November 9, 2011 CONGRESSIONAL RECORD — SENATE S7233 have just as severe an impact. I would whatsoever. Why are we here in Wash- The Marketplace Fairness Act would like to spend a minute or two talking ington creating a disincentive for the allow States—not require States—to be about the destructive taxes that are in small business owner? Why are we cost- able to have the out-of-State online this legislation. ing Americans jobs? sellers, providing they sell more than When we add it all up, the new health The Congressional Budget Office has $500,000 in a year, to collect the State care law basically requires new taxes of looked at this legislation. They have sales tax. I have also been a State leg- about $1⁄2 trillion—not to pay down the come to the conclusion that the Amer- islator, and I can tell you we never in- national debt, not to solve the Nation’s ican labor supply will be reduced by tended to pass a law to tax the people debt woes but to create a new entitle- 100,000 workers. The CBO quote is this: on Main Street who buy the yearbooks ment. The Treasury Department’s In- The law will encourage some people to and participate in community activi- spector General for Tax Administra- work fewer hours or to withdraw from the ties to be the ones to collect the tax, tion has looked at the impact of the labor market. and anyone from out of State to not health care law on the Tax Code and The more we learn about this health have to do it. This bill cleans up that said this: ‘‘The law is the largest set of care law, the more we come to realize problem at the same time. Does it tax law changes in 20 years.’’ this is flawed policy. It passed and it make much of a difference? Yes. That is no small undertaking when was signed into law by the President of We are being asked as a Congress to we think about all that has happened the United States, but it goes beyond give money to the States for their over the last couple of decades, that we flawed policy. It impacts real people teachers, their firemen, and their infra- ended up with an impact on the Tax who are trying to make a real living. structure. It is because there is a de- Code that is the largest set of tax law My comments today started with a creasing amount of revenue going to changes in 20 years, according to the story about 50 Nebraskans who lost them through sales taxes that are Treasury expert who looked at this. their jobs or are about to lose their owed, but are not currently being col- There are 42 separate provisions adding jobs because of the health care law. I lected. People may not realize it, but to or amending the Internal Revenue am concerned that it is not going to when they buy something online, if the Code in the health care law. So much stop there; that as employers are more tax is not collected by the seller, they of this law was put together in the last and more burdened with the thousands still owe it. This is not a new tax; it is days of this debate, people were scram- of pages of regulations, they will come a tax that is already on the books. No bling around trying to read it and un- to realize their best strategy is to try legislator ever intended for it to just be derstand it and get information out to to figure out how to deal with these for Main Street retailers. If States so their constituents. new requirements and they will pull choose, sales taxes should be collected Speaker PELOSI said: We will prob- back on hiring, which is exactly what by all retailers. In our attempts to fix ably have to pass this law to figure out we do not want to have happen in this this problem, we have received a num- what is in it. And we are now figuring economy. ber of support letters for this new bill. With that, I conclude my remarks out what is in it, and it is so much I hope everybody will take a look at and our colloquy today. more than a health care law. There are them. They can view them online. I ask 42 separate provisions that add to or I yield the floor. I suggest the ab- sence of a quorum. unanimous consent these letters be amend the Internal Revenue Code. printed in the RECORD. The Boston Globe weighed in on this. The PRESIDING OFFICER (Mr. UDALL of Colorado). The clerk will call There being no objection, the mate- They pointed out the 2.3-percent excise rial was ordered to be printed in the tax on medical device suppliers, ac- the roll. The legislative clerk proceeded to RECORD, as follows: cording to the Globe, ‘‘will force indus- call the roll. NATIONAL CONFERENCE try leaders to lay off workers and curb Mr. ENZI. Mr. President, I ask unani- OF STATE LEGISLATURES, the research and development of new mous consent the order for the quorum November 9, 2011. medical tools.’’ There is no question call be rescinded. Hon. RICHARD DURBIN, about it. When we add up the tax law The PRESIDING OFFICER. Without U.S. Senate, changes, the impact from a regulatory objection, it is so ordered. Washington, DC. standpoint and the other provisions of Mr. ENZI. I also ask unanimous con- Hon. LAMAR ALEXANDER, this law, this is not going to result in U.S. Senate, sent that the Senator from Illinois and Washington, DC. the promised jobs that Speaker PELOSI the Senator from Tennessee be allowed Hon. MICHAEL ENZI, spoke of. It is a job killer. to enter into a colloquy with me for U.S. Senate, If we look at what this law is doing, the time that we have allotted. Washington, DC. it will actually shrink the labor force, The PRESIDING OFFICER. Without Hon. TIM JOHNSON, actually create a disincentive to work objection, it is so ordered. U.S. Senate, or to receive a pay raise. I referenced f Washington, DC. earlier in my comments a small busi- DEAR SENATORS DURBIN, ENZI, ALEXANDER ness owner in the Bellevue, NE, area. I MARKETPLACE FAIRNESS ACT AND JOHNSON: On behalf of the National Con- was sitting in a Business Roundtable a Mr. ENZI. Mr. President, I am going ference of State Legislatures (NCSL) we little more than a year ago. We were to talk about a problem I have tried to would like to express our support and appre- ciation for your introduction of the Market- just going around the room, and I was solve for 14 years. Today, I think we place Fairness Act, which will provide those listening to small businesses describe have a new solution and ‘‘the’’ solu- states that comply with the simplification to me some of the challenges they face. tion—The Marketplace Fairness Act. requirements outlined in the legislation, the A woman, a small business owner, Our solution has to do with sales taxes authority to require remote sellers to collect said to me: MIKE, we have studied this that are not being collected at the those states’ sales taxes. health care law every which way we present time. It is a loophole in the tax At a time when states continue to face se- can. I am right on the edge of having 50 law. vere budget gaps—states