Senators oppose sales tax bill

‘Fairness Act’ voted on today

WASHINGTON – A bipartisan Internet sales-tax bill is expected to sail through the Senate today, much to the chagrin of Montana Sens. Max Baucus and Jon Tester.

The Democratic lawmakers oppose the Marketplace Fairness Act, which would allow other states to require Montana-based small businesses that sell products online to collect sales taxes when selling to customers from that state.

Montana wouldn’t see a dime because it doesn’t have a state sales tax. Alaska, Delaware, New Hampshire and Oregon are the four other states without state sales taxes.

Baucus and Tester say the measure represents a huge burden for small businesses because it would require them to collect sales taxes for up to 9,600 other states, cities and municipalities.

“This bill forces small businesses across the country to spend time and resources they should be using to create jobs, jumping through new bureaucratic hoops,” Baucus said. “In Montana, it forces our small businesses to play tax collector for other states – with absolutely no benefit to them.”

Lance Trebesch, CEO of TicketPrinting.com in Harlowton, said the extra work this legislation would create would eat into his profits.

“Small businesses in Montana like mine rely on Internet sales for much of our business,” he said. “This bill would fundamentally hurt my bottom line.”

Montana has maintained a budget surplus despite the economic downturn. Tester said on the Senate floor that it was “insulting” other states couldn’t manage their budgets better without reaching into the pockets of Montana’s businesses.

“In Montana, our budget has a surplus because we’ve handled our money wisely,” he said. “We don’t have a sales tax and have twice vot­ed against having one. This bill would impose new tax burdens on small businesses and create more bureaucracy and more accountants. It’s bad policy that will fundamentally alter the rights of states.”

The Senate voted 74-23 on April 24 to move the Marketplace Fairness Act to the floor for a vote today. Both Montana senators voted against the measure, but their opposition isn’t likely to be enough to stop the bill from passing.

The bill would exempt sellers with less than $1 million in out-of-state sales a year from collecting state sales taxes. Ebay, one of the bill’s largest opponents, wants businesses with fewer than 50 employees, or those with up to $10 million in sales to be exempt.

Supporters of the Senate bill, introduced by Sen. Mike Enzi, R-Wyo., include President Barack Obama, a majority of Senate Democrats, labor groups, many state legislatures and the National Governors Association.

“The continued disparity between online retailers and Main Street businesses is shuttering stores and undermining state budgets. The Senate has the opportunity now to level the playing field with 21st century rules for all retailers,” the governors’ group said in a recent letter.

A national law is necessary to make sure online companies collect state sales taxes just as brick-and-mortar retailers have to, supporters say. According to the National Conference of State Legislatures, states lost about $24 billion in uncollected sales tax revenue in fiscal 2012. Since Montana doesn’t collect sales taxes, it didn’t lose any revenue.

Critics say the proposal would increase the tax burden on consumers and raise online prices. Some argue it’s an unnecessary government intrusion into e-commerce.

If approved, the Marketplace Fairness Act would overturn a 1992 Supreme Court ruling that required brick-and-mortar retailers to comply with state sales-tax laws but exempted other businesses, reasoning that the latter would find it too difficult to comply with myriad state tax laws.

The bill still would need to pass the House to become law. A similar measure there hasn’t advanced since Rep. Steve Womack, R-Ark., introduced it in February.