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Public Statements

Marketplace Fairness Act

Floor Speech

Location: Washington, DC

Mrs. SHAHEEN. Madam President, I really came down to the floor today to continue my opposition to the Internet sales tax legislation that is before us.

The proponents of this legislation claim it is about ``fairness,'' but when you really think about it, this bill is anything but fair. In fact, it creates an unfair situation for small businesses in a number of ways.

First, the legislation is particularly unfair for businesses in my State of New Hampshire and in the other four States in this country that do not collect a sales tax.

I filed amendments, as I know a number of my colleagues have--my colleague from New Hampshire, Senator Ayotte, has filed a number of amendments--that I hope can help address this issue. But I think it is important for everyone here, especially those who are concerned with creating new redtape, to understand how this legislation is going to affect small businesses.

This proposal is going to put new regulatory burdens on small companies across the country, not just in New Hampshire. As a result, it is going to put those small businesses at a disadvantage, making it harder for them to compete with large online retailers.

As a former small business owner myself, I understand how time-consuming regulations and compliance requirements can be. Make no mistake, the bureaucratic nightmare we are going to be creating for small businesses under this legislation is real. I think it is worth talking for a minute about what that process is going to look like for the small online retailers.

In a recent piece for the Daily Beast, writer Megan McArdle went through what the process would be like for a small business. She pointed to the SBA guidebook for small businesses when they collect sales taxes in multiple States. The guidebook tells small businesses:

Generally, states require businesses to pay the sales taxes they collect quarterly or monthly. You'll have to use a special tax return for sales taxes, and report all sales, [all] taxable sales, [all] exempt sales and amount of tax due. Not paying on time can result in penalties. As always, check with your state or local government about the process in your location.

McArdle points out that, despite claims from the proponents of the Marketplace Fairness Act that tax collection will be easy and streamlined, the bottom line for a small business is that ``you've still got to keep fifty states worth of records and file 40-odd states worth of returns.''

McArdle went on to say:

For Amazon--the actual target of these laws--this is trivial. Their staff of crack accountants can probably roll these things out before their Monday morning coffee break. For a small vendor, however, that's a whole lot of paperwork.

And that is what this legislation is really about--those small business owners who are working hard to grow their companies. They do not need an additional paperwork burden to distract them from running their companies.

Let me provide one example. There is a small company in the town of Epsom, NH. It is called Michele's Sweet Shoppe. Michele's sells popcorn and other gourmet treats both at their brick-and-mortar store in Epsom and online. This is a small business that is growing, and it wants to create jobs. They sell locally in New Hampshire at their brick-and-mortar store, but a big part of their future strategy for growth is taking advantage of new markets through the Internet.

Under this legislation, however, there is an arbitrary ceiling on this company's growth because as they get closer to $1 million in online revenue--as they have said to me--they are going to have to ask themselves, is it worth going through the bureaucratic nightmare of complying with 46 different States' sales taxes? Unfortunately, for them and for too many other businesses, the answer is more than likely to be no.

For Amazon and online retailers, this is not even a question. This is exactly the reason why this bill is good for big businesses and bad for small businesses. It makes it harder for small mom-and-pop stores to compete.

Small businesses--certainly in New Hampshire and in most of the country--are really the economic engine of our economy. Two out of three of the new businesses that are going to be created are going to be created by small business. We should really think twice before we pass this kind of legislation that will keep them from growing and that is really designed to help those big businesses.

I support a number of amendments to this bill. I would like to see them at least voted on. I hope some might be adopted because I think they would make the legislation fairer for small businesses. One of those is a bipartisan amendment we have worked on with Senator Toomey to raise the threshold for small businesses under the legislation. I have also filed an amendment to address a fundamental flaw in the legislation that I think must be addressed because this legislation is anything but fair to States such as New Hampshire, States such as Alaska, Montana, the other States in this country that do not collect a sales tax.

This is a proposal that fundamentally violates State sovereignty. It enables one State to impose the enforcement of its laws on the 49 other States and territories without their approval, and it provides zero benefit for the non-sales tax States while it creates an additional and unnecessary burden on our small businesses. That is why I filed an amendment to create an exemption for businesses in States such as New Hampshire. States will be able to force New Hampshire companies to collect sales taxes--especially when our States get no benefit whatsoever--and this amendment is designed to prevent that.

I am disappointed this evening that it does not look as though we are going to be allowed to vote on any of these amendments, although I am still hopeful that we might get a hearing.

I urge my colleagues, again, to think twice about this legislation. I urge them to look at the amendments when they are filed--if we are able to get an amendment process--and to think about supporting those amendments so the legislation really could live up to its billing as the Marketplace Fairness Act because right now it certainly does not meet that standard for the State of New Hampshire and our small businesses.

Thank you very much, Madam President.

I yield the floor.


Mrs. SHAHEEN. My friend from Alaska and I, as she pointed out, represent States neither of which has a sales tax. Would the Senator agree with me that if this passes it sets a dangerous precedent that says at any point this Congress could impose on States such as ours, despite what we have chosen to do in our home States, a tax we may totally disagree with, and that that is a very dangerous precedent for us to set?


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