Mr. President, I thank Senator Alexander for the leadership he has shown on this bill. We had a much more extensive bill designed, and I worked on it for all of the years he mentioned, which is all the years I have been here, 17 years. We made some progress every single time it came up, but there were misconceptions with it. Senator Alexander suggested the solution that is the true solution for this bill. He changed it to a very brief States rights bill, not a Federal bill. This doesn't have any requirements for any State, but it has an ability for States to make up their own mind.
So I rise today with my colleagues from Illinois, Tennessee, and North Dakota to recognize the anniversary of this significant event. One year ago today, with a show of strong bipartisan support, the Senate took an important step forward to level the playing field for all retailers that collect sales taxes. But it is not really about the retailers; it is about the people who work in those stores. We are talking about middle America. They can't afford to have the employees unless they make the sales, and if they just do the sales pitch and then it is ordered online, there is no revenue the employee brought in, and if there is a prolonged period when there is no revenue, the business doesn't need the employee. This bill is about supporting the jobs we have in our towns. It is about the people who are our neighbors who work in the stores and the people who have the stores that participate in all of the community events.
As the Senator from North Dakota said--and she is probably the only one who has worked on this bill longer than I have because she was involved in it in State government when she was in North Dakota. I appreciate her expertise on this bill. Without some of the explanations she was able to give on the history of this bill, we wouldn't have been able to get it done.
Of course, Senator Durbin and I have been speaking for what seems like years now trying to explain how this bill works, taking into consideration any concerns people had and trying to overcome those concerns. I couldn't guess how many hundreds of meetings there have been over trying to get this bill right and to get it fair, all so the States still have the revenue they need to operate without imposing perhaps a personal income tax. In the case of Virginia, I think they are not going to raise the gas tax if this bill passes. So this is a States rights bill. It takes money to the States, and it is money that is really owed right now.
I did a little checking. Wyoming started collecting their sales tax in 1935, and it has been virtually unchanged since that time. There is a provision in the sales tax law that requires a form, so that if someone buys something from out of State and didn't pay sales and use tax on it, they are supposed to fill out this form before the end of the month and send the sales and use tax with the form to the State government to pay it.
One of the surprises I discovered is there is about $1\1/2\ million a year collected in Wyoming that way--people obeying the law. But that is pretty tough to keep track of and especially if one doesn't make out- of-State purchases every day. So the State, of course, imposed on local retailers the requirement that they collect sales tax, and then people don't have to fill out that form. They don't have to send it in before the end of the month.
So they made it a lot easier by making the retailers collect the money. Unfortunately, they weren't able to make all of the retailers collect the money. Because of a court case, they aren't able to do it out of State, and that is very important because it is a huge loss of revenue. I think Wyoming actually loses about $23 million a year because of purchases over the Internet where no sales tax is paid.
On May 6, 2013, this Chamber passed the Marketplace Fairness Act, and we passed it with 69 votes. Some of the votes we had were as high as 76 votes. That is very significant around here. Sixty-nine is an incredible number for the Senate to produce on any bill. It came from a majority of both sides of the aisle, which is important. I wish to remind my colleagues that this bill is about fairness. It is about leveling the playing field between brick-and-mortar and online companies, and it is about collecting that tax that is already due. It is not about raising taxes. It isn't about taxing the Internet, and it isn't about taxing Internet access. I think we are all opposed to that. But we are in favor of the States, if they wish, to be able to collect the taxes they have imposed on the people who live in their State. So it is a States rights bill.
In a nutshell, the Marketplace Fairness Act is a straightforward, 11-page bill that brings clarity to a vexing area of sales tax collection inequity. Online sales often go without collection of the sales tax from the point of purchase, while the Main Street stores and the other brick-and-mortar stores in town typically face established collection procedures--no choice, regular reports.
Wyoming shouldn't subsidize online retailers that operate and sell to people in our State. Neither should Illinois or North Dakota or Tennessee or any other State that has sales tax laws. But right now, online retailers can offer lower prices than the local businesses that hire the local people who pay the property taxes and that participate in the community events; the most important thing being those local jobs, simply because they do not have to charge the same sales tax out of State that all our local merchants do.
