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Marketplace Fairness Act - Motion to Proceed

Floor Speech

By:
Date:
Location: Washington, DC

Madam President, as I understand it, Leader Reid moved to proceed to the Marketplace Fairness Act a bit ago. I have deep reservations about this legislation, so I am not able to support the motion to proceed. The leader has filed cloture on his motion, and I just want it understood at this point that if cloture is invoked, I will not be able to support a reduction in the amount of time available for Members to debate this.

The Presiding Officer and I have talked about this a number of times, but just for purposes of this discussion, I think it is extremely important that the Senate and the country think through the implications of what this bill is all about.

What this bill is all about is that the advocates essentially want to take a function that is now vested in government--State tax collection--and, in effect, outsource that function of government to small businesses, particularly these small online retailers.

This has been a big source of employment, good wages, innovative approaches, new apps. It has been a big boost for our country. I think it is important for the Senate to think through what this means and try to see if we can come up with something that is sensible.

For example, the proponents of the legislation are going to argue with considerable passion that this is not going to be a hard task for these small businesses on which they have imposed this new assignment--as they call it, outsourcing the function of State tax collection, which is done by government, to these small businesses.

The proponents say it is not going to be hard for small businesses to handle this. They are going to say there is a lot of new technology available--computer software and the like--and that the Marketplace Fairness Act will not be difficult to administer as a result of these new technologies.

Having been involved in this debate now for years and years--having been the original author of what is a different subject but has some of the same connections, the Internet tax fairness legislation--I have heard the proponents of this legislation say, year after year after year, this is not going to be a hard assignment, the process of these small businesses collecting these taxes, that new technologies are available, and that the law ought to be passed because it can be done.

But year after year we have seen that the idea that this is so simple and it can be done is not borne out. If it were so simple, it would have been done already. The reason this bill comes to the floor of the Senate is because it is, in fact, not so simple. It is not going to be a piece of cake for these small businesses.

There are more than 5,000 taxing jurisdictions in our country. Some of them give very different treatment for products and services that are almost identical. So this is a big lift to say we are going to have software and computers and technology and it is just going to be a piece of cake for these small businesses to be able to handle this.

I think that is part of what needs to be discussed in a debate on the floor of the Senate because, fundamentally, the idea of taking a function of government--tax collection--and handing it over to small businesses--and small businesses being a big part of our country's economic engine--is something I think ought to give every Senator pause.

In addition to that, I want us to think through the aspects of this that relate to America's ability to compete in tough global markets.

I know when we talked about this in a brief way during the Senate budget debate, several Senators said that, oh, back in the days when we were just debating the Internet, they could see the need for some of these policies in the digital age, but now the Internet is all grown up. We do not need any of these kinds of approaches such as technological neutrality and nondiscrimination with respect to taxes and regulation.

My response to this is, yes, it is a different day. There is no question about it. I chair the Senate Finance Subcommittee on International Trade. As part of my obligations there to look at trade and competitiveness, I have come to the conclusion that the Internet is the shipping lane of the 21st century.

I think about what the Finance Committee looked like 30, 40 years ago--people moving goods physically from North Dakota, Oregon, and the like. It is very different today. With a lot of economic activity, in a sense, being conducted online on the Internet, to a great extent it is now the shipping lane.

This bill, I want the Senate to know and the country to know, will be a big leg up for foreign retailers and foreign businesses. The reason I say that is the Marketplace Fairness Act, in effect, tries to take local law and apply it to the global economy. It is unprecedented.

What it will mean--if passed in its present form--is that if you are on the northern border--say you are in North Dakota or Washington State or other places that are on the northern border--if you are an online retailer, you are going to say to yourself: Why in the world would you want to stay on the U.S. side of the border and try to comply with the rules of thousands of taxing jurisdictions when you can move, in effect, half an hour away outside the borders of the United States and not be subjected to this?

