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Mr. ENZI. Mr. President, I want to congratulate the Senator from Maine on his speech. It was a tremendous history lesson. I have enjoyed getting to know him a little bit since he got here. I had quite an interesting surprise yesterday. He came to my office and he brought an American flag, all framed. The way he got it, there was a desk his great-aunt had. The desk was probably made in the 1860s. But behind one of the drawers they found this flag. It was a flag with 44 stars. Wyoming was the 44th State. So he presented this framed flag to me. Incidentally, that was only the flag of the United States for a 6-year period. Then some other States came in and we added them. It has an interesting arrangement of stars on it too, because the 44 stars do not fit in a nice even pattern unless you did four rows with 11 in a row. That changes the dimensions of the flag considerably.
I appreciate his consideration on that. I appreciate the consideration he has given to pieces of legislation that I have seen him work on. We do not agree on all of those pieces of legislation, but it is nice to have the concern and the thought and the process for getting things done that he brings to the Senate. That is very nice.
I too want to encourage my colleagues if they have amendments to bring them down. That is what we say this process is about. This is an amendment process on the floor, which everybody has asked for. We are doing it. So we need the amendments. A number of people have talked to me about different parts they had a potential concern about. I hope we solved their concern by actually looking at the wording in the bill. This is not a very difficult bill to read. Sometimes we do ones that are a couple of thousand pages. This one is 11 pages. I do not think there is anybody who will not be capable of reading the bill. Unlike most of the bills, this is in pretty normal language, rather than some of the conforming language that sometimes results around here.
I think most of the problems retailers should have with this have been taken care of. One that the nonsales-tax States talk about, and the Senator from Illinois, Mr. Durbin, also mentioned, the people in those States still will not pay a sales tax. But if you happen to be one of the people selling into other States, and you sell a tremendous volume into other States, then under this bill you will be expected to collect and remit the sales tax, as any retailer in the States that have sales tax.
There is an exemption. The Senator from Oregon, Mr. Wyden, asked us to have a compromise. That is why we have the exemption in there. It is a compromise. We started with it in the Senate as being a $500,000 exemption. The House folks convinced us--as I mentioned, this is a bipartisan, Republican and Democrat, bicameral, House and Senate effort. The House convinced us that $1 million was a more reasonable figure, and they gave some good reasons for it. Now $1 million would give any small businessman quite a few years, perhaps--I hope it is a short period of time, but it should give them quite an amount of time before they had to adjust to this, because they have to sell $1 million on line in a year before they have to start collecting the tax the next year.
In a State where there is a sales tax and the people are selling in the brick-and-mortar store which we are trying to help out with this bill, they collect from every person from the first dime of sales. So we have given a little bit of a break to particularly the nontax States, and to those working on line that are small businesses to continue this effort to grow the Internet.
Of course, we are hoping a lot of our businesses in our States will get to that million-dollar mark. But here is the status on the million-dollar mark. We are told that if we reduced that to $150,000 it would only affect less than one-quarter of 1 percent of the businesses in the United States--not very many. They are starting to be a relatively big business when they are doing $1 million on line. This does not count their in-store sales. This is just their on-line sales. So I hope the other States that have had some difficulty with that will realize that is a pretty liberal mark we have gone to.
Of course, I know a lot of people are getting a lot of correspondence from eBay. eBay, in the 12 years I have been working on this bill, has consistently opposed it, even though they appeared almost up to the time we were ready to do the bill to be in agreement with some of the things that were in the bill.
Incidentally, that is when we had a considerably bigger bill. It was about 80 pages long. This one we changed. The main difference is now there are States rights, which there should have always been. That is the way it is in the Constitution. This is a States rights bill. That reduces the length of it considerably.
The million-dollar proposal is to give people time to adjust and collect. Incidentally, there is kind of a phase-in in this. Some people say, why don't we have kind of a phase-in? Well, we have 90 days. We agreed to do 6 months so people could gear up for it.
Besides that 6 months, the States are going to have to provide free software to be able to do the tax, so that when they put in a ZIP Code for where they are sending the product, they will automatically know the tax. They talk about 9,600 tax jurisdictions. Well, in this there are only
46 different tax jurisdictions. Nevertheless, they put in that ZIP Code and they will know what the tax is and have no liability whatsoever because that falls on the people who provided them with this free software. This makes a huge difference to States, counties, and municipalities.
