States rights, a level playing field for all retailers, and keeping local taxes low is the driving force behind an amendment that U.S. Senator Mike Enzi, R-Wyo., spoke in favor of on the Senate floor late Wednesday night.
Enzi's Marketplace Fairness Act, S.1832, would give state and local governments the ability to collect sales tax on out-of-state, catalog and online sales. No state would be forced to collect the sales tax, but would have the authority to make this decision if they so choose. Enzi said it's a conversation state residents and their state legislators should be able to have.
Sales taxes go directly to state and local governments, which brings in needed revenue for maintaining schools, fixing roads and supporting local law enforcement. If sales over the Internet continue to go untaxed and electronic commerce continues to soar, revenues to state and local governments will plummet and the federal government does not have the money to help states, according to Enzi.
"If Congress fails to authorize states to collect tax on remote sales, and electronic commerce continues to grow, we are implicitly blessing a situation where states will be forced to raise other taxes - such as income or property taxes - to offset the growing loss of sales tax revenue. We do not want this to happen," said Enzi.
Facts about what the Marketplace Fairness Act does:
* The bill gives states the right to decide to collect -- or not to collect -- taxes that are already owed.
* The legislation would simplify the country's more than 9,000 diverse sales tax jurisdictions and provides two voluntary options by which states could begin collecting sales taxes from online and catalog purchases.
* The bill would not tax the Internet or Internet services. It does not raise taxes. It closes a sales tax loophole that puts local and Main Street retailers at a disadvantage.
* The bill exempts businesses with less than $500,000 in annual online or out-of-state sales from collection requirements.
"As a state legislator, I know we never passed a law that discriminated against in-state people. We never put a burden on the people who pay the property tax, hire residents and participate in community events while telling those from outside Wyoming that we want them to have our money, but they don't have to do anything in return. We never intended to give out-of-state businesses a free ride," Enzi said.
The Marketplace Fairness Act is bipartisan legislation that is supported by Republican and Democrat governors, state legislators, and local officials nationwide and could provide $23 billion in local fiscal relief at a time when state budgets are hurting and federal funding has dried up.
Enzi, Sens. Dick Durbin, D-Ill., and Lamar Alexander, R-Tenn., filed the bill as an amendment to S. 2337, the Small Business Jobs and Tax now being considered on the Senate floor. Majority Leader Harry Reid blocked most amendments from being considered, however.