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Public Statements

Internet Sales Tax

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. DAINES. Thanks much to my good friend from Kentucky, Mr. Thomas Massie, for coordinating this Special Order here tonight. I appreciate it greatly.

We're here tonight to share our strong opposition to the so-called Marketplace Fairness Act. This is a bill that mandates small businesses to collect sales tax on behalf of other cities and States when selling products over the Internet.

The problem is this bill would fundamentally change how online purchases are taxed and would impose yet another burden on small businesses across the country, but especially like my home State of Montana. You see, in Montana we don't have a statewide sales tax. In fact, we often say you know you're a native Montanan if you voted against a sales tax twice.

But I will have to say that in my home State we have a balanced budget requirement. And not only did our State balance its budget this year, we're running a surplus, and we've done that without a sales tax. And Washington should do the same. They should learn how to balance their budget, and they don't have to impose a sales tax that's imposed on businesses across this country.

But even though we don't have a sales tax, under this legislation, Montana small businesses would be forced to collect sales taxes for up to 9,600 cities and States, none of which would go back to the people of Montana.

Let me be clear. This isn't just a bill that hurts no sales tax States like Montana. It hurts small businesses in every State, burdening businesses that depend on Internet sales with added costs and more paperwork and more regulations.

Proponents of this bill say, well, it's about fairness. They say that this bill will help prevent the supposedly widespread practice of ``showrooming,'' where customers visit a physical store but then buy the goods online where customers can get a better price or avoid paying sales tax. According to proponents of this bill, this showrooming is destroying our brick-and-mortar businesses.

Well, ladies and gentlemen, this is not only misleading; it's wrong. As the National Journal reported, a recent PricewaterhouseCoopers survey of 10,000 shoppers found this so-called widespread problem occurred less than 2 percent of the time. In fact, the survey found that 10 times as many consumers researched products online so they could go buy them at the local brick-and-mortar shop.

Think about that. And we've all had that happen to us. You may go online and shop, but you may not want to pay the shipping costs. You may not want to have the time it takes to receive the goods. You may want to be buying that bike for your child, so you go downtown and buy at the brick-and-mortar store.

Furthermore, the study states, and I quote, ``We also can't emphasize enough that the physical store remains the centerpiece of the purchase journey for many categories. In 9 out of 11 categories, in fact, the majority of consumers use physical stores for both researching and purchasing the products they want to buy.''

I know that many times I'd rather head downtown to my home of Bozeman, Montana, to talk to folks face-to-face and purchase a product I've researched online so I can avoid shipping fees and avoid the wait time.

I know a lot of Montanans feel the same way. But then I also have to ask, what is fair about forcing a small business that relies on Internet sales to learn the ins and outs of 9,600 different tax jurisdictions or be subjected to tax audits, as the gentleman from Kentucky just mentioned, not just from one State but from all 46 States that collect sales tax?

Imposing these unreasonable standards on online retail sales but not also on brick-and-mortar retail stores is not only unfair, it's unworkable. I've heard from Montana's small businessowners who are deeply concerned about what this bill means for them and how it will affect their ability to remain profitable. I'm concerned too.

I've spent nearly three decades in the private sector. In fact, prior to having served in Congress, the last elective office I held was student body president in high school. So I've come from the business world. I've been a job creator and somebody that's had to fight the regulations and pay taxes. I know that if you're a small business owner and you're forced to comply with more than 9,000 different tax codes, which, by the way, most small businessowners readily admit it's next to impossible for any small business to do that. You are not going to be investing in your own business. You're not going to be hiring new employees, you're not going to be growing your product base or promoting innovation. You're now going to be spending more time and more capital dealing with regulations and mandates and more time with lawyers and accountants.

We also can't forget the threat that this holds for principles that are the foundation of our Nation's tax policy, and that is that States must not be allowed to extend their taxation and regulatory authorities beyond their borders. The Internet tax would do away with the physical presence standard which dictates that a State can only require a business to collect a sales tax if it's physically present within its boundaries.

Furthermore, the people don't want an online sales tax. A recent survey found that 84 percent of consumers were opposed to this bill and 75 percent of small online retailers are opposed. Those numbers send a clear message that the American people are strongly opposed to this proposal.

So I would ask my colleagues this--remember this is the people's House. We're here to represent our districts and our States and do what is best for them. The problem back in this town, in Washington, D.C., is that the big businesses, the big corporations, have lobbyists here to be the voice here on the Hill. We need to be the voice tonight for the small business people who don't have lobbyists here in Washington, D.C., because they can't afford them. Imposing a new tax burden in these precarious economic times is clearly not what our small businesses and consumers need.

I know one of the fastest ways to slow down growth and innovation is to tax it and to regulate it. This bill is a $23 billion tax increase coming right out of the pockets of hardworking American families. So let me be clear. The so-called Marketplace Fairness Act is a job-killing tax hike that hurts America's small businesses, and it hurts America's consumers. I promise I will continue to fight this bad piece of legislation.

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