Today, the House Judiciary Committee held a hearing on H.R. 3179, the "Marketplace Equity Act of 2011." This legislative hearing was a follow-up to the oversight hearing on the "Constitutional Limitations on States' Authority to Collect Sales Taxes in E-Commerce" on November 30, 2011. Ranking Member John Conyers, Jr. (D-Mich.) is the longest standing member of the Judiciary Committee to work on the issue of sales tax fairness, having worked alongside Representatives Bill Delahunt and Spencer Bachus since 2000. Ranking Member Conyers released this statement following the hearing:
"In 1992 the Supreme Court decided in Quill Corp. v. North Dakota that it was too difficult for a remote seller to understand and comply with every tax law in every state and locality in which it may sell something. The Supreme Court felt that the states needed to simplify their complex sales tax laws to not be a burden on interstate commerce. They ruled that without a simplification in sales tax laws, a remote seller would not have to collect sales taxes in a state in which it does not have a physical presence.
"However, the Supreme Court stated clearly that Congress was better suited to decide whether remote sellers have to collect sales taxes. With the rise in online shopping and technological advances made in the decades since this Supreme Court decision, I think it is past time for Congress to make that determination.
"As a result of these different circumstances since the Supreme Court's decision 20 years ago, I support legislation leveling the playing field between brick and mortar retailers with online sellers for three main reasons.
"First, this legislation ensures fairness between online sellers and brick and mortar retailers. Online retail prices are generally lower because many Americans do not have to pay sales taxes on the item purchased. This can make a significant difference in the final purchase price the customer pays, ranging anywhere from 3% to 12% of the price of the item. This gives an unfair advantage to out-of-state retailers who operate online because they can charge the same basic pre-tax price as a local retailer, but the price the consumer actually pays is lower because they do not collect a sales tax.
"Second, this legislation will provide state and local governments with much needed revenue that supports vital public services like education and healthcare. In Michigan alone the state Department of Treasury estimates that total revenue lost to e-commerce and mail order purchases will total $872 million during fiscal years 2012 and 2013.
"Lastly, there is bipartisan support in the House and Senate for sales tax fairness legislation, as well as a national coalition urging for the passage of this bill. At least a dozen Democratic and Republican governors, the National Governors Association, the National Conference of State Legislatures, and the National League of Cities have joined with retailers large and small to support sales tax equity. Congress can restore fairness in the marketplace, and address state revenue issues, by granting states the authority to require remote sellers to collect and remit sales taxes.
"The bill we discussed today, H.R. 3179, the "Marketplace Equity Act of 2011,' introduced by my colleagues, Representatives Jackie Speier and Steve Womack would grant states and localities that much-needed authority. I have signed on as a cosponsor to this legislation, and I encouraged all of my colleagues on the Judiciary Committee to do the same. I introduced similar legislation, H.R. 2701, the "Main Street Fairness Act," while Senators Mike Enzi, Dick Durbin, and Lamar Alexander introduced S. 1832, the "Marketplace Fairness Act." Although each of the three bills take different approaches, they each would accomplish the same goal: leveling the playing field between retailers and online sellers."
I believe that Congress should pass legislation that promotes economic efficiency and helps our states and local governments maintain financial support for public education, health, and safety. The Marketplace Equity Act and the other legislative proposals that I mentioned accomplish these goals and I urge my colleagues to consider them today."