Marketplace Fairness Bill

Floor Speech

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Mr. President, this past Thanksgiving marked the beginning of the holiday shopping season.

In an effort to find deeply discounted electronics, toys, and other Christmas gifts for family and friends, bargain-hunting shoppers searched for Black Friday and Cyber Monday deals.

While these deals provided great savings for shoppers, Main Street retailers and States did not reap the same benefits.

Because we have let another year and holiday season come and go without closing the online sales tax loophole, States missed out on millions of dollars in sales tax revenue owed to them from online purchases. And Main Street retailers continued to lose business.

However, this was not without trying.

Around this time last year, Senators Enzi, Alexander, Heitkamp, and myself opposed the air dropping of legislation in the customs conference report that would have taken away a State's right to collect taxes on accessing the internet unless we gave States the ability to collect taxes on internet sales that were already owed, and we leveled the playing field for brick and mortar businesses.

Despite our opposition, the customs bill passed, and Majority Leader McConnell promised to give us a vote later this year on the Marketplace Fairness Act or similar e-fairness legislation.

This would give House Republicans the opportunity to go through regular order, a process they said was necessary to address the issue.

Yet, unfortunately, here we are, at the end of the Congress, and House Republicans have still refused to act.
The Marketplace Fairness Act levels the playing field for retailers by allowing States to treat brick and mortar retailers the same as remote retailers in the collection of State and local sales and use taxes.

Internet retailers benefit under our current system with a 5-10 percent price advantage over their Main Street competitors.

This is because customers visit local retailers, browse goods, use their phone to take a picture of it, and go online to purchase the item tax-free.

Products sold online seem cheaper when sales taxes are not collected at the point of sale. But they are not because the tax is still owed, though not paid, by the customer.

This is not fair, and it is not right.

Thousands of Main Street businesses have worked hard to grow their businesses, but have become showrooms because of this price advantage, making it difficult, and, in some cases, impossible for them to compete.

I have come to this floor in the past to share the stories of Main Street businesses, such as Play It Again Sports in Naperville and Soccer Plus in Palatine, that have gone out of business due, in large part, to the unfair advantage of their online competitors.

Since then, Sports Authority has met that same fate, and many department stores and big-box retailers have closed a number of stores because of the increase in online shopping.

These are local jobs and community anchors that no longer exist.

There is nothing we can do now for these shuttered retailers. But we can, and should, still help thousands of retailers avoid the same fate by leveling the playing field for Main Street retailers.

For the first time in history, consumers said they made more of their purchases online than in stores.
This trend is evidenced by an increase in online retail spending, which grew 14.6 percent last year, to $341 billion, and is projected to reach $523 billion in 2020.

During the weekend following Thanksgiving--the biggest shopping weekend of the year--online retail spending was over $9.3 billion, a 16.4 percent increase from 2015.

As online sales increase, the potential sales tax revenue that States lose increases.

The longer we delay in closing this loophole, the longer we perpetuate an uneven playing field between local and online retailers that erodes the revenues needed by State and local governments to fund essential public services.

Despite the looming budget deficits State and local governments are facing and the competitive disadvantage experienced by brick and mortar businesses, House Republicans have refused to address the issue for more than a decade.

This year is no different.

Numerous requests to the chairman of the House Judiciary Committee to markup e-fairness legislation from the ranking member and other bipartisan members on committee, Main Street retailers, State and local governments, labor, and the sponsors of the Marketplace Fairness Act remain unanswered.

Instead, Chairman Goodlatte drafted his own proposal that created more problems than it solved.

I didn't support the chairman's proposal, but I supported the process and his calls for regular order and encouraged him to work with his colleagues in the House to send us a bill so that we can resolve our differences.

We are still waiting.

The chairman has continued to refuse to work with us on reasonable compromise legislation that didn't turn 100 years of sales and use tax law on its head, even though he doesn't have the support of the majority of the House Republican Caucus on his approach.

It is apparent that these calls for compromise and regular order are nothing more than veiled attempts to delay and obstruct, which have so far been successful.

If Congress continues to ignore this issue and fails to act, the courts will.

Because States are missing out on an estimated $23 billion a year in potential sales tax revenue, they are looking to the courts for a solution, heeding the call from Supreme Court Justice Kennedy to reexamine the Court's precedent on the issue.

This year alone, 16 States have introduced over 40 sales tax bills, and others have enacted legislation that have triggered legal challenges that would help States collect sales tax without congressional action.
This week, a Federal court in South Dakota will begin hearing oral arguments on a South Dakota law that requires remote retailers to collect and remit sales tax.

And we may know, as early as next week, if the Supreme Court will grant review of a law Colorado recently enacted that imposes reporting and notification requirements on remote retailers.

Let me be clear. This is not the approach I prefer. I would rather Congress do its job to pass a uniform, comprehensive Federal solution instead of the States moving forward individually so we don't have a patch work of laws that small businesses have to navigate.

But I understand that, in the absence of Congressional action, the States have no other options. They must either raise taxes or cut vital public services if Congress continues to sit on the sidelines.

As you can see, the States are no longer waiting for Congress to get its act together.

But there is still time for us address this issue.

And I hope my colleagues in the House will work with me to do that before it is too late.

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