Marketplace Fairness Act

Floor Speech

BREAK IN TRANSCRIPT

Mr. DURBIN. I thank my friend and colleague from Oregon for coming to the floor and stating his position on the bill. For those who follow the Senate, we are about to see something that is historic, precedent setting, and nothing short of remarkable in an hour and a half. The Senate is actually going to vote on a bill.

Those who are watching this program on C-SPAN or from galleries may actually see 100 Senators--or close to that number--come to the floor, vote, and perhaps there will be a bipartisan majority supporting the bill. At least that is my hope.

I have joined with Senator Enzi, a Republican from Wyoming; Senator Alexander, a Republican from Tennessee; and Senator Heitkamp, a Democrat from North Dakota, in a bipartisan effort to solve a problem. It was a problem not out of our creation, it was a problem that came about because commerce has changed in the United States.

Twenty years ago the State of North Dakota went to the Supreme Court and said: We want to collect sales tax from remote sellers. Twenty years ago these were mainly catalog sales. It would give a company that made a catalog sale in the State of North Dakota the ability to collect sales tax.

Nearly 21 years ago the Supreme Court--across the street--said in the Quill decision: We are not going to rule this from the Court. It is up to Congress to write the law.

Well, in lightning-fast speed--the kind of reaction we have come to expect--21 years later, here we are actually debating the bill. We may actually vote on it in an hour and a half.

What is it all about? It is about the way commerce has changed in America. Let's think about it. When did anyone here first make an Internet purchase? Virtually all of us have. I remember doing it and saying: I wonder how this is going to work. They are going to take it off my credit card, I am going to receive this in the mail or UPS will deliver this book from Amazon. Well, it worked out pretty nicely, so I did it again. I bought clothes from Lands End, along with some other things, and pretty soon I am an Internet purchaser.

Well, it turns out there was something going on I didn't know about. In my State of Illinois--and 45 other States--I have a legal obligation to pay sales tax on what I purchase on the Internet. Most people don't know it. It is on the State income tax form, and at the end of the year in Illinois--and many other States--each taxpayer is asked to itemize how much they owe for sales tax to, for instance, the State of Illinois for purchases that were made on the Internet.

A year ago my bookkeeper brought it to my attention and said: Senator, do you want to pay this? I said: I think I should. I started making calculations of what it was. It was my best estimate, and I paid it. It turns out only 5 percent--1 in 20 taxpayers in Illinois--make that payment.

Now repeat that story for 45 States and we will find that so many residents of States--whether it is Maine, Illinois, or California--may have a legal obligation to pay sales tax on their Internet purchases, but they don't do it.

As a result, less money is going into the States, the counties, and the localities that have the sales tax revenue coming their way, but something else has happened that is very significant. The competition of the Internet retailers is a disadvantage.

Unabridged Bookstore is on Broadway in the city of Chicago. It is around the corner from where my wife and I reside in Chicago. Unabridged is a great bookstore, and I love bookstores. I make a point of going in there. I went in there last Friday, bought a couple of books, and paid my sales tax to the State of Illinois.

As I mentioned earlier, I also buy books on Amazon. Sometimes they collect sales tax and sometimes they don't. It depends on whether the actual seller of the book is a store in Illinois, for example.

So what is the difference? Well, the difference is about 8 or 9 percent on what a purchaser pays for a book. When I bought the book at the store on Broadway--where they are collecting the sales tax as they are required by law, where they pay property tax as they are required by law sustaining the great city of Chicago and all of its services--I paid more than I might have on the Internet.

Here is what this bill says: States can now require the Internet retailers to collect the sales tax at the point of purchase and to remit those proceeds back to the States. So, for example, if Amazon, which supports this bill, sells a book to me in Illinois, they can collect the sales tax and send it to Springfield, the Illinois Department of Revenue. It is just that simple.

As far as the way they collect it, this bill requires that the Internet retailers be given the software they need so when I put in my address either in Chicago or Springfield--I have two places in Illinois--the address is going to identify how much tax is owed. It is not as dramatic and complicated as some on the Senate floor have suggested. In fact,

it is done every single day.

What if we don't do it? What we are going to find is that stores that sell books, running shoes, bicycles, and appliances are at a distinct disadvantage. They become showrooms, and they tell a story.

This is a Lacrosse store, and they are going out of business. They sold sporting goods and soccer gear in the suburbs of Chicago. They could not keep up with it anymore because people were coming in and they were showrooming. Potential customers would come into the store and say: I am looking for running shoes, and I cannot decide if it is Nike or Adidas. Can you bring out a few boxes? How about different colors? Let me try a different size. OK. This is perfect. Let me write this down.

Everyone knows what happened next. They walked out of the store, ordered it on the Internet, and paid no sales tax. That is what this store, and many like them, are competing against. We are trying to solve this once and for all, and we have done it in a way I think is fair.

We took a bill that was 80 pages long and turned it into 11 pages so it is simple to follow. We made it easy for the retailers in terms of the software they need to make this collection, and now across the United States there will be a standard which will help a lot of retailers. Sure, it is going to help the biggest ones. I will not make any bones about that. Of course it will. It will help the small ones too such as the Unabridged Bookstore and businesses such as the Lacrosse sporting goods store. They will be helped in the process too. They create jobs. These are entrepreneurs which sustain our communities.

