Marketplace Fairness Act

Floor Speech

Mr. DURBIN. I note Senator Enzi is on the floor. At 5:30 p.m. we are voting on a measure which will affect literally millions of Americans. I will provide some illustration about this bill.

A close friend of mine is the mayor of Normal, IL. His name is Chris Koos, and he is a local businessman. His business sells bicycles, running shoes, running paraphernalia, and equipment. Chris has a good business and has done well.

He told me that in the last 10 or 20 years things have changed. He said, It is not unusual for someone to come into my store, ask to see a pair of running shoes, try them on, look at the different colors, and then leave without buying anything. Sometimes they will come back several weeks later with shoes and they will say: Chris, we bought these over the Internet, and they are not what we thought they would be; what can we do about it?

This is called ``showrooming'' and is happening more and more. Why would somebody try on the shoes, not purchase them, and then go to the Internet? In many instances, it is because many Internet retailers do not collect sales tax. In my State, this means 9 or 10 percent less cost to purchase an item over the Internet.

This is the reality for most companies. Some companies, Internet retailers, collect a sales tax. I recently purchased a book on Amazon, and they charged the sales tax, which is appropriate in Illinois. Most companies do not collect the sales tax.

I wish to tell another side of this story. When we are dealing with the collection of this sales tax, we are dealing with existing law.

Forty-six States in America have sales tax. The States that do not are Montana, Oregon, New Hampshire, and Delaware. Every other State has either a sales tax or what they call a use tax, and the State law requires all of us living in those States to pay a sales tax on Internet purchases even if the seller didn't charge it.

In my State, people are supposed to pay it when they file their annual State income tax return. There is a line: How much do you owe for Illinois sales tax that should have been paid on remote purchases or online purchases? It is really an honor system is what it comes down to. Though there is a legal obligation, there is no direct enforcement. It turns out that only 1 out of 20 people in Illinois even know this exists. So only 5 percent of the population know.

As I mentioned several times, a few years ago my bookkeeper said--when she was doing our taxes--Senator, do you want to pay the sales tax you owe? I said: I think I do. I did, and we have ever since. But most people aren't aware of it.

So here we have businesses all around America, on Main Streets and in shopping malls, collecting sales tax on the things they sell and competing with Internet retailers who do not collect the sales tax. Secondly, we have individuals with an obligation to pay the sales tax, but most of them do not. So the bill we will consider at 5:30 this afternoon is going to try to resolve this problem.

Over 20 years ago the U.S. Supreme Court said: Congress, you have to fix this. We are not going to fix it by court decision. The States can't fix it because it affects retailers from all around the United States. In the Quill decision before the Supreme Court, they said: Congress, you have to fix it.

It was about that time my colleague, Senator Enzi of Wyoming, teamed up with Senator Byron Dorgan of North Dakota to fix it. Many years have passed and here we are today on the floor of the Senate trying to finally resolve this issue. We have reached a good place. I think we have a reasonable approach to it, and this is what it says: States have to decide to opt in to our system. In other words, no mandate from the Federal Government.

If States opt in to what we propose in this legislation, here is what it means. It means States will be willing to provide the Internet retailers with the software program so that when they sell into the State of Illinois and the purchaser gives the home address, the program will automatically calculate how much sales tax should be collected on the sale. This is free to the retailers, and it allows them to collect the sales tax and then remit the sales tax to the State of Illinois or the other States in which they are selling.

We have worked with businesses--Internet businesses, obviously--and have the support of amazon.com, the largest Internet retailer. For years they have been fighting this battle State by State. As I said, they are now in Illinois collecting sales tax on things they sell over the Internet. But they have decided, and many others as well, it is time to put an end to these statewide court battles, statewide legislative battles, and finally have a national program to collect the sales tax.

What it means is a lot of money for the States and localities. My State is struggling with terrible budget problems. We are in the red with deficits, our pension system is in trouble, and money that should be collected for sales tax is not being collected. So what we are doing with this bill is allowing States to have Internet retailers selling in those States to collect the sales tax.

Several of my colleagues will come to the floor to oppose this, and they have one thing in common. Most of them--I think virtually all of them--live in States that don't have a sales tax. So what about those States? If we say Internet retailers can collect a sales tax, what does that mean in the State of Montana, for example? It means nothing changes for the people living in Montana. If there is no State sales tax they have to pay in their stores, this bill is not going to impose any new sales tax on the people of Montana.

So, then, why are the Senators from Montana opposing it? They are arguing their Internet retailers should not have to collect a sales tax for sales made in States that do have a sales tax. My answer to that is, if you wanted to do business in Illinois--if you wanted to move your shoe store to Illinois--you would have to follow Illinois law; you would have to play by Illinois rules--you would have to pay your property tax and collect the sales tax. That is accepted. If you want to do business in our State or any other State, those are the rules. We think the same thing should apply when it comes to Internet sales.

If a Montana Internet retailer, a State with no sales tax--Montana has no sales tax--wants to sell in Illinois, we are saying they need to collect money from the Illinois purchaser--not from the Montana purchaser but from the Illinois purchaser--for the sales tax and remit that back to the State of Illinois. If they do not want to do that or sell in Illinois or any State with a sales tax, that is their right. But if they do, for the privilege of selling in our State, we are saying they will pay this sales tax.

Mr. President, I ask unanimous consent to have printed in the Record a column from last week, April 21, from the Wall Street Journal, entitled ``Tax Internet Sales, Stimulate Growth.''

There being no objection, the material was ordered to be printed in the Record, as follows:

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Mr. DURBIN. There are differences of opinion about this, but here are several things we should make clear. This is not a new tax. The bill we have before us will not create any new tax. It creates a method for compliance or collection of an existing tax.

Secondly, it is only fair to the businesses across America--the entrepreneurs who open their stores every morning and do business. If they are required to collect a sales tax on their sales, it is only fair those who are competing with them do the same.

Also, I might add, it is naive to believe the Internet retailers are selling into States and not using the benefits of the State. When I buy a book on Amazon or wherever it happens to be, ultimately it may be delivered by UPS, for example. That UPS truck is going to use the streets of Chicago and the streets of Springfield. It will use all the basic infrastructure of the cities and the State of Illinois to deliver its product. I don't think it is unreasonable they collect taxes to support the State and the city where they are making their sales, and that is what this is about.

I also note, Mr. President, that today the White House announced the President supports this bill to give States the authority to collect sales tax from Internet retailers. The White House spokesman said: The Senate bill will level the playing field for small businesses and brick-and-mortar retailers undercut by online retailers. Governors and mayors are overwhelmingly in support of this bill. They told the White House the bill is needed. The States are losing out on revenues that can go to education, law enforcement, infrastructure investments, and health care.

We have a wide array of businesses supporting this. You can imagine. Retailers large and small are supporting it. Labor unions are supporting it as well. Business and labor have come together. They believe this is only a matter of fairness.

I want to thank my colleague, Senator Enzi of Wyoming--and then I will yield the floor for him--for his leadership, persistence, and patience on this issue. It has been a long time. Senator Enzi was in the retail business before he came to the Senate, and he was one of the earliest supporters of this measure. When Senator Dorgan retired, I asked Mike if I could join him in this effort, and he has been a terrific ally.

At this point, Mr. President, I yield the floor for my colleague and friend from Wyoming.

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