closed shortfalls to- employees. I am told if I go over 50 em- I used to be a retailer. I never taling $72 billion leading into the FY 2012 budget process—it is essential states be al- ployees, I am now subject to all of the thought it was fair that I had to collect lowed to collect the revenue generated by ramifications of the health care law. the sales taxes but the people from out uncollected sales taxes. In 2012, states will After looking at this I have decided I of State did not have to collect the collectively lose an estimated $23.3 billion in will not grow my business beyond 50 same sales tax. I used to be a mayor, uncollected sales taxes from out-of-state employees. I do not want to deal with and this bill is a jobs bill and an infra- sales, with more than $11.3 billion alone from this health care law. structure bill. A lot of people do not re- electronic commerce transactions, according Her discussion with me has stuck alize that sales taxes help pay for to a study by the University of Tennessee. with me all of these months. Why is it schools, police and firemen. They may The amount of uncollected sales taxes will continue to grow, especially with the unprec- that Washington would actually pass not realize it pays for infrastructure, edented growth of online commerce. legislation that would discourage her such as streets and sewers. I always The enactment of the Marketplace Fair- from hiring additional employees to tell people it is a little tough to flush ness Act is imperative in light of the current grow her business? It makes no sense the toilet over the Internet. deliberations by the Joint Select Committee

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on Deficit Reduction and resulting seques- NATIONAL ASSOCIATION OF COUNTIES, of taxation and help our members recover tration if the ‘‘Super Committee’’ is unsuc- Washington, DC, November 9, 2011. tax revenues that are due from purchases cessful. Under either scenario, states will Hon. RICHARD DURBIN, made by remote means. likely face hundreds of billions in reductions U.S. Senate, Your legislation responds appropriately to in many state-federal programs. While the Washington, DC. the changing nature of commerce and sales and use tax collection. While the increasing $23.3 billion in uncollected sales taxes will Hon. TIM JOHNSON, strength of electronic commerce creates ex- not match any funding reductions, it will U.S. Senate, citing new marketplaces, it has also put tra- provide states with some fiscal relief. In the Washington, DC. Hon. MIKE ENZI, ditional retail outlets at an unfair disadvan- words of Senator Roy Blunt, a sponsor of U.S. Senate, tage because of outdated and inequitable tax this legislation, it is ‘‘fiscal relief for the Washington, DC. and regulatory environments. states that does not cost the federal govern- Hon. LAMAR ALEXANDER, Our organizations strongly support your ment a dime.’’ U.S. Senate, legislative efforts to require collection of The Marketplace Fairness Act is also a win Washington, DC. taxes made on remote sales, and we are pleased that in doing so that you recognize for local main street businesses throughout DEAR SENATORS DURBIN, JOHNSON, ENZI AND the longstanding Streamlined Sales Tax the country by leveling the playing field be- ALEXANDER: On behalf of the National Asso- Agreement Project (SSTA). We are also tween these main street businesses who have ciation of Counties (NACo) and the nation’s 3,068 counties, I applaud the introduction of pleased that you have excluded issues such to collect sales taxes and out-of-state mer- the Marketplace Fairness Act. At a time as local telecommunications tax reform, chants who currently do not. Allowing some when counties continue to make the tough which should be addressed separately from remote sellers to avoid collecting this tax is decisions and provide services for our mutual collection of remote sales and use taxes. unfair to the main street merchants that constituents with fewer resources, we appre- Although we have championed for collec- make up the lifeblood of our local commu- ciate your legislative efforts to both assure a tion of remote sales taxes for over a decade, nities. The legislation also removes the li- simpler system of taxation and help our there is no time better than now for this leg- ability for businesses collecting sales taxes, members recover tax revenues due from pur- islation to move forward, as local govern- ensuring that sellers are held harmless for chases made by remote means. ments face the fifth straight year of declines calculations and collections using the infor- Due to the changing nature of commerce in revenue with probable further declines in mation and certified technology provided by and sales and use tax collection, your legis- 2012. Thank you again for introducing this im- the states that have complied with the Act. lation responds appropriately by establishing a path to modernize the current system. Ac- portant legislation. We look forward to There will be some who claim that this is cording to a University of Tennessee study working with you and other supporters of a new tax; nothing could be further from the in 2009, e-commerce sales have grown from the Act and the SSTA to see the collection truth. This legislation will not require any just over $900 billion in 1999 to more than $2 of remote sales taxes enacted into federal state to levy a sales tax on any product or trillion in 2006. That same study estimated law. means of buying a product. It merely cor- revenue loss for state and local government Sincerely, rects a tax avoidance problem that if not to the tune of $10.1 billion to $11.3 billion in LARRY E. NAAKE, closed now, will only get worse and possibly sales taxes in 2011 alone. Although NACo has Executive Director, push states to seek new revenue sources to worked with other state and local govern- National Association make up for the uncollected sales taxes. ment representatives to champion for collec- of Counties. tion of remote sales taxes for over a decade, DONALD J. BORUT, On behalf of our colleagues from across the there is no time better than now for this leg- Executive Director, country, we thank you for introducing this islation to move forward. Local governments National League of vital legislation and in doing so, enhancing are facing declining revenues due in part to Cities. state sovereignty and fiscal federalism. rising mortgage foreclosures, and a reduc- TOM COCHRAN, Sincerely, tion in assistance from their states and the CEO and Executive SENATOR STEPHEN MORRIS, federal government. Director, United President, Kansas Senate, While your legislation is important in States Conference of NCSL President. moving us towards collection of remote sales Mayors. SENATOR RICHARD MOORE, tax, it also serves the purpose of creating eq- JEFFREY L. ESSER, Massachusetts