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Public Statements

Marketplace Fairness Act of 2013

Floor Speech

By:
Date:
Location: Washington, DC

Mr. President, before he leaves the floor, let me commend my colleague from Minnesota for making so many thoughtful points in this effort to deal with climate change. Having returned from Oregon, with a whole host of meetings in connection with Earth Day, the Senator is spot-on in speaking about the enormity of the problem. It is very clear that the planet is getting warmer, drought is becoming more serious, the fires are becoming more catastrophic and the storms increasingly brutal. It is very clear that now Democrats and Republicans must come together around this issue.

The Senator and I serve together on the Energy and Natural Resources Committee. This will be priority business for us, and his thoughtful remarks today are yet another effort in terms of trying to bring people together. The focus of the Senator's remarks has been not to say it is this person's fault or another person's fault, it is about how Democrats and Republicans need to come together.

I commend my Democratic colleague for his good speech and the good fortune to chair the subcommittee on Energy and Natural Resources, where he will be able to focus on these issues.

BREAK IN TRANSCRIPT

The Senate has now moved to the Marketplace Fairness Act. I say this, frankly, a little dubiously because I think it really ought to be called the Shop Canada or Shop Mexico Act. It will make it attractive for businesses located in the United States to set up shops overseas as the coercion that is applied to the United States will not affect foreign retailers.

What I wish to do tonight is speak for a brief period of time--because we are going to have opportunity throughout the week to discuss this--in the hopes that the points I highlight tonight will help start a bipartisan effort to attempt to fix what I think are the most serious problems with the Marketplace Fairness Act.

The essence of my concern is that coercion and discrimination are not what America is all about. Those are the fundamental principles of the Marketplace Fairness Act. What I wish to do is be very specific with respect to how this coercion and discrimination, particularly against some of the most innovative forces in the American economy, are going to take their toll.

With respect to coercion, this is legislation that enabled one State to impose the enforcement of its laws on 49 other States and the territories without the approval of such States and territories. Let me repeat this. It is coercion. It can be forced on these other States against their will. In effect, under the Marketplace Fairness Act, businesses may be audited by a myriad of out-of-State tax collectors and be forced to defend themselves in out-of-State courts.

A vote for the Marketplace Fairness Act without efforts to try to promote some element of voluntary participation is a vote to subject a Senator's home State Internet companies to the whim and will of tax collectors and State courts around the country. This, in essence, is the coercion aspect of this legislation.

I have suggested to Senators that at a minimum this effort, this legislation should be altered to allow for voluntary compacts. Congress would say States could voluntarily take these steps with respect to interstate tax collection rather than being required to do it. I have heard my colleagues who say perhaps this would make one State a haven with respect to Internet sales. The reality is that States rights are about States rights. One State may look to choose to incent one particular type of business or another, but this is ultimately a State decision.

If you are, in fact, a supporter of States rights, why would you oppose something that allows a State to voluntarily choose what course it wishes to promote with respect to the collection of online taxes? This is not what this bill is all about. It is not voluntary, it is coercive. That is why, in my view, it undermines what I think the principles of our country are all about. Our country is not about coercion, it is not about discrimination. This is what the bill, regrettably, is all about.

Let me outline the second point with respect to how the Marketplace Fairness Act discriminates against Internet companies.

The Marketplace Fairness Act relies on Internet sellers to determine the address of where consumers are located in order to generate an approximation of where goods or services sold by an online retailer will be consumed. There is no similar requirement with respect to brick-and-mortar businesses--no similar requirement with respect to brick-and-mortar businesses--even though consumers often travel across State lines in order to purchase goods and services that may be unavailable to them in their home jurisdictions or available at lower sales or use tax rates.

The Marketplace Fairness Act does not require brick-and-mortar firms to obtain and use consumer information to determine where a good or service may be consumed. Why should the Federal Government require Internet companies to collect and remit sales and use taxes on behalf of consumers but not impose any such burden on brick-and-mortar firms providing goods and services to out-of-State consumers?

