Mr. President, I rise today to voice my continued support for enactment of the Marketplace Fairness Act this year. Last year the Senate passed this bill with a strong, bipartisan vote of 69 Members, and I believe that now is the time to get this issue done.
I have been working on this sales tax fairness issue since joining the U.S. Senate in 1997 because as a former state legislator, mayor and small business owner, I believe it is important to level the playing field for all retailers – in-store, catalog, and online – so an outdated rule for sales tax collection does not adversely impact small businesses and Main Street retailers.
Right now, thousands of local businesses are forced to do business at a competitive disadvantage because they have to collect sales and use taxes and remote sellers do not, which in some states can mean a 5 to 10% price advantage. We should not be subsidizing some taxpayers at the expense of others. All businesses and their retail sales should be treated equally.
Additionally, sales taxes go directly to state and local governments, which brings in needed revenue for maintaining our schools, fixing our roads and supporting local law enforcement, fire departments, and emergency management crews. If Congress fails to let states collect tax on remote sales this year, we are implicitly blessing a situation where states will be forced to raise other taxes - such as income or property taxes - to offset the growing loss of sales tax revenue. Do we want this to happen?
Now is the time for Congress to complete action on this issue by enacting the Marketplace Fairness Act this year, and today I want to spend a few minutes debunking some of the myths and allegations that have been raised against my bill.
First, some opponents argue that the bill unfairly burdens on-line retailers by forcing them to comply with various sales tax rates across the country. In response, I would first note that the Marketplace Fairness Act includes a “small seller exception” set at $1 million in remote sales each year, which means the bill would not affect any business that makes less than $1 million in on-line or other remote sales each year. Moreover, the Marketplace Fairness Act requires states to provide to sellers software free of charge that can calculate sales and use taxes due on each transaction at the time the transaction is completed, file sales and use tax returns, and be updated to reflect rate changes. The software is required to be capable of filing sales and use taxes in all states that choose to exercise collection authority. This software is available from a number of providers and is already being used by some retailers across the country to accurately collection and remit state and local sales and use taxes.
In addition, opponents of the Marketplace Fairness Act argue that our bill violates states’ rights by setting tax rates. In fact, our bill does not change State law and does not require states to do anything. The bill does not create new taxes or increase existing taxes, it simply gives states the ability to enforce their own sales and use tax laws. Our bill is a states’ rights bill, which is why the National Governors Association, National Conference of State Legislatures, National Association of Counties, and National League of Cities support the bill.
Opponents of the Marketplace Fairness Act also suggest it benefits big business at the expense of small online retailers, but last year a Small Business Administration study determined the small seller exemption included in MFA would exempt 99.96% of all sellers from the bill’s requirements.
And, opponents of the Marketplace Fairness Act suggest that it creates a massive new tax requirement. The truth, Mr. President, is that the bill that passed the Senate with an overwhelming bipartisan vote of more than two thirds of the Senate last year does not create any new taxes. Consumers already owe sales and use taxes on the goods they purchase if they reside in a state that has a sales tax, whether those purchases are made over the phone, by mail, or via the Internet. Unfortunately, most consumers are unaware they are required to pay this tax when the retailer does not collect it at the time of purchase. The Marketplace Fairness Act provides states the authority to reduce the burden of self-reporting from consumers, allows states to enforce existing state and local sales and use tax laws and eliminates the competitive advantage currently enjoyed by many remote retailers at the expense of local businesses.
Additionally Mr. President, the Marketplace Fairness Act does not tax Internet use and it does not tax Internet services.
For many years, I have worked with all interested parties to find a mutually agreeable legislative package to enact. This Congress, Senators Durbin, Alexander, Heitkamp and I worked together with 26 of our Senate colleagues to produce a bipartisan bill that helps sellers and state and local governments to simplify sales and use tax collection and administration. We are working with our House supporters – including Representatives Steve Womack, Jackie Speier, Peter Welch, and John Conyers – and have found common ground on this important issue that is supported by more than 200 groups. I want to publically commend all of my Senate and House colleagues in taking a leadership role in working on this important policy issue, and I strongly encourage my colleagues to support the goals of states’ rights and a level playing field for all businesses by pushing for enactment of the Marketplace Fairness Act this year.