Senate, uity for those businesses within our local Executive Director and NCSL Immediate Past President. communities. The increasing strength of CEO, Government electronic commerce creates exciting new Finance Officers As- STREAMLINED SALES TAX marketplaces, but it has also put traditional sociation. GOVERNING BOARD, INC., retail outlets at an unfair disadvantage be- November 9, 2011. cause of outdated and inequitable tax and FEDERATION OF Hon. RICHARD DURBIN, regulatory environments. TAX ADMINISTRATORS, Hon. TIM JOHNSON, NACo strongly supports your legislative ef- November 9, 2011. Hon. MIKE ENZI, forts to require collection of taxes made on SENATOR RICHARD J. DURBIN, Hon. LAMAR ALEXANDER, remote sales, and we appreciate that you Senate Hart Office Building, U.S. Senate, recognize the longstanding Streamlined Washington, DC. Washington, DC. Sales Tax Agreement Project (SSTA). We are SENATOR MICHAEL B. ENZI, also pleased that you have excluded issues Russell Senate Office Building, DEAR SENATORS DURBIN, ENZI, JOHNSON AND such as local telecommunications tax re- Washington, DC. ALEXANDER: The 24 Streamline states want form, which should be addressed separately SENATOR LAMAR ALEXANDER, you to know they support your introduction from collection of remote sales and use Dirksen Senate Office Building, of the Marketplace Fairness Act. taxes. Washington, DC. Online retailers have a competitive price Thank you again for introducing this im- SENATOR TIM JOHNSON, advantage over brick-and-mortar retailers portant legislation. We look forward to Dirksen Senate Office Building, working with you and other supporters of harming the brick-and-mortar retailers. Washington, DC. the Act and the SSTA to see the collection DEAR SENATORS DURBIN, ENZI, ALEXANDER Many main street businesses are little more of remote sales taxes enacted to federal law. AND JOHNSON: The Federation of Tax Admin- than showrooms where consumers go to Sincerely, istrators (FTA) thanks you for introducing ‘‘kick the tires’’ on products they later buy LENNY ELIASON, the new version of the Main Street Fairness online harming the local business and the Commissioner, Athens County, Ohio, Act for which we are pleased to be able to community depending on the sales tax from NACo 2011–2012 President. announce our support. FTA is an association that sale. of the tax administration agencies in each of At a time when Main Street retailers face NOVEMBER 9, 2011. the 50 states, the District of Columbia, and enormous competitive challenges it is appro- Hon. RICHARD DURBIN, New York City. priate for Congress to end this unfair treat- Hon. MIKE ENZI, The Main Street Fairness Act offers a real- istic framework for both large and small ment. Hon. TIM JOHNSON, Hon. LAMAR ALEXANDER, states to collect sales taxes that are already After our ten years of effort to simplify U.S. Senate, due and owing in a simplified administrative sales tax administration we are encouraged Washington, DC. system. We regard the ability to collect sales by your effort to get Congress to level the DEAR SENATORS DURBIN, ENZI, JOHNSON AND taxes from remote sellers to be a matter of playing field for all retailers. ALEXANDER: As leaders of the local govern- the highest importance. This Act will signifi- Sincerely, ment associations listed above, we applaud cantly improve tax compliance for both state SENATOR LUKE KENLEY, the introduction of the Marketplace Fairness and local governments while at the same President. Act, which will both assure a simpler system time creating a level playing field for all

VerDate Mar 15 2010 04:36 Nov 10, 2011 Jkt 019060 PO 00000 Frm 00006 Fmt 0637 Sfmt 0634 E:\CR\FM\A09NO6.001 S09NOPT1 smartinez on DSK6TPTVN1PROD with SENATE November 9, 2011 CONGRESSIONAL RECORD — SENATE S7235 businesses. This is because the current sys- puts them at a competitive disadvantage to ner of taxing community-based retailers, re- tem disadvantages in-state ‘‘bricks and mor- the online retail giants. RILA and our mem- move the liability currently being pushed tar’’ stores to the advantage of out-of-state bership are grateful for your leadership on onto consumers, and promote community in- businesses and this Act will help improve this important issue and we are committed vestment. More importantly, it would pro- business activities in our states and the em- to helping make this legislation law this vide support for local businesses and nec- ployment these in-state businesses generate. Congress. essary revenue to states without adding to We look forward to working with you dur- By way of background, RILA is the trade the federal deficit, establishing new taxes or ing the legislative process to enact final leg- association of the world’s largest and most increasing existing taxes. This bill is a true islation into law. innovative retail companies. RILA promotes stimulus for our states and local commu- Sincerely, consumer choice and economic freedom nities. through public policy and industry oper- PATRICK T. CARTER, It is time for the federal government to ational excellence. Its members include more President. allow states to enforce their laws and pro- than 200 retailers, product manufacturers, mote sound policy that will allow commu- and service suppliers, which together ac- NATIONAL RETAIL FEDERATION, nity-based and internet retailers to thrive in count for more than $1.5 trillion in annual Washington, DC, November 8, 2011. the 21st Century marketplace. sales, millions of American jobs and operate Hon. MICHAEL B. ENZI, more than 100,000 stores, manufacturing fa- Thank you again for the dedication and Ranking Member, Committee on Health, Edu- cilities and distribution centers domestically strong leadership that was required to create cation, Labor & Pensions, U.S. Senate, and abroad. this important legislation. Washington, DC. Because of a decades-old loophole that pre- Sincerely, Hon. RICHARD J. DURBIN, dates the Internet, online-only companies BETSY LAIRD, Assistant Majority Leader, U.S. Senate, Wash- can achieve as much as a 10–percent price ad- Senior Vice President, ington, D.C. vantage over brick-and-mortar retailers by Office of Global Public Policy. Hon. LAMAR ALEXANDER, not collecting state sales taxes. This special Chairman, Republican Conference, U.S. Senate, treatment has the effect of the government Mr. ENZI. Some of the groups in- Washington, DC. picking winners and losers in the market- clude: One is from the National Con- Hon. TIM JOHNSON, place, and main street businesses simply ference of State Legislatures, one from Chairman, Committee on Banking, Housing & cannot compete over the long term with on- the National Association of Counties, Urban Affairs, U.S. Senate, Washington, line giants that enjoy a government-sanc- the National League of Cities, the Fed- DC. tioned competitive advantage. eration of Tax Administrators, The