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Public Statements

Marketplace Fairness Act

Floor Speech

By:
Date:
Location: Washington, DC

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Ms. MURKOWSKI. Madam President, I appreciate being here in the Chamber to hear the comments from my friend the Senator from New Hampshire. As she has noted, there is a small handful of States that for a host of different reasons have chosen not to impose a sales tax on their residents. As she has very well stated, this so-called Marketplace Fairness Act is not fair. It is not fair to those States that have put in place other mechanisms. Yet what we are doing through this legislation that we have pending on the floor right now is to tell States such as New Hampshire to tell States such as Alaska regardless of what your State chose to do, those who are engaged in online sales and activity are going to be scooped into the requirement of whatever State in which the individual purchasing your product lives.

To me, that is absolutely not fairness within the marketplace. I think the people in Alaska, when they think about their marketplace, are looking at where they are and assuming their State's laws are going to be what they are dealing with. I thank the Senator for her comments, and in laying out very well how this measure impacts these few States.

Maybe that is our problem. Maybe we do not have enough of us in terms of those States that have opted to not move forward with a sales tax. We are at a point in the evening where we had a vote to move on. We are told we are going to be taking up this measure when the Senate returns in about a week. It is my understanding at this point in time there will be no amendments allowed despite the efforts of many of my colleagues to help address, to help bring about some fairness to this legislative measure. We will not be allowed to do that. It is a real challenge today as we discuss this, recognizing that these few States might be impacted disproportionately in a way that I think does not demonstrate any level of fairness.

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Ms. MURKOWSKI. I would absolutely agree. As the Senator points out, it is Alaska, Oregon, Montana, Delaware, and New Hampshire that are in this situation. Basically, if this legislation were to pass, the message to those within these States is it does not make any difference what your State laws are with regard to a State sales tax. It does not make any difference, because we have made this directive back here that there is going to be uniform application. I have a tough time with that. I think our States may be somewhat similarly situated in the sense that there is a real sense of States rights, State sovereignty. I believe your motto is ``Live Free or Die.'' We feel pretty independent up North as well. I do feel this is a hard push against States' rights and their ability to impose local taxes within their State boundaries.

I am very concerned about the direction we have taken. I note again, for the States without sales tax and use taxes like these five States my colleagues and I have been talking about, and that are not members of the Streamlined Sales and Use Tax Agreement, this legislation creates an inherent unfairness.

Again, I do think it is somewhat ironic that the bill's sponsors chose to call it the Marketplace Fairness Act. We have noted here on the floor what the requirements under this legislation would mean. Senator Shaheen from New Hampshire has indicated exactly what it means to a small business. A remote seller in Alaska who makes an online sale to someone in Vermont who is a member of the Streamlined Sales and Use Tax Agreement will have to comply, collect, and file a return in the State of Vermont. The seller otherwise has zero connection to Vermont.

So it does beg the question, is this fair? I would contend not. Does it present a burden on interstate commerce? Absolutely. The drafters of this bill will argue it creates no new taxes, but I would also respectfully disagree. This bill essentially forces States such as ours to adopt its requirements to ensure parity. Currently no State can impose its local sales tax on another, short of meeting constitutional nexus requirements. So we have made clear that you cannot do that.

This legislation again scoops in everybody. States that wish to enter into agreements with other States for this purpose are able to do so. Let those individual States decide whether they want to participate in the Streamlined Use and Tax Agreement but do not mandate it. That is what this measure would do. Only 24 States could agree to do this.

You have to ask, is 24 States a mandate for Congress? I do not think so. Again, it begs the question, is this fair? Absolutely not. This law presents a backdoor mandate to States such as Alaska, such as New Hampshire, to effectively adopt a sales tax. I think Congress has to respect a State's right to determine how to implement and how to enforce its tax laws and not impose how it must do so.

The Senator has mentioned the burden on small business owners, and the Senator spoke to an article that detailed some of the concerns. This is an issue that has generated considerable interest in my State. I have had over 600 constituents who have written to me in opposition to this bill.

Here are a couple of the examples of the mail I am getting. I have a constituent in Fairbanks, AK, who says:

I am a small business woman selling books off of my Web site. I do not want to be a tax collector for other States. I especially do not want my customers running off to other non-tax parts of the world.

I have got another constituent who owns a business in Anchorage who writes:

I do not support a measure that would allow individual States to collect sales taxes on any on-line purchases regardless of which State an on-line retailer is located. As a small business owner, this legislation will affect me, because I often have clients that start our transaction out of State, and we do not have the staff to handle collecting taxes for 50 States.

Then, finally, a constituent from Eagle River writes:

As a former small business owner, I am very aware of the constant and increasing burden that government subjects our businesses to. Requiring on-line businesses to collect local sales taxes would be a horrendous administrative burden that would undoubtedly cause many businesses to fail. Governments at all levels should be trying to encourage businesses to succeed, rather than trying to squeeze every last dollar of revenue out of the businesses and their customers.

These are three examples of some of the correspondence I have received from folks who are worried about the burden it is going to inflict on our small business owners. Of course, we hear this from all of the other States, certainly heard it just now from the Senator from New Hampshire.

The communities I mentioned we have been hearing from are all on the road system, as we call it in Alaska, are bigger communities. But in many of our rural communities, for those that are offroad, where economies are very limited, there is no major business, there are no big stores. We have been encouraging folks in our villages to use the Internet to bring the world marketplace to your door, and to sell their products on line, and to sell--whether it is arts and crafts or whatever it may be. So we are encouraging them to do this.

Now the concern we are hearing is, I do not want to be the one who is the tax collector for California taxes. I am trying to get myself up and going and make a business, make an economy in a very small area.

I know there is a carveout or an exemption for the smaller businesses. I think that is critical. That is important. That is going to help the very small mom-and-pop operators. But I think we recognize it will have a burden on our small businesses, not only in Alaska but around the country.

The ability of a small business owner to comply with the reporting requirements that will be required by this bill, which would include the 50 States plus the District of Columbia and the U.S. territories, I think deters new startups. I think it acts as a hurdle, if you will. I do not think our businesses need that, particularly now. We already have regulatory burdens that our small businesses are concerned and worried about. I do not think we need to impose that on these States that have, again, made that determination that they would not apply a sales tax within their State boundaries.

So for these reasons, as well as so many of the reasons that have been outlined by others on this floor earlier, I cannot support this measure. We will see whether we have got the opportunity to have any amendments in the week following our recess. Again, I feel it was important to express the concerns of many of the individuals I represent in the State of Alaska.

I yield the floor and I suggest the absence of a quorum.

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