Speeches & Floor Statements

Floor Remarks of U.S. Senator Lamar Alexander (R-Tenn.) -- Marketplace Fairness Act

Posted on November 9, 2011

I wish to congratulate Senator Enzi and Senator Durbin and say how pleased I am to join as a cosponsor of their legislation.  Here is what I want to congratulate them for.  Senator Enzi said he came to this as a former mayor, as a former shoe shop owner, and as a former legislator.  I come as a former Governor. 

In our constitutional framework, I have always thought it was our business in Tennessee to decide what services we wanted to provide and what taxes we wanted to levy to pay for them.  For example, we have a high sales tax, but we have no income tax.  That is different from most States.  We have a low overall tax burden.  For me, this is, as Senator Durbin and I have discussed, a matter of States rights. 

I think the most important thing I could say today is that they have solved the problem with this legislation.  This problem has been there for a long time.  It has had the opposition of conservatives worried about taxes.  It has had the opposition of Amazon and other online sellers. 

Twenty years ago, when technology for businesses to compute and collect taxes was not nearly as innovative as it is today, the Supreme Court said that without congressional approval, states could not require out-of-state businesses to collect sales taxes because this created too much of a burden on interstate commerce.  Senator Enzi and Senator Durbin, with this legislation, in my opinion, have solved the problem, and this is going to happen. 

I am not presumptuous enough to predict what the Congress will do and what the President will sign, but I think I have been around long enough and I have watched Congress enough to say this is going to happen.  And if I were Governor, if I were an online retailer, or if I were a catalog retailer, I would make my plans to conduct my business in this way.  Why do I say that?  Well, for one thing, times have changed. 

This morning, I got up and looked up the weather in my hometown.  So I went online and put in weather, 37886 -- that is my ZIP Code -- and back came the information.  Under the bill Senator Durbin and Senator Enzi have proposed, the State would create a system for Amazon, let's say as an example, an online seller.  All they would have to do, if I buy a $300 or $400 television set, is they put my name in, they put in my ZIP code, and the software the State has provided will tell them what the tax is and will even electronically transfer the tax money back to the State.  In other words, Amazon will do the same thing the appliance store in Maryville, TN, will do, and that is what we intended to happen. 

I mean, when we passed a sales tax in Tennessee -- I wasn't around then, but I was around when it has been raised -- we didn't intend to exempt some people over others.  We didn't intend to subsidize some businesses over others.  We made a general decision that when we buy things in Tennessee, all sellers would collect the sales tax.  We have a local sales tax and we have a State sales tax, and that is our right to decide. 

Some of the opposition in the past has come from conservative groups.  It was important, just yesterday, to see the chairman of the American Conservative Union write a very strong article in support of a House version of this same bill.  I talked with him yesterday, Mr. Al Cardenas, a businessman from Florida, and he is reviewing our bill. 

Ten years ago, William F. Buckley wrote about this problem and said that it was a loophole that needed to be solved and when States decided to subsidize some taxpayers over others and some businesses over others, that was not good conservative philosophy. 

So when you have Amazon supporting in a strong letter that Senator Enzi read, and when you have the chairman of the  American Conservative Union on the same day announcing his support for the same principles, I think you have solved the problem. 

As Amazon just said in their letter, they are in business to compete and they can sell their goods, they claim, cheaper online than they can buy them in Senator Enzi's store in Gillette, WY.  Maybe they can, maybe they can't, but at least they will have a level playing field, and both the store in Gillette, WY, and the online seller will do the very same thing.

They will collect the sales tax that is already owed from the purchaser and they will send it directly to the State, which has been the way things have worked for a long time.

This is an issue about preserving the States' right to collect or not to collect their own sales tax.  It is about closing a tax loophole.  It is about stopping the subsidization of some businesses over others, of some taxpayers over others.

I will conclude my remarks in a moment, but first here is what William F. Buckley said about it: 

The mattress maker in Connecticut...does not like it if out-of-State businesses are, in practical terms, subsidized; that's what the non-tax amounts to.  Local concerns are complaining about traffic in mattresses and books and records and computer equipment which, ordered through the Internet, come in, so to speak, duty free. 

Of course, Governors and legislators are up in arms as well.  This loophole costs States $23 billion.  Tennessee could use this money to ward off a State income tax which we don't have and we don't want.  Wyoming could use the revenue to reduce its property tax.  Other States might reduce rising college tuitions, or they might reward outstanding teachers.

This has been a problem for the last 20 years, but Senator Enzi and Senator Durbin, with their legislation,  have solved the problem.

I will stop where I started.  This is not a new tax, it is an existing tax.  It is not a tax on the Internet; it is on all sales.  Senator Enzi and Senator Durbin, with their legislation, have solved the problem, and I predict that because of the voluntary agreements and the ease of out-of-State vendors doing the same thing Main Street vendors do, that very soon we will eliminate these subsidies and close this loophole.  I congratulate them for their years of work in this area.  I am happy to join 10 Senators -- 5 Republicans, 5 Democrats -- in cosponsoring this legislation.

Mr. President, I wonder if I might ask unanimous consent to include for the Record the article by Al Cardenas, the head of the American Conservative Union; the essay by William F. Buckley; and a letter from Governor Bill Haslam of Tennessee, endorsing the Durbin legislation.