Heidi Heitkamp: Congress should level playing field for local businesses

WASHINGTON -- Small businesses are the backbone of North Dakota's economy. In our state, small businesses represent 96 percent of all employers, and they employ almost 62 percent of the private-sector labor force.

Heidi Heitkamp
Heidi Heitkamp portrait from fall 2011.

WASHINGTON -- Small businesses are the backbone of North Dakota's economy. In our state, small businesses represent 96 percent of all employers, and they employ almost 62 percent of the private-sector labor force.

As we are right in the middle of the holiday season, it's a reminder that before looking online for Christmas gifts, check out the shops downtown first. They boost our local economies, provide good jobs and make our downtowns places where we all want to visit.

But day after day, small businesses lose out to large retailers. The local brick and mortar shops where we can get Chippers, Badman Design products or Walter Piehl paintings are too often being replaced by purchases online that just take a click of a button because those vendors play by different rules.

We must make sure our local shops are given every opportunity to compete fairly. Earlier this year, the Senate passed a bill -- which I helped lead -- to level the playing field between local stores and large online retailers.

Currently, companies that don't have a physical presence in states where consumers are shopping have a distinct advantage because they aren't required to collect and remit sales tax. Rather, it's up to consumers to calculate and send in the taxes they owe for goods bought on the Internet.


But as all of us know, most families aren't even aware this is something they're supposed to do.

To correct this glitch, the Marketplace Fairness Act requires all retailers -- whether on Main Street or online -- to collect and remit the same sales tax so that everyone pays what they owe. That's just fair. And I've heard stories from small business owners across North Dakota who strongly support this bill.

But we still need the House of Representatives to act. It's a disservice to the millions of Americans who own or work at small shops on Main Street, and it's detrimental to their communities.

Imagine you're a small drugstore or pet store. You have a burden to collect your community's sales tax, but large online retailers selling similar products don't, putting local shops at a competitive disadvantage.

And when states don't collect those taxes, property tax rates go up for the rest of us so states can pay for needed projects.

The Marketplace Fairness Act bridges the partisan divide in Congress. It passed in the Senate in May with strong support from both sides of the aisle, including 19 Republicans., the National Governors Association, the National Conference of Mayors and the National League of Cities all support the bill, as do Gov. Jack Dalrymple and North Dakota Tax Commissioner Cory Fong.

The bill requires states to provide software free of charge to companies so that it won't be difficult for them to calculate the different sales taxes in each state. And the bill doesn't burden small online businesses, as those making less than $1 million in remote sales are exempted.

If this issue is decided by the courts rather than Congress, these provisions likely won't be included, making compliance more difficult for remote sellers.


I've been working for a long time to level the playing field for small businesses. When I was North Dakota's tax commissioner in the early 1990s, our state tried to make catalog retailers collect the sales tax that the state and municipalities already were owed on sales.

The debate went all the way to the Supreme Court in the case Quill v. North Dakota. Our highest court decided that it's up to Congress to resolve the issue.

That brings us back to where we are today. This issue has become even more relevant over the past two decades as the Internet has become a part of our daily lives, leading to the creation of online retailers that have grown dramatically.

Just recently, the Supreme Court declined to hear a case about whether states can collect sales tax from online retailers. It's just another reminder that we need to create a federal system to require remote retailers to collect and remit sales tax, just like local shops are required to do.

And it's up to Congress to do that -- just as the Supreme Court said.

The Senate has done its part. Now it's time for the House to pass the Marketplace Fairness Act.

Heidi Heitkamp, a Democrat, represents North Dakota in the U.S. Senate.

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