(Washington, DC) – U.S. Senator Jeanne Shaheen (D-NH) spoke on the Senate floor Tuesday evening in opposition to the Internet sales tax legislation that the Senate is considering this week. Shaheen is opposed to the measure — which would require online retailers to establish a costly and burdensome sales tax collection infrastructure — and plans to file amendments to the bill to exempt New Hampshire from the new regulations. To watch Shaheen’s remarks, click here.
Shaheen is part of a bipartisan coalition of Senators opposed to the Internet sales tax legislation who earlier this week expressed their concerns to Majority Leader Reid about the legislative process under which the legislation is being considered. Senate leadership is fast-tracking the bill this week despite the fact that it has not gone through the regular committee process.
A transcript of Shaheen’s remarks is included below:
This is a proposal that fundamentally violates state sovereignty. It enables one state to impose the enforcement of its laws on the 49 other states and territories without their approval. This legislation would impose new burdens on small businesses not only in New Hampshire but actually across the country.
I represent a state that does not have a sales tax. There are still some states in this country that don't have sales taxes. So my colleagues can understand why I oppose this measure, because this legislation will hurt small, online, family-owned businesses in New Hampshire – businesses that have no experience collecting sales taxes whatsoever.
The proponents of this legislation have said small businesses will not be affected, thanks to the exemption for businesses with less than $1 million in revenue. That is just not true. This legislation creates a disincentive for Internet firms to grow and create jobs for American workers.
We know that the margins for so many small online retailers are very slim. I will give you an example. I have heard from a small business owner in Hudson, NH. Hudson is down along the border of Massachusetts. I know the acting President Pro Tempore knows it well. This business is approaching $1 million in revenues, and he has about six employees--just six employees.
Now, under the Internet sales tax legislation before us, this company would be considered a large business--revenues over $1 million--because they are almost there. But if this legislation passes, the company's plans to grow will be in doubt. They are going to be forced to reconsider whether they are going to continue to grow, continue to hire more employees, because this arbitrary threshold creates a real disincentive for them to grow.
Now, e-commerce has been a real boon to small businesses in New Hampshire and across the country. It has helped companies find new markets. It has helped them add new revenues. But for companies looking to grow through online sales, this legislation represents a real ceiling for growth.
That is why I have joined with a number of my colleagues to call on the Senate to rethink this legislation. We need to think through its unintended consequences. Small businesses across the country--not just in non-sales tax states, such as New Hampshire, but small businesses across the country--will see their tax burdens increase. I want to give just a few examples of the new burdens that are going to come with this legislation.
First, as I mentioned, each state has different sales and use taxes, so businesses would need new software to figure out how to collect and remit the right taxes. It is my understanding that the States, under this legislation, would be responsible for providing that software to the businesses in their State. I think this creates an unfunded mandate, for the State of New Hampshire to have to provide that software for the small businesses in the State that would be affected.
Small businesses would also need to collect personal information from each buyer to make sure they are complying with all state and local sales taxes.
These small businesses would also have to deal with audit and enforcement actions from out of state. In other words, they would have to answer to taxing authorities in places where they have no representation whatsoever. And as states and localities consider new taxes, these small businesses would have no voice in that process because they have no representation in those jurisdictions.
So these are just a few examples of the many unintended consequences this legislation would create.
I intend to join with a number of my colleagues in filing amendments to improve this bill, including ways that we can protect state’s rights and small businesses. If the state of New Hampshire does not want to participate because we have no sales tax and we do not think our businesses should be forced to collect Massachusetts sales taxes or Maine sales taxes or Vermont sales taxes online, then it seems to me we ought to be able to opt out of this legislation.
The citizens and small businesses in New Hampshire that will be affected by this legislation deserve a full hearing on these issues, and I urge my colleagues to join us in addressing these defects before we pass this bill.