MARKETPLACE FAIRNESS ACT
(Senate - April 25, 2013)

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[Pages S3016-S3018]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        MARKETPLACE FAIRNESS ACT

  Mrs. SHAHEEN. Madam President, I really came down to the floor today 
to continue my opposition to the Internet sales tax legislation that is 
before us.
  The proponents of this legislation claim it is about ``fairness,'' 
but when you really think about it, this bill is anything but fair. In 
fact, it creates an unfair situation for small businesses in a number 
of ways.
  First, the legislation is particularly unfair for businesses in my 
State of New Hampshire and in the other four States in this country 
that do not collect a sales tax.
  I filed amendments, as I know a number of my colleagues have--my 
colleague from New Hampshire, Senator Ayotte, has filed a number of 
amendments--that I hope can help address this issue. But I think it is 
important for everyone here, especially those who are concerned with 
creating new redtape, to understand how this legislation is going to 
affect small businesses.
  This proposal is going to put new regulatory burdens on small 
companies across the country, not just in New Hampshire. As a result, 
it is going to put those small businesses at a disadvantage, making it 
harder for them to compete with large online retailers.
  As a former small business owner myself, I understand how time-
consuming regulations and compliance requirements can be. Make no 
mistake, the bureaucratic nightmare we are

[[Page S3017]]

going to be creating for small businesses under this legislation is 
real. I think it is worth talking for a minute about what that process 
is going to look like for the small online retailers.
  In a recent piece for the Daily Beast, writer Megan McArdle went 
through what the process would be like for a small business. She 
pointed to the SBA guidebook for small businesses when they collect 
sales taxes in multiple States. The guidebook tells small businesses:

       Generally, states require businesses to pay the sales taxes 
     they collect quarterly or monthly. You'll have to use a 
     special tax return for sales taxes, and report all sales, 
     [all] taxable sales, [all] exempt sales and amount of tax 
     due. Not paying on time can result in penalties. As always, 
     check with your state or local government about the process 
     in your location.

  McArdle points out that, despite claims from the proponents of the 
Marketplace Fairness Act that tax collection will be easy and 
streamlined, the bottom line for a small business is that ``you've 
still got to keep fifty states worth of records and file 40-odd states 
worth of returns.''
  McArdle went on to say:

       For Amazon--the actual target of these laws--this is 
     trivial. Their staff of crack accountants can probably roll 
     these things out before their Monday morning coffee break. 
     For a small vendor, however, that's a whole lot of paperwork.