I used to be a mayor. I was a mayor of a town that tripled in size during the 8 years I was mayor. Had it not been for sales tax, we would have been broke. I checked around to see how much towns and municipalities rely on the sales tax for their source of revenue. I was shocked. About the minimum that I run into is 30 percent. There are quite a few more than I ever thought that rely on sales tax for 70 percent of what they do.
So what does a municipality do with its money? Well, let's see, a lot of them have schools they have to take care of, they have law enforcement they have to take care of, they have firefighters they have to take care of, some of them have ambulances. So it is all of the first responders essentially they have to take care of.
If you are in the northern States, as I was, you have to do it for snow removal. People are really particular about snow removal. Incidentally, Wyoming is still having a little bit of winter. Let's see, today is Wednesday, so that is typically our spring. We have a lot of snow, even in April. That is when most of our moisture comes. We get snow in January too, but that is a real dry snow. In fact, we are such a dry climate that I often tell people that even our rain is only 80 percent moisture. Of course, a lot of it gets sucked up by the air as it falls. A long rainstorm in Wyoming might be 5 minutes. We get a total of 13 inches a year. So we rely on that snow. But if you are a mayor and it snows, you have a major problem, because people expect to be able to get around. I found out that if you plow it to the center, then they cannot make left-hand turns. If it is left on the ground very long and that freezes, then you really have a problem getting it up. If you plow it to the sides, you block in people's driveways and people's cars. That usually upsets them too.
I remember when I was mayor, every once in a while I would get a call from a disgruntled citizen who would complain that I just plowed their driveway back in after they had gotten it open. They wanted to know what I was going to do about it. I would tell them to give me a few minutes. I would get in my car, which always had a snow shovel in the trunk. I would go to their house and start digging it out. Usually when they noticed me, they came running out and said: Oh, no, we did not intend for you to do that. I said: Well, everybody else is doing snow removal. I never got two calls on that. But that is another use for sales tax money. There are many more.
All of the charities in a town usually go to the city council. They say, we have this valuable project. We need some money. Anybody who says they cannot fight city hall probably never tried. A lot of those requests are granted.
But if the sales tax continues to shrink--that is what is happening with it now, State sales tax, county sales tax, local sales tax is all shrinking. If that continues to shrink, they are going to have to start cutting back on things they do. Of course, probably some of the charity things will be some of the first ones to go. It is always hard to tell what the net effect will be. But if they do not have any ability to increase the revenues they have--and most of the towns in Wyoming do not have a chance to increase the taxes they receive. Property taxes are limited by very specific sorts of things, such as how much you can levy for the cemetery, and how much you can levy for a library, and how much you can levy for fire. Those things do not begin to cover the cost of the service that is rendered.
So to the people who are protecting the Internet, I would say it is pretty hard to flush your toilet on the Internet. Sometimes those utilities come into play with these things too. Those taxes are very important to almost all of the communities across the United States, in 46 States. The other four do not have a sales tax.
One of the things people have said is, if they get this extra sales tax, why don't they bring down some of the taxes they currently have? Some of the States and some of the municipalities and counties will do that. I have had several of them tell me that if we could get a little bit more in sales tax, we would do that.
But let me tell you a little problem we have in the Federal Government. We are out of money, so we are cutting back. And one of the ways we cut back was through the sequester.
The way some of that is worded, some of these things are considered tax expenditures. For instance, the Federal Government promised to pay a property tax in lieu of real taxes. In other words, the municipality does not tax them, the county does not tax them. But the Federal Government says: Yes, we own property. If you can sell that property at a private sale, the private entity would have to pay property tax on that. So it is only fair that the Federal Government pays taxes in lieu of taxes. They have been doing that for a number of years.
The value of the properties, of course, has gone up considerably, particularly in cities where there are Federal buildings, but also in the forests. I have people who know the value went up because they are able to lease some cabin land in national forests. Their payments have more than doubled in the last 3 years. That is a 100-percent increase. I guess this year it is even a more dramatic increase. But the Federal Government, while it is charging more for the property, is not paying more in property taxes, which would be the normal thing. This year, they are taking 5.3 percent out of every bit of that tax.
Of course, I say to people: Wouldn't it be nice if when you file your Federal income taxes you could have taken 5.3 percent out of there? It is sort of the same thing. It is what the government said they would pay in taxes.