Na- DEAR SENATOR ENZI, SENATOR DURBIN, SEN- This loophole is costing jobs on Main Street while shortchanging state budgets by tional Retail Federation, the Retail In- ATOR ALEXANDER AND SENATOR JOHNSON: On dustry Leaders Association, the Inter- behalf of the National Retail Federation an estimated $23 billion in uncollected state (NRF), I am writing in support of the Mar- sales taxes annually, a figure that will only national Council of Shopping Centers, ketplace Fairness Act, which levels the play- increase as Internet commerce continues to and the Governing Board of the ing field between local and out-of-state mer- grow. Few Americans know that their state Streamlined Sales and Use Tax Agree- chants with respect to collection of sales requires them to pay the sales tax on pur- ment. taxes. chases made online if the vendor does not I want to read one from Amazon.com collect it at the point of sale, leaving con- As the state of retailing evolves and inter- because they are one of the world’s net sales become a more prominent portion sumers vulnerable to penalties, interest and of total retail sales, it is critical that the tax increased scrutiny from state auditors. If en- largest online sellers. In the past, they laws not discriminate between similar busi- acted, the Marketplace Fairness Act would have opposed previous versions of the nesses based on how their products are dis- remove this burden from your constituents bill, but they think we have this one tributed. The Marketplace Fairness Act will and in the process empower states to address right. eliminate this discrimination by removing their budget deficits without having to raise The letter states: the constitutional limitation on your State’s taxes—all without any cost to the federal authority to collect sales and use taxes from government. Thank you very much for your legislation remote sellers. Over a quarter trillion dollars In closing, we strongly support the Mar- on interstate sales tax collection. will go uncollected in the next decade unless ketplace Fairness Act to eliminate this anti- Amazon strongly supports enactment of this legislation is enacted. quated loophole and view it as critical to your bill and will work with you, your col- As the world’s largest retail trade associa- preserving Main Street businesses and the leagues in Congress, retailers, and the states tion and the voice of retail worldwide, NRF’s jobs they provide. Thank you again for your to get this bipartisan legislation passed. It’s global membership includes retailers of all leadership on this important issue. a win-win resolution—and as analysts have sizes, formats and channels of distribution as Sincerely, noted, Amazon offers customers the best well as chain restaurants and industry part- KATHERINE LUGAR, prices with or without sales tax. ners from the United States and more than Executive Vice President, If enacted, your bill will allow states to re- 45 countries abroad. In the U.S., NRF rep- Public Affairs. quire out of state retailers to collect sales resents an industry that includes more than tax at the time of purchase and remit those 3.6 million establishments and which di- INTERNATIONAL COUNCIL taxes on behalf of customers, and it will fa- rectly and indirectly accounts for 42 million OF SHOPPING CENTERS, INC., cilitate collection on behalf of third party jobs—one in four U.S. jobs. The total U.S. Washington, DC, November 7, 2011. sellers. Thus, your bill will allow states to GDP impact of retail is $2.5 trillion annu- DEAR SENATORS ALEXANDER, DURBIN AND obtain additional revenue without new taxes ally, and retail is a daily barometer of the ENZI: On behalf of the more than 42,000 mem- or federal spending and will make it easy for health of the nation’s economy. bers of the International Council of Shopping consumers and small retailers to comply The Marketplace Fairness Act will bring Centers (ICSC), I would like to thank you for with state sales tax laws. fairness to large and small retailers alike your leadership on the Marketplace Fairness Act. We strongly support this bipartisan leg- Amazon is grateful for your hard work on and provide a business climate in which the issue, and we look forward to working these retailers have a better opportunity to islation that will level the playing field for community-based retailers by offering long- with you and your colleagues in Congress to grow and create jobs. Our members look for- pass this legislation. ward to working with you to help this legis- overdue sales tax fairness. lation become law. ICSC was founded in 1957 and is the pre- We have a number of other sup- Sincerely, mier global trade association of the shopping porters in addition to the others I just center industry. Its members include shop- DAVID FRENCH, ping center owners, developers, managers, mentioned. We are appreciative of Senior Vice President, marketing specialists, investors, retailers their support and look forward to Government Relations. and brokers, as well as academics and public working with them to get this bill en- officials. acted. RETAIL INDUSTRY Under the current system, not all retail The Marketplace Fairness Act is a bi- LEADERS ASSOCIATION, sales are treated equally. While brick-and- Arlington, VA, November 9, 2011. mortar retailers must remit sales and use partisan bill. The original cosponsors Hon. MIKE ENZI, taxes, many remote sellers, such as catalog on it are five Republicans—Senators U.S. Senate, and online vendors, are exempt from such re- ALEXANDER, BOOZMAN, BLUNT, CORKER, Washington, DC. quirements. Our current sales tax policy un- and me and five Democrats—Senators DEAR SENATOR ENZI: On behalf of the Re- fairly impacts local retailers—many of DURBIN, TIM JOHNSON, REED, WHITE- tail Industry Leaders Associations (RILA), whom have also been hit during the reces- HOUSE, and PRYOR. A key person in this and the millions of Main Street retailers sion—and places an impractical legal burden debate has been the Senator from Illi- throughout the country, we would like to ex- on taxpayers and consumers, costing state nois, Mr. DURBIN, who introduced a pre- press our strong support for the Marketplace and local governments billions in much- Fairness Act. This legislation levels the needed revenue. vious version of the bill. We encourage playing field for Main Street brick-and-mor- The Marketplace Fairness Act would our colleagues to take a look at Sen- tar businesses by closing a loophole that eliminate the present system’s lopsided man- ator DURBIN’s previously introduced