So maybe the sponsors of the bill want to rename their bill--now called the Marketplace Fairness Act--the shop Canada and the shop Mexico bill because that is truly what it would mean.

I have heard some in favor of the bill say that is not the case, that there are long-arm statutes and the like. Good luck with that. Good luck with the idea we have not been able to figure out a way to do this in the United States, now we are going to write a bill that says it does not apply to the foreign retailer or the foreign business, and we are going to say we are going to be able to hook those people somehow with a long-arm statute. I do not see it.

That is what the point of this debate is all about. So we had the discussion in the context of the budget. I think then it was sort of seen as kind of a general proposition. But now we are getting ready to write a real law. My own preference would be to have this go back to the Senate Finance Committee chaired by Chairman Baucus--we work very closely in a bipartisan way, Chairman Baucus and Senator Hatch--and that we have a chance to think through the implications here.

I can think of some commonsense ideas where the Presiding Officer and I would agree on some kind of uniformity. I mean, if we were talking about uniformity rather than 5,000-plus taxing jurisdictions, that would be one thing. We saw the jobs numbers last month. They were not where they ought to be. The idea that now we are going to take steps here in the Senate which would hinder the growth of the innovative engine of the American economy strikes me as something we should not be doing.

Personally I would very much like to be part of an effort to work this out. I have always said the American economy is now about bricks and clicks. We now have most of our businesses looking to try to have storefronts and online operations. I want both of them to prosper. Some of Oregon's most illustrious companies look at just that principle, bricks and clicks.

But let's not hammer the innovation sector, that online aspect of the American economy, especially given what we have seen of late. I mean, think about the Friday after Thanksgiving. Were the malls and the stores empty the Friday after Thanksgiving? They certainly were not. The traditional part of the American economy, stores and malls--people could not find a parking place. Those stores were offering hours earlier and earlier in order to meet consumer demand.

So, yes, let's promote bricks and clicks, but let's not precipitously take steps that will harm so much of the American economy. When I got involved in these issues years ago--I think I told the Presiding Officer about this. When I came to the Senate, I had just become Oregon's first new Senator in 30 years. I made it clear I was going to spend a lot of time on timber and natural resources issues. I chair the Energy Committee. I am going to continue to do that, because that is a bedrock part of the American economy and a bedrock part of Oregon's future and small communities and what our State is all about.

I said in addition to that focus on timber and natural resources, when I came to the Senate, I am going to spend a lot of time looking at technology and innovation and new areas for our State to get into. That led me into some of those initial kinds of efforts, passage of the section of the Communications Decency Act which encouraged investment in social media, Facebook and Twitter and social media, because had we not gotten that passed, we were told a lot of people who might think about investing in the social media would see that someone who ran a Website would get held liable for someone who posted on that site and the owner of the site would not know anything about it and could not figure out how to get rid of that. So with that, and with the Internet tax freedom bill and others, we said with respect to technology and innovation, let's do two things: First, let's do no harm. Let's not take steps actively where we damage our economy and our future. Second, let's not discriminate. Let's not single out this sector which has shown so much promise.

At a minimum, the marketplace fairness legislation, as written today, will violate that first principle. It will do harm. It will force those small online retailers to, in effect, take on a government function, tax collection. I do not know of any civics book that talks about outsourcing a function of government--tax collection--to small businesses. That is what the marketplace fairness legislation does.

Second, in a tough global economy--I know the Presiding Officer cares a great deal about global commerce and global trade coming from her State--this bill will favor foreign businesses that will not be subjected to it. That is something that cannot be corrected in this bill in its present form. There may be other ways to correct it; there may be other ways to correct a number of aspects of the bill. That cannot. It will favor foreign retailers.

As I chair the Finance Subcommittee on Global Commerce and Global Trade, I do not see how that makes sense. That is why I have made it clear today that given the state of where the Senate discussion is now with the leader having filed cloture on his motion--I want to make it clear that if cloture is invoked, I will not support a reduction in time for this discussion.


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