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Marketplace Fairness Act


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Senator Chuck Grassley issued this comment about his vote against the Marketplace Fairness Act, S.743, which would allow states to require online retailers to collect state sales tax.

"There are a lot of questions about how this legislation would work as a practical matter. How would it be enforced, even on foreign-based businesses, and what kind of costs and administrative burdens it would put on all businesses? Could businesses face audits from any state that acts on the authority given by the legislation? What about the lack of certainty regarding how far the tax authority could be taken by states? Would it result in states imposing taxes on financial transactions, for example?

"In addition, there's an unresolved Constitutional concern. Congress has the authority to allow states to exercise authority across state lines under the commerce clause, but Congress does not have authority to loosen requirements under the due-process clause, which requires a minimum level of contacts between a state and a business before a state may exercise taxing authority over a business. A single sale in a state isn't likely to meet that standard.

"These are important questions, and they should have been addressed in the Senate committee of jurisdiction, the Finance Committee. Bringing this bill directly to the floor circumvented the committee process and the scrutiny and expertise needed for good tax policy."

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