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When I DURBIN if he has any comments he will describe in a moment—that cap- think back on all of the battles that would like to share as he has been an italizes on the technology and software have been fought in all of the States by integral part of making the bill a available today to make this a process Amazon when each State tried to ad- strong bipartisan product and realizing that is not burdensome and does not dress this, I believe it is telling that the plight the retailers and the state slow down commerce in any way. they have stepped forward and said: and local governments are in. I recently went to Bloomington, IL, Here is a solution that can work. And Mr. DURBIN. I thank my colleague, and a number of other communities in if the largest online retailer in Amer- Senator ENZI. I want to give fair warn- my State and sat down with local re- ica—or one of the largest—feels that ing to all who are witnessing the de- tailers and had them tell their sto- way, it should encourage many col- bate that bipartisanship is about to ries—in many cases, depressing sto- leagues who don’t want to destroy that break out on the floor of the Senate, ries—about what they are going part of our economy, and I certainly and you can witness it. We have a bi- through. In one instance, this fellow don’t either. partisan effort led by Senator ENZI, sells camping gear, outdoor wear, some This is a positive step in the right di- who has really been dedicating his life snorkeling equipment, and ski equip- rection. I thank Senator TIM JOHNSON, in public service, as a former retailer, ment, and it is not unusual for him and Senator BOOZMAN, Senator JACK REED, to being sensitive to the needs of Main for others who are selling that type of Senator BLUNT, Senator WHITEHOUSE, Street and small business. For years, sporting equipment to have local cus- and many others who are going to join Senator ENZI, Senator ALEXANDER, and he worked with our former colleague, tomers come in and look for the prod- myself in this effort to pass this bipar- Senator Byron Dorgan of North Da- uct they want, actually get a fitting to tisan bill. Let’s get this done. Let’s kota, and they did their best to pass make sure they get the right size, and work together on a bipartisan basis to this legislation. When Senator Dorgan then leave to order it on the Internet solve a problem that has haunted us for retired, I approached Senator ENZI and so they can escape any sales tax liabil- over a decade and do it in a fair fashion said: I would like to join you in this ef- ity. Well, that isn’t fair to the local that does not create any new taxes but fort. I am honored to be on the floor merchant, and it certainly wasn’t the gives to the States the right to collect with him and our mutual friend, Sen- intention of Illinois or any other State those taxes that are already on the ator ALEXANDER, in this combined bi- to impose a sales tax just on those book. partisan effort to deal with an issue I businesses that physically exist in our I yield the floor. think is essential to fairness in our States. The PRESIDING OFFICER. The Sen- economy and helping small businesses This bill, the Marketplace Fairness ator from Tennessee. The minority has thrive, which is the key to economic Act, applies this sales tax across the 20 seconds left. revitalization. board to sales across the United States, Mr. ALEXANDER. I ask consent to If you ask the small businesses in my and it is voluntary. States have to de- extend the colloquy into Democratic home State of Illinois what they want, cide they want to move into this field time. it is not a big handout from Wash- and use this opportunity. I think that The PRESIDING OFFICER. Is there ington, nor any special attention. is the way to approach it. Some 24 objection? Frankly, they ask for a level playing States, if I am not mistaken, have al- Mr. DURBIN. No objection. field: Let them compete. What Senator ready signed up for this streamlined The PRESIDING OFFICER. Without ENZI has said is that many retailers in coalition which allows them to make objection, it is so ordered. my State, his, and every State are find- this happen. Other States, by com- Mr. ALEXANDER. I wish to con- ing it more difficult to compete be- plying with this law and passing a local gratulate Senator ENZI and Senator cause they have to rent a building or State law, can do the same. It is their DURBIN and say how pleased I am to buy one. They have to pay the property option. We don’t impose it or demand join as a cosponsor of their legislation. taxes. They, of course, have to pay it. It is their option, if they choose it, Here is what I want to congratulate utility bills and local taxes that might to use existing sales tax and to take them for. Senator ENZI said he came to this as a former mayor, as a former be generated because of their sales ei- the initiative at the State level. As shoe shop owner, and as a former legis- ther to the State or local government. Senator ALEXANDER has reminded me In each instance, they are investing lator. I come as a former Governor. many times, it is a States rights issue, In our constitutional framework, I back into the community and State in as it should be, and that is what we are have always thought it was our busi- which they live. That is part of the focusing on in this legislation. ness in Tennessee to decide what serv- basic understanding we have in this I think it is an issue of fairness, and ices we wanted to provide and what country, that we are in this together I think it goes beyond what we are fac- taxes we wanted to levy to pay for and we need to cooperate. The busi- ing today in terms of the disparity be- them. For example, we have a high nessman down the street who is selling tween Democrats and Republicans. We sales tax, but we have no income tax. something in a store is also at the are coming together. We are coming That is different from most States. We same time supporting the local com- together on behalf of tax fairness, com- have a low overall tax burden. For me, munity to make sure it has traffic ing together on behalf of States rights, this is, as Senator DURBIN and I have lights and make certain it has police coming together to make certain that discussed, a matter of States rights. protection and utilities and streets and small businesses across America have I think the most important thing I curbs and gutters and everything that the resources they need to prosper, be could say today is that they have goes with it. profitable, and, we hope, to expand solved the problem with this legisla- But there has been a new phenomena their workforce. We need to create tion. This problem has been there for a in the American marketplace over the more jobs, and I don’t think it is un- long time. It has had the opposition of last several decades, and now it is in reasonable to expect that to happen as conservatives worried about taxes. It full throat, and that is the Internet. these local retailers become more com- has had the opposition of Amazon and Internet sales are an amazing entity— petitive and more profitable. other online sellers. we can literally click a mouse and buy I might also add that the States that Twenty years ago, when technology a product that will arrive several days decide to opt in to it will have a source for businesses to compute and collect later at our home or business place. It of revenue that will be helpful to them taxes was not nearly as innovative as also has invited an inequity, an unfair- in difficult times. Again, it is their de- it is today, the Supreme Court said ness that we address in this bill. cision. that without congressional approval, We are not creating any new taxes in I will not recount all of the groups states could not require out-of-state this bill. I say to my friends on both that have endorsed this; Senator ENZI businesses to collect sales taxes be- sides of the aisle, that is not our inten- already has. It is a pretty impressive cause this created too much of a bur- tion, nor does this bill do that. What it array. One of the most impressive sup- den on interstate commerce. Senator

