McConnell: Online sales tax bill would burden 'the little guys'

On Monday, the Senate took a procedural vote of 74-20 to proceed to the Marketplace Fairness Act, S. 743, which would empower states to collect taxes on purchases made online by consumers in their states. But senators in states without sales tax say it would burden retailers in their states by forcing them to collect taxes for other state governments.

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The bill would exempt small businesses that earn less than $1 million annually from out-of-state sales. 

McConnell said it was time the Senate looked out for the “little guys” because the big companies could take care of themselves.

“From what I’m told, there are nearly 10,000 state, local and municipal tax codes nationwide. And while complying with so many codes might not be a big deal for large online retailers, it’s a huge burden on the little guys,” McConnell said. “So small-businesses owners are worried, and justifiably so.”

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do.

Supporters of the bill have argued that states desperately need the sales tax revenue to deal with budget deficits. But McConnell said the bill would harm small businesses trying to compete with larger companies.

“If states decide they need this revenue, they should keep in mind the tremendous burden they’ll be placing on the little guys who do so much to drive this economy. In my view, the federal government should be looking for ways to help, not hurt, these folks,” McConnell said. “Let’s be honest: the big guys can take care of themselves. Let’s not make it even harder for their smaller competitors.”

Last month, the Senate passed a non-binding budget resolution on a 75-24 vote supporting the Marketplace Fairness language. That strong bipartisan vote showed there is enough support to pass the bill.

Retail groups such as the National Retail Federation and the Retail Industry Leaders Association have backed the legislation, which senators have been pushing for years.

Reps. Steve Womack (R-Ark.), Jackie Speier (D-Calif.), Peter Welch (D-Vt.) and John Conyers (D-Mich.) have introduced companion legislation in the House.