Capitol to Capitol | Vol. 21, Issue 6

Jeff Hurley 3/19/2014

Capitol to Capitol

FRIENDLY REMINDER—SALES TAXES ON eCOMMERCE ARE NOT NEW TAXES. On Wednesday, March 12, the House Judiciary Committee held a hearing entitled “Exploring Alternative Solutions on the Internet Sales Tax Issue.” Discussion centered around legislation to allow states to collect the taxes they are owed from remote purchases made by their residents but are unable to collect. NCSL submitted a statement from Louisiana Senator Sharon Weston Broome and South Dakota Senator Deb Peters, co-chairs of NCSL’s Steering Committee, urging passage of federal legislation to allow states to collect sales taxes on remote sales. The hearing didn’t directly address the Senate-passed Marketplace Fairness Act, but the legislation was often compared to the alternative electronic commerce proposals. Although there were numerous disagreements during the nearly four-hour hearing on what is the best way to collect owed sales taxes, panelists and members of the committee all agreed on the most fundamental point: that this is not a new tax.

Although the Judiciary Committee failed to coalesce around a single proposal, the hearing did accomplish its goal of dismissing unworkable proposals. Most notably, the committee exposed the flaws of the “origin-sourcing” proposals, where a business’s physical presence would determine tax collection obligations. Members agreed this recommendation would actually raise taxes on certain constituencies and impose other states’ sales tax laws on out-of-state consumers, leading to concerns about taxation without representation. ”Origin sourcing is dead on arrival,” noted Rep. Jason Chaffetz (R-UT).

Congressman Chaffetz offered to lead the effort in the Judiciary Committee to craft legislation addressing some of the most pressing concerns discussed at the hearing such as state audits on remote sellers and certification of the software to determine amounts and collect the sales taxes. NCSL will continue to work with Congressman Chaffetz and the Judiciary Committee on this issue and to continue advocating for passage of legislation by the end of this year. Stay tuned. NCSL staff contacts: Neal Osten, Max Behlke

TOXIC STATE PREEMPTION IN CHEMICAL DRAFT. “If enacted, the Chemicals in Commerce Act would severely impede the ability and authority of states to protect the health and welfare of their citizens.” That was NCSL’s message in a letter sent on March 10 to the House Subcommittee on the Environment and Economy regarding a discussion draft proposed by Chairman John Shimkus (R-IL). The chairman’s proposal would reform Toxic Substances Control Act of 1976 and eliminate state policymakers’ ability to regulate toxic chemicals at the state level. The subcommittee held a hearing on the discussion draft on March 12. No state groups were represented, and the hearing’s panel was unable to identify any state laws that would be preempted by the federal legislation. Yet, research by NCSL staff discovered more than 60 state laws in 22 states that would be preempted if the Chemicals in Commerce Act were to be enacted. ACTION: Please continue to urge your House delegation, especially members of the House Energy and Commerce Committee, to oppose the preemption in the Chemicals in Commerce Act as it will impede state efforts to protect the health and safety of their residents. See NCSL’s Action Alert and section-by-section analysis of the discussion draft for more details. NCSL staff contacts: Susan Parnas Frederick, Melanie Condon

NCSL SUPPORTS FEDERAL TRAFFICKING LEGISLATION. Last week, NCSL sent a letter supporting Texas Senator John Cornyn’s (R) recently introduced legislation to eliminate human trafficking. The Justice for Victims of Trafficking Act (S. 1738) would create a Domestic Trafficking Victims Fund that would aid state and local governments in combating trafficking. Nevada Assemblyman William Horne and Tennessee Representative Eric Watson, co-chairs of NCSL’s Committee on Law and Criminal Justice, thanked Sen. Cornyn for his “leadership in establishing a mechanism that melds together federal and state priorities with a common goal of eradicating the inhumane practice of human trafficking.” State legislatures have been at the forefront combating those involved in trafficking, smuggling or transporting people under false pretenses. Over the last three years, 45 states collectively enacted 221 laws addressing human trafficking. NCSL staff contacts: Susan Frederick, Jennifer Arguinzoni

AFTER ALL THESE YEARS. The Senate passed a reauthorization of the $5.3 billion child care and development block grant fund (CCDBG) by a 96 to 2 vote. Created in 1990, the block grant, which also requires state matching funds, has not been reauthorized since the 1996 welfare reform law. The bill is authored by Senators Barbara Mikulski (D-MD), Richard Burr (R-NC), Tom Harkin (D-IA), and Lamar Alexander (R-TN), and contains new requirements on states. Under the legislation, states would have to conduct background checks and inspections, use at least 70 percent of the grant on direct services, and set aside a greater portion of their funds to improve the quality of child-care programs, from 4 percent now to 10 percent by 2018. The House Education and Workforce Committee will hold a hearing on the reauthorization on March 25. NCSL staff contacts: Joy Wilson, Rachel Morgan

ON THE HORIZON. Both the House and Senate are on recess this week and are scheduled to return on Monday, March 24 … After reaching a tentative agreement last week, the Senate is expected to approve a five-month extension of expanded unemployment compensation later this month. These benefits expired at the end of 2013, and the new proposal would be offset by increased user fees … Leaders in the House are currently debating whether to bring a FY 2015 budget resolution to the floor this year. Members are specifically weighing the merits of a budget framework, as December’s budget agreement already set overall discretionary spending caps. Earlier this month the Senate Budget Committee announced they will not introduce a budget resolution.

Capitol to Capitol is a publication of the National Conference of State Legislatures, the premier bipartisan organization representing the interest of states, territories and commonwealths. The Conference operates from offices in Denver, Colorado, and Washington, D.C.