VerDate Mar 15 2010 00:53 Nov 10, 2011 Jkt 019060 PO 00000 Frm 00008 Fmt 0637 Sfmt 0634 E:\CR\FM\G09NO6.008 S09NOPT1 smartinez on DSK6TPTVN1PROD with SENATE November 9, 2011 CONGRESSIONAL RECORD — SENATE S7237 ENZI and Senator DURBIN, with this WY, and the online seller will do the competitiveness isn’t other countries. It’s legislation, in my opinion, have solved very same thing. They will collect the our tax law. the problem, and this is going to hap- sales tax that is already owed from the The United States Tax Code is difficult to understand and even harder to navigate, for pen. purchaser and they will send it directly families and businesses alike. Title 26 has I am not presumptuous enough to to the State, which has been the way been patchworked, reformed, and tinkered predict what the Congress will do and things have worked for a long time. with for decades, giving us an antiquated what the President will sign, but I This is an issue about preserving the mess of laws rife with inequities. Our cor- think I have been around long enough States’ right to collect or not to col- porate tax rate is among the highest in the and I have watched Congress enough to lect their own sales tax. It is about world. We refuse to shift to a Territorial Tax say this is going to happen. And if I closing a tax loophole. It is about stop- System that would stop punishing our com- were Governor, if I were an online re- panies for bringing earned overseas income ping the subsidization of some busi- back to the U.S. for reinvestment. Tax rates tailer, or if I were a catalog retailer, I nesses over others, of some taxpayers for small businesses remain high and incon- would make my plans to conduct my over others. sistent. business in this way. Why do I say I will conclude my remarks in a mo- A robust free-market system requires a that? Well, for one thing, times have ment, but first here is what William F. level playing field, where the government changed. Buckley said about it: doesn’t get to pick the winners and losers. We should require the same of our system of This morning, I got up and looked up The mattress maker in Connecticut . . . the weather in my hometown. So I taxation. We need a simpler, fairer, flatter does not like it if out-of-State businesses tax code that removes loopholes, subsidies, went online and put in weather, 37886— are, in practical terms, subsidized; that’s and credits, one that lowers rates across the that is my ZIP Code—and back came what the non-tax amounts to. Local con- board and expands the percentage of Ameri- the information. Under the bill Senator cerns are complaining about traffic in mat- cans paying their fair share of taxes. tresses and books and records and computer DURBIN and Senator ENZI have pro- When it comes to sales tax, it is time to equipment which, ordered through the Inter- address the area where prejudice is most posed, the State would create a system net, come in, so to speak, duty free. for Amazon, let’s say as an example, an egregious—our policy towards Internet sales. At issue is the federal government exempt- online seller. All they would have to Of course, Governors and legislators are up in arms as well. This loophole ing some Internet transactions from sales do, if I buy a $300 or $400 television set, taxes while requiring the remittance of sales is they put my name in, they put in my costs States $23 billion. Tennessee could use this money to ward off a taxes for identical sales made at brick and ZIP code, and the software the State mortar locations. It is an outdated set of has provided will tell them what the State income tax which we don’t have policies in today’s super information age, tax is and will even electronically and we don’t want. Wyoming could use when families every day make decisions to transfer the tax money back to the the revenue to reduce its property tax. purchase goods and services online or in per- Other States might reduce rising col- son. Moreover, it’s unfair, punitive to some State. In other words, Amazon will do small businesses and corporations and a boon the same thing the appliance store in lege tuitions, or they might reward outstanding teachers. for others. Maryville, TN, will do, and that is This is why the American Conservative what we intended to happen. This has been a problem for the last Union applauds Rep. Steve Womack for his I mean, when we passed a sales tax in 20 years, but Senator ENZI and Senator sponsorship of the Marketplace Equity Act Tennessee—I wasn’t around then, but I DURBIN, with their legislation, have of 2011, one of the first sincere attempts to was around when it has been raised—we solved the problem. modernize our tax policy for the 21st cen- I will stop where I started. This is tury. didn’t intend to exempt some people As conservatives we know that govern- over others. We didn’t intend to sub- not a new tax, it is an existing tax. It is not a tax on the Internet; it is on all mental power can be used to destroy entre- sidize some businesses over others. We preneurship, innovation and the free market. made a general decision that when we sales. Senator ENZI and Senator DUR- There is no more glaring example of mis- buy things in Tennessee, all sellers BIN, with their legislation, have solved guided government power then when taxes or would collect the sales tax. We have a the problem, and I predict that because regulations affect two similar businesses of the voluntary agreements and the completely differently. local sales tax and we have a State Over time, the company that has to com- sales tax, and that is our right to de- ease of out-of-State vendors doing the same thing Main Street vendors do, ply with a tax or a regulation will lose mar- cide. ket share to its competitor who is carved out Some of the opposition in the past that very soon we will eliminate these