So the irony of this is that really about 15 years ago--and it has been particularly satisfying to me in terms of our service in the Senate--as we began to look at policies that would allow innovation and technology to grow--and I will talk a little about how some of those policies led to the first investments in social media--we established two principles with respect to technology policy: No. 1, we said let's ensure there is no discrimination. What goes on off-line and what goes on online should be parallel so that we can encourage both parts of the American economy.

That principle has made a lot of sense. In fact, it has led to a great many stores--I am sure at home in Indiana for the Presiding Officer of the Senate--with bricks and clicks looking to try to have a vigorous presence in States because the two are mutually reinforcing. To do that we have to ensure there is a policy of nondiscrimination.

What I have done is outline very specifically about how the Marketplace Fairness Act moves away from that principle of nondiscrimination by giving, in many jurisdictions, the brick-and-mortar retailers a leg up. And what I am in favor of is continuing that policy which has made sense for 15 years.

We also talked about doing no harm and ensuring we especially promoted voluntary approaches--voluntary approaches. I think it was before the Presiding Officer was in the Congress, but one of the things I was especially proud of was our help in generating investment in the social media back when I came to the Senate. There was a great concern about censorship online. Of course, all of us, as parents, were horrified by some of the smut and pornography that was coming available online, all over the Web, and so a big debate was held.

There were essentially two approaches: One was to set up a big censorship effort that would say, for example, if somebody posted some of this horrible pornography on a Web site or a blog, the Web site would be held secondarily liable for this material posted on the site. A lot of us said: No way the Net is going to be able to grow if Web sites and blogs are held liable for something that is posted on their site, which they probably aren't even going to know anything about because there are, of course, thousands and thousands of postings--millions in the case of some of the big sites.

So working with a very conservative Republican in the House, Congressman Cox, we wrote an alternative approach which encouraged voluntary approaches with respect to dealing with a societal problem, and a very serious problem with respect to pornography. Back then the Congress didn't know how to deal with these issues, so both approaches--both the censorship approach and the voluntary approach to help parents filter out the smut--actually got into the law and it went to the Supreme Court. The Supreme Court struck down the censorship approach and upheld the voluntary bipartisan approach Congressman Cox and I put together.

Today, when we talk to people in the social media, they will tell us that voluntary approach was, to a great extent, what encouraged the first investments in social media. People in social media will say nobody would have invested in the future Facebooks and Twitters and the like if they thought the social media sites, the Web sites and the like, were going to be held secondarily liable for something that was posted.

That voluntary approach, which did so much to boost our economy, is being rejected in the Marketplace Fairness Act as it is written because this bill goes to a coercive approach, as I said, that would outline the ability for one State to impose the enforcement of its laws on 49 other States and territories without the approval of those States and territories.

So I bring up this tonight because I am very hopeful as this debate goes forward and the bill is considered further that at a minimum the sponsors of the legislation--and all of us here can count and look at vote totals--will see that allowing for voluntary compacts is really what States rights are all about, No. 1. It is that voluntary approach that has made such a difference in encouraging the innovation and growth of the Internet and technology.

One other point I would like to mention tonight is what this bill does with respect to America's ability to compete in a global economy. This is, in effect, an unprecedented approach that would apply local laws to the global medium that is the Internet.

For example, I just came back--flew about 6,000 miles over the last few days--from meeting with constituents at home. I was in southern Oregon until the middle of the day yesterday. They have a big e-commerce effort going in a wonderful company called Fire Mountain Gems in Grants Pass, OR, with hundreds of employees and a very exciting online business. Their big competitor in Grants Pass, OR--which is a town that has been hard hit economically. We are working hard on their forestry issues, particularly trying to get the harvest up. That is something I am working on as chairman of the Energy and Natural Resources Committee, and I had a good chance to talk about resources policy with the Presiding Officer of the Senate.

One of the things they very much want to do in Grants Pass is find as many good-paying jobs as they can, given the fact the economy is hurting in rural areas.

So as I try to boost the harvest in Grants Pass, OR, and get people back to work in the woods, I am obviously looking for other areas where businesses could grow. This legislation, as written, will deal a significant body blow to a business's ability to grow, such as the one I know about in Grants Pass, OR. Here is why: The legislation doesn't apply to foreign retailers, and the competition for Fire Mountain Gems is certainly overseas, with a host of companies in this space.

