On Senate Floor, Durbin Calls For House Passage of Marketplace Fairness Act
[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) joined his colleagues U.S. Senators Mike Enzi (R-WY), Lamar Alexander (R-TN) and Heidi Heitkamp (D-ND) in calling on the House of Representatives to act on the bipartisan, bicameral Marketplace Fairness Act of 2013 which passed the Senate one year ago. Video of Senator Durbin’s remarks can be accessed HERE.
The Marketplace Fairness Act of 2013 would give states the option to require both brick and mortar and online retailers to collect taxes already owed. It will give local brick and mortar retailers a chance to compete on a level playing field and allow states and localities to collect much needed revenue.
The Marketplace Fairness Act of 2013 passed the Senate with an amendment by a vote of 69 to 27. The legislation has the support of 67 Republicans and Democrats in the House of Representatives. The bill currently has the support of over 280 labor, business and government organizations while 22 Governors (15 Republicans and 7 Democrats) have come out in support of leveling the playing field for businesses by addressing sales tax fairness.
Text of Senator Durbin’s remarks below:
“Mr. President, I wish to thank my colleague from Wyoming. The most frequently asked question, no matter where I appear in Illinois or at fundraising events, is, Why can't you folks get along in Washington. What is it like to be in a place where everybody is at one another's throats and you can't accomplish anything? Why can't you do things on a bipartisan basis? What is it like today, and how do you compare it to what it was like a few years ago?
“I say to them there are times when we do come together and do something important. This is one of those times--the Marketplace Fairness Act.
“It was 1 year ago that Senator Enzi led the fight on this. I do not know exactly when he started it, but I was happy to join in, in his effort, when Senator Byron Dorgan retired. I called Senator Enzi and said: I would like to step in and help you with this bill. He said: Let's do it. We brought in Lamar Alexander, who made some valuable contributions to it. Then along comes Heidi Heitkamp, the new Senator from North Dakota. Was she ever ready for this fight--a former sales tax commissioner in that State and a former attorney general. She knew this issue inside and out. She has been a terrific ally.
“So there were the four of us. What an odd grouping: two Republicans, two Democrats from literally all over the United States. We worked together, and 1 year ago today we passed this basic bill, the marketplace fairness bill. The reason for passing it was just look at the name of it: fairness.
“I think about two people when I think about this bill. One of them is the mayor of Normal, IL. His name is Chris Koos, a great friend of mine and a terrific mayor. Chris, in addition to being the mayor, runs a shop where he sells running shoes and bicycles and lots of running equipment and stuff.
“So I visited his shop, a great little shop. He is a terrific bus i ness per son. He told me a story, which I have heard over and over, about people coming in, picking out the bicycle, picking out the shoes. That is perfect. Let me try them on. Let me get out and ride this. Then they say: I will get back to you. And he never sees them again. They turn around and buy the product on the Internet. So Chris is running a showroom as much as a business. There is no fairness there.
“When those sales are made on the Internet, instead of in Chris Koos's shop, there is no revenue coming back to the city of Normal, IL, or McLean County. That is Chris's story, but it is the story of thousands, maybe millions, of businesses across America that are losing out now to Internet competition that is not collecting the sales tax that is supposed to be paid.
“Then I met another man. I will not disclose the name of his company, but he is a major retailer in the United States. He came to visit me in my office in February or March, and he said: I want to tell you, in this last Christmas season, which is the biggest time of the year for my big-box business, we had a down turn of 8 percent in sales. Based on our projections, we thought for sure we would have more sales. We had a down turn of 8 percent. He said: I lost them to the Internet. Senator, I can't stay in business this way. I can't run a showroom for people who want to sell things on the Internet.
“What we are talking about is the basic collection of sales tax for purchases on the Internet. In my State--in virtually all the States with a sales tax--there is a legal obligation to pay it. I did not realize that until a few years ago. My bookkeeper was doing my family tax return for my wife and myself. She called and said: Senator, do you want to pay the taxes you owe on Internet purchases? I said: Yes, I think I want to pay the taxes I owe. She said: Well, how much did you buy on the Internet? I said: I will try to put it together. I called her back, gave her a number. She said: Here is the calculation. On your State income tax return we will declare that you are going to pay X dollars that you owe for Illinois sales tax for purchases you made on the Internet. When I said: Is that what I am supposed to do? She said: Yes. We did it. We have done it every year since.
