-ME), Renee Ellmers (R-NC), Allyson Schwartz (D-PA), Don Young (R-AK), Keith Ellison (D-MN), Ted Poe (R-TX), Ted Deutch (D-FL), Rick Crawford (R-AR), Linda Sanchez (D-CA), Michael Grimm (R-NY), Niki Tsongas (D-MA), Charlie Dent (R-PA), Hank Johnson (D-GA), Mark Amodei (R-NV), Michael Capuano (D-MA), Mike Conaway (R-TX), Betty McCollum (D-MN), Kristi Noem (R-SD), John Larson (D-CT), Lou Barletta (R-PA), James Langevin (D-RI), Tim Griffin (R-AR), Eleanor Norton (D-DC) and Suzan DelBene (D-WA)