It also has huge implications for the northern border and the southern border of our country because so many of the promising businesses in those communities are going to say to themselves: We are patriotic Americans. We deeply believe in our country and our values, but how are we going to compete? How are we going to figure out a way to wade through more than 9,000 taxing jurisdictions? Wouldn't it be more sensible to just move a half hour across the border and not have to go through any of this?

I just don't think this works as it relates to the global economy. Maybe this bill ought to be called the Shop China or Shop Mexico or Shop Canada bill. Whatever you call it, it seeks to apply local laws to a global medium. That, in my view, defies common sense, and, by the way, that too has been a principle that has been rejected in debates about tech policy over the years.

So I hope Senators are going to be open to working with the bipartisan group--there are a host of Senators on both sides of the aisle who care about these issues--to take some of the principles that have been central to the growth of innovation, online business--particularly as it relates to new apps and new technologies--that have worked for the last few years and build them into this legislation, rather than repudiate the principles of voluntarism and nondiscrimination that have been so key, as I have outlined here tonight, to investment in the social media, to encouraging innovation through nondiscriminatory tax policies, and to new innovations that we began to bring into the policy arena, such as digital signatures.

There we had the same thing--a great concern about whether this was equitable, whether it would work, but after hearings and a thoughtful analysis, a group of us wrote that law as well. So whether it was regulation, whether it was taxes, whether it was innovation such as digital signatures, the four or five laws over the last 15 years that have paid off for technology and innovation and small business--the basic principles behind those laws--are being repudiated in this bill and, I believe, will be injurious to the country.

So my hope is, as we go forward, that we can take some of those principles that have been key to growth in the technology sector and start building them into this discussion with respect to collection of online sales taxes.

By the way, for more than a decade, this has been a topic. I and others have said we are very open to any and all approaches to collect taxes owed, and particularly ones that don't amount to what looks like bureaucratic water torture associated with the collection process. And I think Senators are underestimating how difficult this will be.

I would particularly cite the proposition that if it was so easy, it would have been done some time ago. By the way, it would have been done with voluntary actions through many of these taxing jurisdictions rather than the coercive approach that is advanced in this legislation.

I see my friend from New Hampshire. I was particularly struck, I would say to my colleague, about how the principles I am talking about today--coercion and nondiscrimination--apply in my colleague's State as well because her State, as so many others, would face the prospect where online retailers would have one set of burdensome rules that wouldn't apply to a whole host of other businesses. It brings back the principle of discrimination we rejected years and years ago.

Having heard the Senator from New Hampshire speak eloquently on these issues, I look forward to her remarks. When I came to the floor, I said the key to successful tech legislation for the last 15 years has been two principles: a voluntary approach rather than a coercive approach and nondiscrimination rather than discrimination. The Senator from New Hampshire and I are from States where this bill brings those policies--coercion and discrimination--back in very stark terms that will be injurious to the citizens we represent and harm the cause of innovation across the country.

BREAK IN TRANSCRIPT

Mr. President, I wish to thank the Senator from New Hampshire for her contribution.

Obviously, the vote this afternoon didn't go our way. My hope is that as Senators from both political parties have a chance over the next few days to lay out the consequences of the two principles we have been talking about--staying away from coercion and staying away from discrimination--by the time the Senate has completed debate and votes, we can come up with a proposal that will not set back the cause of innovation in this country.

We both have talked about the fact that the March numbers on jobs were not where we would like them to be. Particularly distressing is the number of people who seem to be either dropping out of the workforce or working part time because they can't find anything full time. Now we are looking at policies that will make efforts to put those people back to work even harder.

So I am very appreciative of the fact that the Senator was able to come to the floor; because what I tried to do over the last 20 minutes or half an hour is outline what has worked in technology policy for the last 15 years. It has been nondiscrimination and noncoercion. This bill repudiates both of those. My hope is the Senator and I and other Senators on both sides of the aisle can find a way to change this legislation so as to at least not go backward with respect to those values that have been so key to the growth of jobs in the technology sector. To have the Senator here is so helpful, and I am very appreciative.


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