“It turns out only 5 percent of Illinois taxpayers fill in that line on a State income tax return. I am guessing more than 5 percent of taxpayers make Internet purchases. But folks do not know their obligation, they do not follow through on their obligation, and the losers are, of course, our State and local units of government.
“This bill says, if Illinois, if Indiana, if Wyoming wishes, on a voluntary basis, they may use this bill to start collecting sales tax when it comes to Internet sales into their State. It is voluntary. The States have to decide to do it. It is not a new tax. This has been said over and over: It is the existing sales tax wherever it may be--in your State, county or city--existing sales tax.
“The bill provides if you are an Internet seller and have less than $1 million worth of sales in a given year--whether it is Grandma Donnelly's applesauce or whatever it happens to be--you are not covered by this, but if you have more than $1 million, yes, you have to collect the sales tax.
“How can you collect it? First, the States have to provide you with the software so your business does not run into the expense of how to collect it. You say: I bet that is an elaborate undertaking. You can buy the basic software to identify the sales tax based on the consumer's address for about $15 for the basic package or maybe a couple hundred dollars at the most.
“But in this situation the States are going to help the Internet retailers in developing the software so that when someone makes a purchase from Chicago, IL, or Springfield, IL, whoever is selling to me on the Internet will then forward that sales tax to the Illinois Department of Revenue. End of story. It is just that simple.
“What it does, of course, is level the playing field for bricks-and-mortar businesses, providing a new source of revenue that should be collected and is owed legally in these States to the local units of government.
“We passed this with enormous support from the retail community. It is not surprising. And it just was not the shop owners. It is people who understand the importance of this. This has been said over and over: These bricks-and-mortar shops around America do so much more than just sell a product. They are citizens in the community, corporate business citizens in the community. They participate. When the local high school is having their graduation program and they want somebody to help sponsor it, they will go down to the local sporting goods store for a helping hand on the program. That happens over and over. Whether it is Khoury League or Pop Warner, they are in there helping in the communities.
“Isn't it important and fair that they be treated fairly here? Sixty-nine Members of the Senate thought so. Democrats and Republicans voted for it--Senator Enzi and I, Senator Alexander and Senator Heitkamp. We had 29 cosponsors of this bill who sat down and said: Let's pass it.
“We passed it. We sent it to the House of Representatives, and nothing has happened--nothing. There have been some statements made over there, and I hope those statements lead to action, but it is time for them to pick up this bill and this responsibility. If they have a better approach, let's see it. Let's work on it. Let's do it on a bipartisan basis. Let's come up with an approach that works.
“I cannot tell you how many different businesses have come through my door--from Sears, Roebuck down to just basic mom-and-pop businesses and said: What are we going to do about the House of Representatives? They just will not take up this measure.
“I hope they will. They still have time to do it. We have waited 1 year. I do not want to wait much longer. In an election year, it will be almost impossible to do it.
“So I hope we can get this done. It is going to mean that local businesses that are important and the backbone of our community are going to have the resources they need because the sales will take place that otherwise are not taking place today, and the local units of government will receive the proceeds from the sales tax that is collected.
“One of the major marketplace retailers on the Internet is Amazon. Amazon may be the biggest. They support this bill. If you ask them why, they say: We don't want to fight this battle in 50 States and all the different cities and counties as to how much sales tax. Let's just make it uniform across the country.
“That is what the bill does. So Amazon supports this. They are prepared to collect that sales tax and remit it to the States. They do not believe it is an onerous burden that they are going to face. I hope others will join them.
“As I have said, 1 year ago today Members of the Senate did something we don't do enough. We put aside the partisan differences that cause so much gridlock around here and came together to pass bipartisan legislation--the Marketplace Fairness Act. On this day last year 69 Members of the Senate agreed that we need to help create jobs, invest in our communities, and keep Main Street alive and able to compete.
“The Marketplace Fairness Act levels the playing field for retailers by allowing States to treat brick-and-mortar retailers the same as remote retailers in the collection of State and local sales and use taxes.
“Those that benefit under our current system--retailers that have a 5- to 10-percent price advantage over their competitors on Main Street--want to continue the status quo. But it is not fair to the thousands of Main Street businesses that have worked hard to grow their businesses only to become showrooms because of this price advantage. People come in, look around, even try on merchandise, and then leave and buy the product online.