from this government interference. In these has come from conservative groups. It subsidies and close this loophole. I con- cases the winner is not the company who was important, just yesterday, to see gratulate them for their years of work outcompetes, but the one who gets special the chairman of the American Conserv- in this area. I am happy to join 10 Sen- privileges from the government. ators—5 Republicans, 5 Democrats—in At its inception, the Internet was every- ative Union write a very strong article one’s darling, the latest example of Amer- in support of a House version of this cosponsoring this legislation. Mr. President, I ask unanimous con- ican innovation and ingenuity. Internet sales same bill. I talked with him yesterday, represented a miniscule portion of the total Mr. Al Cardenas, a businessman from sent to include for the RECORD the arti- retail market, and the novelty led to tax Florida, and he is reviewing our bill. cle by Al Cardenas, the head of the loopholes and unintended consequences. Ten years ago, William F. Buckley American Conservative Union; the Now, according to Forrester Research, Inter- wrote about this problem and said that essay by William F. Buckley; and a let- net sales account for nearly 10 percent of all it was a loophole that needed to be ter from Governor Bill Haslam of Ten- sales of products and services in America, with an annual growth rate of about 9 per- solved and when States decided to sub- nessee, endorsing the Enzi-Durbin leg- islation. cent. sidize some taxpayers over others and If we do not confront this issue, state and some businesses over others, that was There being no objection, the mate- local governments dependent on sales taxes not good conservative philosophy. rial was ordered to be printed in the will need to look for other sources of reve- So when you have Amazon sup- RECORD, as follows: nues as Internet sales continue to expand. porting in a strong letter that Senator [From National Review Online, Nov. 8, 2011] Policy which allows for both online and ENZI read, and when you have the THE CHIEF THREAT TO AMERICAN brick and mortar retailers to be susceptible to the same taxes will—and should—allow chairman of the American Conserv- COMPETITIVENESS: OUR TAX CODE for commensurate reductions in sales tax (By Al Cardenas) ative Union on the same day announc- rates. For instance, if Internet sales tax rev- ing his support for the same principles, More than three years after America’s fi- enues will add 10 percent in revenue to a gov- I think you have solved the problem. nancial system hit a crisis point, the state of erning body’s coffers, then, at a minimum, a As Amazon just said in their letter, our economy remains in turmoil. As our na- corresponding overall reduction in rates they are in business to compete and tion’s leaders grapple with immediate chal- should apply. they can sell their goods, they claim, lenges through dueling jobs plans and the The current system is also inconsistent cheaper online than they can buy them Joint Select Committee on Deficit Reduc- with states’ rights, and the Congress ought tion tries to come to agreement on a trillion to carefully consider enacting revenue neu- in Senator ENZI’s store in Gillette, WY. and a half in reductions, we must also con- tral tax reform policies consistent with the Maybe they can, maybe they can’t, but sider long-term measures to strengthen our Tenth Amendment. at least they will have a level playing economic security. As it stands now, the The free-market system can only operate field, and both the store in Gillette, number one threat to the future of American effectively on a level playing field of free and

VerDate Mar 15 2010 00:53 Nov 10, 2011 Jkt 019060 PO 00000 Frm 00009 Fmt 0637 Sfmt 0634 E:\CR\FM\G09NO6.009 S09NOPT1 smartinez on DSK6TPTVN1PROD with SENATE S7238 CONGRESSIONAL RECORD — SENATE November 9, 2011 fair competition. Whether it’s the Depart- technology. The Internet is the happiest in- Your legislation gives states the flexibility ment of Energy’s disastrous Solyndra tellectual, journalistic, and educational de- to determine what works best for them, and project, or levying sales taxes, or a mul- velopment in history, and the thought of let- I am grateful that you are putting states’ titude of other policy decisions that impact ting the weeds of prehensile government rights first and closing this online sales-tax the private sector, the government picking crawl about it struck some as on the order of loophole. The Marketplace Fairness Act winners and losers is a perversion of the free enforced shutters on sunlight, or taps on wa- strikes the right balance for Tennessee, and market system. Lawmakers on Capitol Hill— terfalls. I fully support your efforts. especially conservatives—ought to at least But, sigh, that was three years ago, which Warmest regards, acknowledge this when deliberating impor- in the Internet business is three millennia BILL HASLAM, tant reforms to the tax code. As we consider ago. The estimated commerce done by the Governor, State of Tennessee. wholesale reform, exempting Internet sales Internet in 1998 was $9 billion. Last year it Mr. DURBIN. Mr. President, would was $26 billion. Which means we have to can no longer be justified. the Senator from Tennessee yield for a The Marketplace Equity Act of 2011 begins come to earth, and face homespun economic this conversation. It’s not a perfect bill, but truths. If the advantage of tax-free Internet moment? it’s a critical beginning to this dialogue and commerce marginally closes out local indus- Mr. ALEXANDER. Oh, yes. should spark bipartisan support for revenue try, reforms are required. Mr. DURBIN. I wish to go on the neutral reforms. Rest assured, we will not be The mechanics of reforms call on holding record on behalf of myself and, I am party to or stand for Trojan Horse legisla- not the buyer, but the seller, responsible. It sure Senator ENZI, in saying that Sen- tion that claims to strive for equity in the still won’t be possible to target the mother ator ALEXANDER doesn’t give himself law merely to serve as a cloak for secret tax in Hartford directly when the mattress ar- enough credit. He has been an integral rives, but the exporter of it in Massachusetts increases. part of putting together this bipartisan We have a great opportunity to drastically can be required to add $30 to the cost of the lower rates, especially corporate rates, and mattress, and send the check off to Con- bill. We wouldn’t be here without him. eliminate esoteric tax preferences to stave necticut Internal Revenue. It is, finally, im- I want to thank him for facilitating off the next massive financial crisis. A flat- possible for Congress to wrestle with the the bipartisan effort to put this bill to- ter, fairer, simpler tax code is the key to en- problem without yielding to legitimate