There are a number of reasons these sales taxes are extremely important and getting more important. If you had Federal mineral royalties, you lost 5.3 percent of that too. That is because the States collect--half the money from the minerals in the State are supposed to be for the State and half are supposed to be for the Federal Government. The half the Federal Government received they considered to be revenue. The half that is supposed to stay with the States or go back to the States is considered a tax expenditure. Again, it was hit by 5.3 percent.
One of the reasons this is 5.3 percent this year in the sequester instead of 2.3 percent--which is what it was across the board for the .3 percent--is we don't have any months left to revise those expenditures, but these are one-time payments. The time for condensing them has not expired, so at the most it should have been 2.3 percent. That is a different problem that I will handle in a different bill. I am hoping people will not try to gum this up with a whole bunch of nongermane or irrelevant motions. If we stick to relevant ones where we are really trying to improve this bill, I am in favor of it. If we are trying to do some other peripheral ones, in light of the tremendous support this bill has, I am hoping people will stick to the bill and try to perfect it. We can have votes on that.
I see my friend from Tennessee is here.
I yield the floor and reserve the remainder of my time.
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Mr. ENZI. I thank the Senator from Tennessee for his comments. He is very involved in the Banking Committee. He understands the transaction taxes that they are talking about, and I appreciate his learned opinion on that.
Mine comes from section 3, called ``Limitations,'' and in general it says: Nothing in this act should be construed as subjecting a seller or any other person to franchise, income, occupation, or any other types of taxes other than sales and use taxes.
I hope we stick to that and make sure it just says ``sales and use taxes.'' I have worked on this for 12 years, so it is tough enough to extend it beyond that. I know there are lots of things people would like and to open this up.
I appreciate the one amendment that was presented but was objected to, which was an amendment which would have continued to ensure--we already have a provision that says you cannot tax the Internet. You cannot tax the Internet. They wanted to extend that another 10 years, and it doesn't expire for another couple of years.
I thank the Senator for all of the effort he has gone to on this bill and all the ways he has helped us. I appreciate his plea for people to come forward with their amendments.
I suggest the absence of a quorum.
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Mr. ENZI. Mr. President, I thank the Senator from Texas for his comments.
There is definitely a problem. We had people miss votes on Monday night because the supposed furlough that the air traffic controllers had to have in effect delayed some planes for more than 1 1/2 hours. I looked at some of the numbers, and I don't think that had to happen. Even within areas, there is enough flexibility to do better things.
I noticed some of the sequester things in Wyoming that came out and made calls about them, and found out that people actually could change within their own budgets some things they were concerned with and make sure it didn't affect the customer.
That is just good management.
One of the things was closing down some of the visitors centers in Yellowstone and Grand Teton. They are not open yet because at this time we are just getting the snow cleared out. I called and asked about keeping them open and they said we don't have enough personnel.
You have a gift shop there. That is a profit center. You are supposed to be making money on that.
They said the money goes to the general fund.
I said: Where do you think your money comes from?
The gift shop should operate, and if they have a problem with personnel, all they have to do is the person who runs the gift shop opens the door, does their day's sales, and in the evening as they are ready to leave, I hope they would look up and down the street and see if another customer was coming, but if they were not, go ahead and lock the door and leave. That is just good business. That is the way they could operate. It is my understanding those gift shops and visitors centers will now be opened.
There are ways that could be handled. To go back to the bill----
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Mr. ENZI. Mr. President, I appreciate that question. One of the reasons there is difficulty, there is the blue-slip problem with the House, but also we have the section on limitations in this bill that appears on page 7. There are only 11 pages in this bill so it ought to be fairly easy for people to look through it and see what is included and what is not included. We have pretty much limited this--not pretty much, we definitely limit this to sales and use taxes. When they put other peripheral things in there, then they are opening the bill to go into a lot of different things. So I hope that would not happen.
Of course, there was some question earlier in one of the speeches by the Senator from Montana about the real difficulties of being able to administer this. Again, there are only 11 pages in the bill. Page 4 covers software, free of charge for remote sellers, that calculates the sales and use tax on that transaction due at the time it is completed. It also has to provide a way to file the sales and use tax returns, and it has to be updated for any rate changes that there happen to be.