“This happens many times because sales and use taxes are not collected when a product is purchased online, so it seems cheaper. But we all know the tax is still owed by the customer. In Illinois about 5 percent of customers end up paying that tax.
“Abt Electronics, a retailer in Glenview, IL, knows about this challenge all too well. It is president, Michael Abt, said that ``often times with consumer electronics, the profit margin is 10 percent or less ..... when an online competitor doesn't collect taxes and then offers free shipping, it's a huge advantage for the competition.''
“Abt is one of the lucky ones--it is a fine example of a successful American business that has continued to grow since opening in 1936 and supports about 1,100 jobs. It also has an online presence so it can reach even more customers.
“But there are others that haven't been so lucky.
“Soccer Plus in Palatine is an example of what happens when it becomes too difficult to compete with online retailers that have a 5- to 10-percent price advantage.
“A year ago when Soccer Plus went out of business we lost good-paying jobs. And Palatine lost a business that was a part of our community.
“There is nothing we can do now for Soccer Plus. But we can still help thousands of retailers avoid the same fate as Soccer Plus by leveling the playing field for Main Street retailers.
“Since the Senate passed the Marketplace Fairness Act 1 year ago, the inequity between Main Street retailers and online retailers has only increased as e-commerce has grown.
“Online retail spending grew 14 percent last year alone, to $263.3 billion, and is estimated to reach over $300 billion in 2014.
“Unlike 20 years ago, or even 10 years ago, we are no longer talking about a few online retailers without access to the technology necessary to collect sales and use taxes. We are talking about hundreds of retailers, many of which are large billion-dollar businesses that have a price advantage over small Main Street businesses because they don't collect sales and use taxes.
“It is time we update our laws so they match our 21st century marketplace.
“Retailers in Illinois can now reach customers all over the country through this new marketplace and software has been developed to calculate sales and use tax for every jurisdiction in the country--yes, all 6,000 of them.
“It is time to end this idea that technology can't handle calculating sales and use taxes. Many retailers are already using this technology to collect and remit these taxes and similar technology to calculate shipping costs. This is especially true when talking about online retailers who by their very definition use technology to sell their products.
“The internet and e-commerce is no longer a baby in its crib. The baby is all grown up, running at full speed, and using outdated laws to threaten Main Street businesses.
“The Senate passed a bill to update our laws and correct this inequity 1 year ago. The bill was supported by over 280 business, State, local, and labor organizations, both progressives and conservatives alike.
“Yet the House has done little more than hold a hearing which was added to the long list of hearings already held on this issue over the last 20 years.
“Each week that the House doesn't act is another week that Congress is picking winners and losers--the losers being Main Street retailers, the jobs these retailers provide, and the communities these businesses support.
“Recently, 1,064 of these businesses sent a letter urging Chairman Goodlatte to move legislation to address the inequity they face every day. Many of these businesses were from the chairman's home State of Virginia.
“How long can we expect our small businesses that are partners in our communities to stay in business when we are tying one hand behind their back?
“I urge them to hold on as long as possible, but the only real solution is for Congress to act.
“I strongly urge my colleagues in the House, Chairman Goodlatte, and others, to give Main Street retailers a fighting chance by passing sales tax fairness legislation as soon as possible.
“We welcome the opportunity to work with our House colleagues so that one day soon we can offer businesses and States a solution to level the playing field for retailers that is simple and fair.
“In closing, I want to recognize the work Senators Enzi, Alexander, and Heitkamp have done on this issue.
“Senator Enzi introduced the first bill more than a decade ago to level the playing field because he understands firsthand, being a former retailer, how unfair this is for Main Street retailers.
“Last year when we passed the Marketplace Fairness Act we came one step closer to leveling this playing field by allowing States to require both brick and mortar retailers and online retailers to play by the same set of rules.
“It will ensure that Main Street businesses, like Abt, have a fighting chance and no more stores will have to close because of the current inequity they face.
“Again, I urge the House to pass sales tax fairness legislation. I hope that the House Judiciary Committee will move forward in the coming weeks and offer any help I can give.
“I am not going to take much longer. I think we have covered the subject well, and I thank Senator Enzi from Wyoming, as well as Senator Heitkamp from North Dakota, and especially Senator Alexander from Tennessee for kicking this off.”