  And that is what this legislation is really about--those small 
business owners who are working hard to grow their companies. They do 
not need an additional paperwork burden to distract them from running 
their companies.
  Let me provide one example. There is a small company in the town of 
Epsom, NH. It is called Michele's Sweet Shoppe. Michele's sells popcorn 
and other gourmet treats both at their brick-and-mortar store in Epsom 
and online. This is a small business that is growing, and it wants to 
create jobs. They sell locally in New Hampshire at their brick-and-
mortar store, but a big part of their future strategy for growth is 
taking advantage of new markets through the Internet.
  Under this legislation, however, there is an arbitrary ceiling on 
this company's growth because as they get closer to $1 million in 
online revenue--as they have said to me--they are going to have to ask 
themselves, is it worth going through the bureaucratic nightmare of 
complying with 46 different States' sales taxes? Unfortunately, for 
them and for too many other businesses, the answer is more than likely 
to be no.
  For Amazon and online retailers, this is not even a question. This is 
exactly the reason why this bill is good for big businesses and bad for 
small businesses. It makes it harder for small mom-and-pop stores to 
compete.
  Small businesses--certainly in New Hampshire and in most of the 
country--are really the economic engine of our economy. Two out of 
three of the new businesses that are going to be created are going to 
be created by small business. We should really think twice before we 
pass this kind of legislation that will keep them from growing and that 
is really designed to help those big businesses.
  I support a number of amendments to this bill. I would like to see 
them at least voted on. I hope some might be adopted because I think 
they would make the legislation fairer for small businesses. One of 
those is a bipartisan amendment we have worked on with Senator Toomey 
to raise the threshold for small businesses under the legislation. I 
have also filed an amendment to address a fundamental flaw in the 
legislation that I think must be addressed because this legislation is 
anything but fair to States such as New Hampshire, States such as 
Alaska, Montana, the other States in this country that do not collect a 
sales tax.
  This is a proposal that fundamentally violates State sovereignty. It 
enables one State to impose the enforcement of its laws on the 49 other 
States and territories without their approval, and it provides zero 
benefit for the non-sales tax States while it creates an additional and 
unnecessary burden on our small businesses. That is why I filed an 
amendment to create an exemption for businesses in States such as New 
Hampshire. States will be able to force New Hampshire companies to 
collect sales taxes--especially when our States get no benefit 
whatsoever--and this amendment is designed to prevent that.
  I am disappointed this evening that it does not look as though we are 
going to be allowed to vote on any of these amendments, although I am 
still hopeful that we might get a hearing.
  I urge my colleagues, again, to think twice about this legislation. I 
urge them to look at the amendments when they are filed--if we are able 
to get an amendment process--and to think about supporting those 
amendments so the legislation really could live up to its billing as 
the Marketplace Fairness Act because right now it certainly does not 
meet that standard for the State of New Hampshire and our small 
businesses.
  Thank you very much, Madam President.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alaska.
  Ms. MURKOWSKI. Madam President, I appreciate being here in the 
Chamber to hear the comments from my friend the Senator from New 
Hampshire. As she has noted, there is a small handful of States that 
for a host of different reasons have chosen not to impose a sales tax 
on their residents. As she has very well stated, this so-called 
Marketplace Fairness Act is not fair. It is not fair to those States 
that have put in place other mechanisms. Yet what we are doing through 
this legislation that we have pending on the floor right now is to tell 
States such as New Hampshire to tell States such as Alaska regardless 
of what your State chose to do, those who are engaged in online sales 
and activity are going to be scooped into the requirement of whatever 
State in which the individual purchasing your product lives.
  To me, that is absolutely not fairness within the marketplace. I 
think the people in Alaska, when they think about their marketplace, 
are looking at where they are and assuming their State's laws are going 
to be what they are dealing with. I thank the Senator for her comments, 
and in laying out very well how this measure impacts these few States.
  Maybe that is our problem. Maybe we do not have enough of us in terms 
of those States that have opted to not move forward with a sales tax. 
We are at a point in the evening where we had a vote to move on. We are 
told we are going to be taking up this measure when the Senate returns 
in about a week. It is my understanding at this point in time there 
will be no amendments allowed despite the efforts of many of my 
colleagues to help address, to help bring about some fairness to this 
legislative measure. We will not be allowed to do that. It is a real 
challenge today as we discuss this, recognizing that these few States 
might be impacted disproportionately in a way that I think does not 
demonstrate any level of fairness.
  Mrs. SHAHEEN. Will the Senator yield for a question?
  Ms. MURKOWSKI. Certainly.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mrs. SHAHEEN. My friend from Alaska and I, as she pointed out, 
represent States neither of which has a sales tax. Would the Senator 
agree with me that if this passes it sets a dangerous precedent that 
says at any point this Congress could impose on States such as ours, 
despite what we have chosen to do in our home States, a tax we may 
totally disagree with, and that that is a very dangerous precedent for 
us to set?
  Ms. MURKOWSKI. I would absolutely agree. As the Senator points out, 
it is Alaska, Oregon, Montana, Delaware, and New Hampshire that are in 
this situation. Basically, if this legislation were to pass, the 
message to those within these States is it does not make any difference 
what your State laws are with regard to a State sales tax. It does not 
make any difference, because we have made this directive back here that 
there is going to be uniform application. I have a tough time with 
that. I think our States may be somewhat similarly situated in the 
sense that there is a real sense of States rights, State sovereignty. I 
believe your motto is ``Live Free or Die.'' We feel pretty independent 
up North as well. I do feel this is a hard push against States' rights 
and their ability to impose local taxes within their State boundaries.
  I am very concerned about the direction we have taken. I note again, 
for