The responsibility is all on the State to provide the software. I think the provisions that are in there pretty well specify how carefully that has to be done. If it is not, there is no liability on the remote seller. So I think we have covered that.
Yes, it will be difficult to do that software, but that is part of the provision in here. It can be done. This is a day, as the Senator from Tennessee points out, that we can put in a ZIP Code and find out what our sales tax is going to be. That is what this program is calling for. I think I have that right. I rely on the Senator from Tennessee to answer that question more specifically.
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Mr. ENZI. I want to talk about what we have just heard here and an implication that we are not champions of small business.
I was in small business. I had shoestores, retail shoestores, so that is why I know some of these problems. I know about the people coming in, trying on the shoes, getting exactly what fits, having all of the service of looking through all of the styles and that sort of thing, and then leaving and making a purchase on the Internet.
Talking to other retailers now, that is not the biggest irritation. They buy it on the Internet, the product has a problem--and every product has the potential of having some problem--and they bring it back to the store where they got the free service, where they did not buy the shoe, and they ask for it to be replaced. I hope people can see the inequity in that.
But we are not talking about the small business like the shoestore I had. We are talking about small businesses that are selling online and are doing over $1 million a year in sales. I do not think people would consider that to be a really small business--$1 million in sales. If they are doing $1 million in sales, you can pretty much guarantee that they are automated. They are automated in their manufacturing, they are automated in their sales. That means they have a computer. Not many businesses today function without a computer. If they have a computer, you would be amazed at some of the things those computers will do.
I go back to Wyoming almost every weekend, and I visit businesses. I visit businesses so they can tell me what kinds of problems the Federal Government is causing for them. I am amazed at the automation they have. I am amazed at what they are able to do. And most of it is because of computers. Now we are saying--and I think computers kind of started out on that coast--that computers just do not have the capability to do these kinds of things. To be able to figure a sales tax? All you have to have is a ZIP Code, and it eliminates the 9,600 jurisdictions we are talking about here. That computer can figure that sales tax, and at the end of the month, that same computer will have kept track of all of this stuff, and it will do the reports that are necessary electronically. It can probably do that with about five or six key taps, maybe less than that. I am sure they could actually be set to send the report on the last day of the month at a specific hour. That is how computers work.
So an argument that this cannot be done--I do not think anybody will buy that. And the States would not be willing to provide those programs free of charge and then put in the protections from liabilities and errors if they were not sure they could do it. The reason they put in those protections for the retailer is because they are sure it can be done.
I was fascinated by the audits. If they are using that computer program, how could they vary from what they actually take in to actually sell? The program takes it in, the program holds it, and the program sends it out with the report. There is not a lot of room for error.
Then they say they are going to be running around auditing those firms. They are going to audit the firm that looks as if it is shipping everything everywhere and not reporting at all. That is what accountants do. They figure out the high risk. They are not going to go in and look for pennies here and there. They go in and look for enough to at least cover the cost of the audit. If you are not doing probably 10 or 20 times the value of the audit, you are not going to be hired to do many of them.
So those that are complying, using the program, they are not going to have any problem.
But this exempts all the businesses that are doing less than $1 million online in a given year. Until you do $1 million online in a given year, you are exempt from it.
I would imagine that a lot of those nurseries do not hit the million-dollar mark. They would like to hit the million-dollar mark, and I would like them to hit the million-dollar mark, and if they got to that million-dollar mark, I think they would be so overjoyed, they would say: I am automating on the computer. I will be happy to do it because maybe I can sell $2 million worth of sales if that is the case.
Now, comments on the streamlined sales tax. My State was one of the first ones to get into it. So was South Dakota, so were Nebraska and another 20, 21 States besides those. The comment was that you cannot streamline this. What kind of incentive has there been for them to streamline it more? The purpose of the compact is to streamline it more, but at the moment they are having to protect their sales within their State to make sure they are not losing the revenues they were already counting on.
They knew there was this little Supreme Court case that is now 20 years old that challenged us to fix it. That is what we are trying to do here--fix it. If that fix goes in, I am betting that a lot more States will join the streamlined sales tax and it will streamline more than what we envisioned. But even if they do not, there are requirements in here that keep it uniform enough. And with the computers, we can show examples of how people already do this sort of thing on the computer. That should take care of a lot of their problems.
I yield the floor under the previous order for Senator Brown.
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