When it comes to things we need in our neighborhood or town, we go to the small stores and ask if they will buy an ad in the church program or support the local baseball team. They are citizens and residents of the community. They are part of the community. This bill is trying to make sure they have a fair and level playing field when it comes to competing. That is what this is all about.

Some may wonder why we have such opposition. The Senator who spoke before me is from the State of Oregon. Oregon is one of five States in the Nation with no State sales tax. For the record, they are Alaska, Oregon, Montana, New Hampshire, and Delaware. Of those five States, four of those States--all eight of those Senators--are actively opposing this bill.

What does it come down to? If this bill passes, will the people of Oregon, who currently have no sales tax, have to collect sales tax from the residents of Oregon? No. Not one penny of sales tax will be imposed on any State where they currently don't have a sales tax. The residents of Oregon will not have to pay sales tax at the counter or over the Internet. It will not apply.

However, the three or four--and there are only three or four companies--Internet retailers in California that want to sell in California, Washington, Maine, and Illinois will be collecting sales tax based on their sales in our States only. That is fair. It doesn't change an Oregonian's sales tax responsibility at all. So for three or four retailers, the argument is being made: Don't change the law.

Just how many Internet retailers are we talking about? We put an exemption in this bill and said: If you had less than $1 million in Internet sales last year, you don't have to collect sales tax this year. What does that $1 million mean? Well, if we set that number at $150,000 instead of $1 million, we would have exempted 99 percent of all the Internet retailers.

What it comes down to is this bill will affect the big boys, such as Amazon and eBay--the big ones. They can certainly--and already do in many instances--collect the sales tax. It does not affect the small Internet retailers, particularly in States that are complaining the most about the passage of this legislation.

I think this is an important measure in terms of leveling the playing field for retailers across America, and it is long overdue. It is bipartisan, and it has the support of the White House. It has the support of the retail community. Stores large and small all across America support this legislation. It has the support of virtually every level of government beyond the Federal level.

All the Governors and mayors in all the different localities--virtually all of them--support it. The labor union supports it as well because money coming back into these States and communities will be used for the good of the people who live there. I don't know about many States, but in my State they are struggling in terms of coming up with enough revenue. This bill will help provide some of the revenue my State needs to deal with some of these problems.

I would like to mention one other issue that was brought up Friday morning by the Wall Street Journal. The Wall Street Journal talked about the number of audits an Internet retailer might face if this bill passes. They suggested--I think improperly in their editorial--that it could be an onslaught of audits. We made it clear--and Senator Enzi said on the floor, as I have--that we are talking about one centralized audit for each State.

It would not be a matter of harassment. At most there would be some 45 audits which these Internet retailers would face. I hope that can be made extremely clear.

I have listened to a lot of speeches on the floor against this measure, and virtually every single one of them has been from a State with no sales tax. My final plea is to the people of Oregon, Montana, New Hampshire, Delaware, and Alaska. If this bill passes, they will not have to pay any new sales tax. This bill creates no new Federal tax and does not create new sales tax anywhere in the United States. It only has a method of collection for those sales taxes that already exist in the States across the Nation.

I hope we can get a good, strong bipartisan vote so we can send it to the House, and I hope they will take it up. It is a timely and important measure. After 21 years I think we have thought it over enough. It is time to act and do something to resolve the issue. This will help small businesses and local governments across America where this revenue will play an important part in their future.

I believe all the speeches I have heard about the value of small business, the value of entrepreneurship, and how important it is to create jobs at the local level. This will be a test vote this afternoon. In fact, we will have a couple of votes. First, there will be the managers' amendment. It is generally an amendment where we look closely and carefully at every single sentence in the bill. We made some slight variations. There were no major changes in the substance of the bill that was originally introduced. However, it is a cleanup amendment, which shows that even with our best efforts, we can improve, and I think that is important. Second, there will be the vote on final passage on the bill.

The last point I want to make is one I expect to hear from my friend from Oregon, Senator Wyden--and he is my friend. He feels passionately about the Internet, and he should. The Internet has changed America. It has changed the world. It has changed the way we live, the way we research, the way we read books, the way we shop, and so many other things.

Senator Wyden talks about the virtual issue of the sanctity of the Internet. I could not agree with him more. We have to make sure we preserve some very basic things about the Internet. One of the things we need to preserve is access to the Internet. What if we had to pay a tax every time we went online? That would be awful. So we had an amendment from Senator Pryor of Arkansas and Senator Blunt from Missouri which said access to the Internet cannot be taxed. It is called the Internet Freedom Act.

I said put it on here. I agree with that. Let's make it clear that nothing we do here will in any way inhibit a person's access to the Internet.

It is a bill which, frankly, Senator Wyden had introduced, but because of the nature of this political debate, he objected to our putting an amendment on the bill. I am sure he still supports that bill in principle. This was an effort by us to make it clear that we want to protect access to the Internet and in so doing make sure we also protect something that is fundamental in this country: an opportunity for real competition and a level playing field for all manner of business, large and small, across America.

I yield the floor and suggest the absence of a quorum.

BREAK IN TRANSCRIPT

Source