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Online sales tax overwhelmingly passes cloture vote

The Marketplace Fairness Act, which would allow states the mechanism to start collecting taxes for online sales, overwhelmingly passed a Senate cloture vote Monday night, circumventing regular order and drawing concern from a minority of Senators over the end of the debate on the proposal. Seventy four Senators voted in favor of the motion, while 20 dissented.

Prior to the vote, many Senators took the floor expressing their disdain for the process the bill was going through, avoiding regular order and a vetting process, which would include a committee markup in the Senate Finance Committee.

“Regular order is not a process designed to protect the power and committee structures…but to make sure that the legislation we pass is technically sound,” Utah Sen. Orrin Hatch argued.

“A bill of this magnitude would benefit from a full committee mark up,”  Republican Hatch said, noting that he is not fundamentally opposed to the legislation, but rather the avenue that it is going down. “I simply want to ensure that it is fully vetted and examined.”

“Here we are again, not going through regular order,”  echoed Sen. Kelly Ayote, a New Hampshire Republican.

Many of the senators who joined Ayotte on the Senate floor represent states that, like New Hampshire, do not have a state sales tax and argue the passage of this bill will be consequential for their small businesses.

“Who is policing all of this?” asked Democratic Montana Sen. Max Baucus, who also represents a non-sales tax state. “The bill as written has no audit or enforcement mechanism.”

“This legislation is rife with unintended consequences,” Baucus added. One consequence cited was the states’ potential power to collect sales tax on financial transactions done online, specifically on Americanss 401(k) accounts.

“Tell me how does this grow our economy and grow our jobs?” he asked.

The only state without a sales tax that supports the bill is Delaware.

The bill has had both support and critics on both sides of the aisle. Recently, however, many conservative figures have come out in support for the bill, including former Reagan economic advisor Art Laffer, whose earlier Wall Street Journal op-ed was cited many times Monday afternoon.

The Wall Street Journal editorial board however remains opposed to the measure, as does the conservative Heritage Foundation’s Heritage Action, which issued a “No” in scoring the  bill.

Illinois Sen. Dick Durbin noted that regular order was not needed given the Senate’s overwhelming support of the bill, which was shown in a non-binding amendment vote last month that passed 75-24. Sen. Mike Enzi, a Wyoming Republican, has spent 12 years working on the issue.

“This bill does not create one new tax,” Durbin maintains. ”We don’t have the power to increase a state tax…It’s simply an act of compliance and collection.”

The National Retail Federation commended the Senate on their vote.

“Congress needs to address this disparity and NRF urges the Senate to pass the Marketplace Fairness Act this week,” the group’s President and CEO Matthew Shay said in a statement.

 

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