de- gether. I share his feelings. I think we suring American competitiveness for genera- mands of the states spending the money on have finally found that sweet spot, and tions to come. Our leaders in Congress are education, police, and fire departments, and we can pass this bill. obligated to thoughtfully consider measures deprive them of revenue. Mr. ALEXANDER. I thank the Sen- to achieve this. The question has not come up in the cur- rent welter of proposals, but we have to ator from Illinois. Mr. ENZI. Mr. President, we yield the [From National Review Online, Oct. 19, 2001] watch carefully to prevent the United States floor. GET THAT INTERNET TAX RIGHT Postal Service from getting into the act. The most calamitous exposure of the postal serv- The PRESIDING OFFICER (Mr. (By William F. Buckley Jr.) ice since the days of mail-train robberies is BINGAMAN). The Senator from Rhode Congress is up against it: what to do about of course fax and the Internet. These are, for Island. Internet commerce? all intents and purposes, absolutely free Mr. REED. I ask unanimous consent To return to an example given earlier in transactions. One hundred messages can be this space, you have a mother living in Hart- to return to morning business. sent out, or for that matter one thousand, The PRESIDING OFFICER. The Sen- ford, Connecticut, looking for a new mat- for less than the cost of a first-class postage tress and spotting one on the website of a stamp. A rumor swept about the medium, a ate is in morning business. producer in Massachusetts. The feel of it is year or so back, that a proposal was making Mr. REED. Mr. President, let me also right, and so is the price, so the $500 order is way that would charge five cents for every commend Senator ENZI and Senator placed. The mattress crossing the border is communication sent out on the Internet. DURBIN and Senator ALEXANDER be- not taxed, because writing the Constitution The very idea is heretical, like charging cause I too am a cosponsor of this leg- in Philadelphia in 1787, it was decided: no for Communion wafers. To tax the Internet islation, and I think it does represent a tariffs within the 13 states. Interstate com- for the benefit of the postal service is merce would be regulated only by Congress. remarkably thoughtful and bipartisan unsupportable reasoning. The postal service approach to the problem of providing Which is all to the good, but Connecticut needs to survive from its own revenues. If takes the position that the family living there is a shortfall, the government can resources to local States and commu- happily in Hartford has to pay its share of come up with it, as required, on the same nities so they can carry out the very the cost of government, which entitles the principle as rural free delivery. But to at- challenging issues of local govern- treasury to a use tax. If the mother in Hart- tempt to relieve its problems by contami- ments. I am not surprised that Senator ford who sent out for the mattress in Massa- nating the Internet is something that any ALEXANDER is a key element in this chusetts were a perfect citizen, she would congressman who has taken an oath to right product. Both Senator ENZI and Sen- write a check for $30 (6 percent) to the State reason is bound to oppose. of Connecticut and sleep at complete ease ator DURBIN deserve to be com- plimented. I thank them for their lead- with her conscience. What she does do, is NOVEMBER 8, 2011. sleep at complete ease with her conscience Senator LAMAR ALEXANDER, ership. without sending in the check for $30. The U.S. Senate, Dirksen Senate Office Building, f reason for it is that taxes of that order are Washington, DC. pretty well uncollectable. An uncollectable DEAR SENATOR ALEXANDER: I am writing to VOW TO HIRE HEROES ACT tax is one which would cost more to exact it thank you for your leadership in helping to Mr. REED. Mr. President, I rise spe- would yield in profit. There is, in addition, advance a federal solution to a problem cifically to speak in strong support of the political question. People wouldn’t like states need Congress to address: the preser- the VOW to Hire Heroes Act of 2011. it when Big Brother stared into every out-of- vation of their own right to enforce their This legislation incorporates key com- state package, inquiring whether there is own tax laws and returning fairness to the something in it for city hall. marketplace. ponents of the American Jobs Act and So that one part of the pressure building The Marketplace Fairness Act will bring other bipartisan proposals designed to on Congress is collectivist: to let states come much needed, and long overdue, relief to the help veterans find jobs, including the in with a transfer tax. But a second pressure State of Tennessee. Tennessee and other Hiring Heroes Act, of which I am a is from merchants who see themselves af- states are currently unable to compel out-of- proud cosponsor. These are common- fected by untaxed transactions. The mat- state businesses to collect sales taxes the sense policies that Congress can and tress maker in Connecticut is willing to same way local businesses do. It is important should pass immediately. compete with the company in Massachu- for states to determine their own tax policy We are in the midst of an unemploy- setts, but does not like it if out-of-state busi- and have the ability to collect the revenues nesses are, in practical terms, subsidized; they are already owed. This is why your leg- ment crisis that is obvious to every that’s what the non-tax amounts to. Local islation is so important. American, and it is a growing problem concerns are complaining about traffic in The Internet has changed the way we do that is sapping not only our economic mattresses and books and records and com- business and provides small businesses the strength but indeed our sense of na- puter equipment which, ordered through the opportunity to grow, but we need our laws to tional purpose and our morale. The na- Internet, come in, so to speak, duty free. adapt to this new marketplace. Our state re- tional unemployment rate has been Three years ago, Congress voted to con- lies on sales taxes for the majority of its rev- hovering around 9 percent, and that tinue until 2001 the tax-free character of enue, and each year we are losing hundreds interstate commerce. This meant not only a of millions of dollars that could be used to means 14 million Americans are look- prospective loss of tax to the affected states, benefit Tennessee. What cannot happen is for ing for work in one of the toughest it meant also something on the order of a Congress to do nothing, which will prevent economies since the Great Depression. benediction on a staggering development in states from enforcing their own laws. But what is unfortunate—some might

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