[[Page S3018]]

the States without sales tax and use taxes like these five States my 
colleagues and I have been talking about, and that are not members of 
the Streamlined Sales and Use Tax Agreement, this legislation creates 
an inherent unfairness.
  Again, I do think it is somewhat ironic that the bill's sponsors 
chose to call it the Marketplace Fairness Act. We have noted here on 
the floor what the requirements under this legislation would mean. 
Senator Shaheen from New Hampshire has indicated exactly what it means 
to a small business. A remote seller in Alaska who makes an online sale 
to someone in Vermont who is a member of the Streamlined Sales and Use 
Tax Agreement will have to comply, collect, and file a return in the 
State of Vermont. The seller otherwise has zero connection to Vermont.
  So it does beg the question, is this fair? I would contend not. Does 
it present a burden on interstate commerce? Absolutely. The drafters of 
this bill will argue it creates no new taxes, but I would also 
respectfully disagree. This bill essentially forces States such as ours 
to adopt its requirements to ensure parity. Currently no State can 
impose its local sales tax on another, short of meeting constitutional 
nexus requirements. So we have made clear that you cannot do that.
  This legislation again scoops in everybody. States that wish to enter 
into agreements with other States for this purpose are able to do so. 
Let those individual States decide whether they want to participate in 
the Streamlined Use and Tax Agreement but do not mandate it. That is 
what this measure would do. Only 24 States could agree to do this.
  You have to ask, is 24 States a mandate for Congress? I do not think 
so. Again, it begs the question, is this fair? Absolutely not. This law 
presents a backdoor mandate to States such as Alaska, such as New 
Hampshire, to effectively adopt a sales tax. I think Congress has to 
respect a State's right to determine how to implement and how to 
enforce its tax laws and not impose how it must do so.
  The Senator has mentioned the burden on small business owners, and 
the Senator spoke to an article that detailed some of the concerns. 
This is an issue that has generated considerable interest in my State. 
I have had over 600 constituents who have written to me in opposition 
to this bill.
  Here are a couple of the examples of the mail I am getting. I have a 
constituent in Fairbanks, AK, who says:

       I am a small business woman selling books off of my Web 
     site. I do not want to be a tax collector for other States. I 
     especially do not want my customers running off to other non-
     tax parts of the world.

  I have got another constituent who owns a business in Anchorage who 
writes:

       I do not support a measure that would allow individual 
     States to collect sales taxes on any on-line purchases 
     regardless of which State an on-line retailer is located. As 
     a small business owner, this legislation will affect me, 
     because I often have clients that start our transaction out 
     of State, and we do not have the staff to handle collecting 
     taxes for 50 States.

  Then, finally, a constituent from Eagle River writes:

       As a former small business owner, I am very aware of the 
     constant and increasing burden that government subjects our 
     businesses to. Requiring on-line businesses to collect 
     local sales taxes would be a horrendous administrative 
     burden that would undoubtedly cause many businesses to 
     fail. Governments at all levels should be trying to 
     encourage businesses to succeed, rather than trying to 
     squeeze every last dollar of revenue out of the businesses 
     and their customers.

  These are three examples of some of the correspondence I have 
received from folks who are worried about the burden it is going to 
inflict on our small business owners. Of course, we hear this from all 
of the other States, certainly heard it just now from the Senator from 
New Hampshire.
  The communities I mentioned we have been hearing from are all on the 
road system, as we call it in Alaska, are bigger communities. But in 
many of our rural communities, for those that are offroad, where 
economies are very limited, there is no major business, there are no 
big stores. We have been encouraging folks in our villages to use the 
Internet to bring the world marketplace to your door, and to sell their 
products on line, and to sell--whether it is arts and crafts or 
whatever it may be. So we are encouraging them to do this.
  Now the concern we are hearing is, I do not want to be the one who is 
the tax collector for California taxes. I am trying to get myself up 
and going and make a business, make an economy in a very small area.
  I know there is a carveout or an exemption for the smaller 
businesses. I think that is critical. That is important. That is going 
to help the very small mom-and-pop operators. But I think we recognize 
it will have a burden on our small businesses, not only in Alaska but 
around the country.
  The ability of a small business owner to comply with the reporting 
requirements that will be required by this bill, which would include 
the 50 States plus the District of Columbia and the U.S. territories, I 
think deters new startups. I think it acts as a hurdle, if you will. I 
do not think our businesses need that, particularly now. We already 
have regulatory burdens that our small businesses are concerned and 
worried about. I do not think we need to impose that on these States 
that have, again, made that determination that they would not apply a 
sales tax within their State boundaries.
  So for these reasons, as well as so many of the reasons that have 
been outlined by others on this floor earlier, I cannot support this 
measure. We will see whether we have got the opportunity to have any 
amendments in the week following our recess. Again, I feel it was 
important to express the concerns of many of the individuals I 
represent in the State of Alaska.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. RUBIO. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. RUBIO. Madam President, are we in morning business?
  The PRESIDING OFFICER. We are.

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