Sales taxes are important. They pay for the roads we drive on. They pay for the schools our kids go to. In Wyoming, with the particularly small towns, they rely on sales tax for the fire protection and the police protection. When people ask me about the sales tax bill, I ask them what county they are from and, if it is a small town, I say: Check with your fire department and see if, without sales tax, they would be able to function. When people understand it is part of their fire protection and part of their law enforcement protection, they are much more interested in it and understand why the sales tax needs to be collected. I don't want to see a situation where other taxes will have to be raised to cover basic local services because the online retailers are not collecting the sales taxes that are owed on the products they sell.
I remember going into a camera store--I try to get into some stores on the weekend and find out what kinds of decisions they have to make, particularly decisions that have to do with the Federal Government. I was in the camera store and the fellow was explaining he had just lost a sale. The sales tax rate in that town is 6 percent. A man came in to buy a camera, and the camera was $2,000. But this owner of the store--the only employee of the store--took the time to help him with all of the different gadgets and how to operate it, and showed him what he needed and how to do it. Then the customer took a picture of the bar code and ordered it online because he saved $120. Technically, he still owed $120 to his State. Whether he filled out one of those forms and got it in by the end of the month, I doubt it, but that is the law. If a State meets the simplification requirements outlined in the bill, it may choose to require collection of sales taxes that are already due at the point of purchase, including sales conducted through e-commerce. Congress is not forcing States to do anything because the Federal Government should not have the role or authority in telling a State how to manage its finances. This bill specifically says that it is up to the States to enforce the law, and it is 100 percent optional. If the States do act, they are collecting taxes that are already due by the consumers.
I have been working on this sales tax fairness or marketplace fairness issue--or any of the number of names we have had on it through the years as we gained more and more support and as people came to understand more and more of what was involved--since 1997. As a former small business owner, it is important to ensure parity for all
retailers by modernizing rules for sales tax collection in a way that respects technology advances and the existing practices of large and small and more traditional businesses, and this bill accomplishes that. It uniquely balances the interests of all businesses and respects the existing laws and rights of states.
The Senator from North Dakota mentioned there is a $1 million exclusion. This is to help out small businesses, new start-up businesses. If you have a start-up business or a small business, until you have sold $1 million online or through a catalog in a given year, you don't have to comply with this. But once you hit that $1 million mark, you can consider yourself a success. We know that is a very small percentage of the Nation, but an important part of the total sales of the Nation. I think that is why one year ago, 68 of our Senators joined me in supporting that Marketplace Fairness Act.
This evening, my lead cosponsors and I are again taking a stand in favor of good public policy for our Nation's retailers while highlighting the need to fix some long-standing sales tax system complexities. By balancing this collection inequity, the Marketplace Fairness Act would help States ensure the viability of the sales tax as a major revenue source for State budgets. We found in Wyoming that it often constitutes 40 percent of a municipality's revenue. It also would close opportunities that encourage tax avoidance.
Beyond the walls of Congress, the Marketplace Fairness Act has received broad support. Trade associations, Governors, mayors, legislators, and numerous businesses have expressed support for the legislation.
But there is work still to be done. Our colleagues in the House need to pass the Marketplace Fairness Act. I know some Members in the other Chamber are working on this issue. A companion Marketplace Fairness Act has been introduced. A hearing has been held, and new Members are engaged in the issue. I appreciate those efforts, and I hope our colleagues in the House will pick up the baton and complete the effort to guarantee sales tax fairness. This is the year to finish the work. Our States and businesses and employees in those businesses cannot wait longer. Enacting the Marketplace Fairness Act is the right thing to do.
In conclusion, I wish to thank everyone associated with this bill for their hard work and efforts in getting us to this point: our countless supporters across the country, the 68 Senators who joined me to vote for a bill a year ago, the 29 cosponsors of the bill for their support, and especially my colleagues who joined me tonight for their unwavering support of this bill. I can't thank Senator Alexander, Senator Heitkamp, and Senator Durbin enough for their efforts. I am going to yield the floor and turn it over to Senator Durbin who has been a real champion and one of the best explainers of the parts of this bill that I have ever run into. I really appreciate his efforts and his help. We wouldn't be this far were it not for his efforts.