BIPARTISAN GROUP OF SENATORS PROTEST DECISION TO RUSH ONLINE SALES TAX BILL TO SENATE FLOOR

WASHINGTON, DC – In a letter today to Senate Majority Leader Harry Reid, U.S. Senator Kelly Ayotte (R-NH), along with Senators Ron Wyden (D-OR), Jon Tester (D-MT), Jeanne Shaheen (D-NH), Marco Rubio (R-FL), Mike Lee (R-UT) and Ted Cruz (R-TX), expressed serious concerns that the “Marketplace Fairness Act” (S. 743) is being rushed to the Senate floor for a vote this week – despite the fact that it has not gone through the regular committee process.  Last week, Leader Reid used a procedural maneuver to circumvent the committee process and speed up consideration of the bill, setting a preliminary cloture vote for this afternoon.

BIPARTISAN LETTER TO LEADER REID:

Dear Senate Majority Leader Reid,

We, the undersigned, urge you to reconsider your decision to expedite consideration of S. 743, the so-called “Marketplace Fairness Act”.  As described more fully below, we have a number of substantive concerns with the bill.  At the very minimum, we believe these concerns warrant a thorough vetting of the bill through regular order. 

Though the official title of the bill references states’ “sovereign rights”, it does nothing but erode them.  As you know, the Marketplace Fairness Act would allow states to force retailers that have zero physical presence, in a state outside of their own, to collect and remit sales tax to it.  Under current Supreme Court precedent, in the absence of a sufficient nexus, a state cannot reach beyond its borders to compel out-of-state Internet vendors to collect taxes on a particular transaction.  This standard is the result of the 1992 decision Quill v. North Dakota, in which the Court held that requiring remote vendors to collect such taxes would place an unconstitutional burden on interstate commerce.  By usurping this standard, the Marketplace Fairness Act would undermine an important limitation of the Commerce Clause: the nexus requirement.

Further, the bill will result in crippling compliance costs on small Internet businesses.  These costs include not only those associated with the new collection and remittance requirements, but these small businesses will also be on the hook for expensive audits and legal bills if there are any errors in the thousands of tax calculations and distributions they must make every day.  At a time of tepid economic growth, Congress should enact measures that are designed to promote innovation and entrepreneurial risk-taking; its priority should not be to look for creative ways to plug state budget holes. 

Despite these concerns, S.743 has yet to go through a markup in its committee of jurisdiction.  A bill with such constitutional and economic implications deserves nothing less.  Again, we respectfully request that you reconsider your decision to expedite consideration of S. 743.

Sincerely,

U.S. Senator Kelly Ayotte

U.S. Senator Ron Wyden

U.S. Senator Jon Tester

U.S. Senator Jeanne Shaheen

U.S. Senator Marco Rubio

U.S. Senator Mike Lee

U.S. Senator Ted Cruz