Congressional Insights on E-Fairness, COVID-19, and Election Landscape
Gain valuable insights on E-Fairness updates in Washington, the Congressional outlook amidst the COVID-19 pandemic, potential threats to Congressional action, House retirements and resignations, and the Senate forecast for the 116th Congress. Stay informed about the latest developments shaping the political landscape.
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Presentation Transcript
E-Fairness: Washington Update Prepared for Streamlined Sales Tax Governing Board (SST) Randi Reid, KDCR Partners October 15, 2020
2020 Congressional Outlook 2 COVID-19 Pandemic Economic Stimulus Fiscal Year 2021 Appropriations Defense Reauthorization Executive and Judicial Nominations SCOTUS Nomination Administration Oversight
Potential Threats to Congressional Action 3 COVID-19 Pandemic Annual Appropriations Process 2020 Elections Majority Party Flip? Congressional Retirements
116th Congress: Pre-Election House Landscape 4 Current House divide is 232 Democrats 198 Republicans 1 Independent with 4 vacancies Democrats hold a 35-seat majority Republicans must pick up a net of 20 seats to reach 218 and gain the majority 15 Democratic-held seats are toss up and 13 Republican-held seats are toss up Two current Republican-held seat leans Democratic, two Republican-held seats are likely Democratic, and one current Independent-held seat is lean Republican
House Retirements and Resignations 5 Republicans (40 or 20% of House GOP) 28 announced retirements (5 are running for other office) 5 lost primary 4 resignations with seat filled in special election 3 resignations leaving the seat vacant Democrats (15 or 6.5% of House Dems) 5 announced retirements (2 are running for other office) 5 lost primary 2 resignations/deaths with seat filled in special election 1 resignations leaving the seat vacant In the last 10 years, between 13-24% turnover each election Open seats are harder to defend for incumbent political party.
116th Congress: Senate Forecast 6 Current distribution is 53 Republicans and 47 Democrats (including two Independents caucusing with the Democrats) Republicans currently hold a four-seat majority, and this majority is expected to hold or decrease Democrats must gain three or four seats in order to gain the majority and fully control the Senate, depending on which party wins control of the vice presidency Cook Political Report currently rates two Republican- controlled seats as lean D , five Republican-controlled seats as toss ups, and three more as lean R, while it rates one Democrat-controlled seat as lean R and one as lean D.
Senate Finance Committee Current Ratio: 15-13 7 Republicans Chuck Grassley (IA), Chair (Term limited as Chair and Ranking) Mike Crapo (ID) Possible new chair Pat Roberts (KS) Mike Enzi (WY) John Cornyn (TX) John Thune (SD) Richard Burr (NC) Rob Portman (OH) Pat Toomey (PA) Tim Scott (SC) Bill Cassidy (LA) James Lankford (OK) Steve Daines (MT) Todd Young (IN) Ben Sasse (NE) Democrats Ron Wyden (OR), Ranking Debbie Stabenow (MI) Maria Cantwell (WA) Bob Menendez (NJ) Tom Carper (DE) Ben Cardin (MD) Sherrod Brown (OH) Michael Bennet (CO) Bob Casey (PA) Mark Warner (VA) Sheldon Whitehouse (RI) Maggie Hassan (NH) Catherine Cortez Masto (NV) Strike Through: Leaving Senate C = Years as Chair of Committee RM = Year as Ranking Member Committee Seniority over Chair/Ranking Member
Senate Appropriations Committee Current Ratio: 16-15 8 Republicans Richard Shelby (AL), Chair (2 C, 2 RM) Mitch McConnell (KY) Lamar Alexander (TN) Susan Collins (ME) Lisa Murkowski (AK) Lindsey Graham (SC) Roy Blunt (MO) Jerry Moran (KS) John Hoeven (ND) John Boozman (AR) Shelley Moore Capito (WV) John Kennedy (LA) Cindy Hyde-Smith (MS) Steve Daines (MT) Marco Rubio (FL) James Lankford (OK) Democrats Patrick Leahy (VT), Ranking Patty Murray (WA) Dianne Feinstein (CA) Dick Durbin (IL) Jack Reed (RI) Jon Tester (MT) Tom Udall (NM) Jeanne Shaheen (NH) Jeff Merkley (OR) Chris Coons (DE) Brian Schatz (HI) Tammy Baldwin (WI) Chris Murphy (CT) Joe Manchin (WV) Chris Van Hollen (MD) Strike Through: Leaving Senate C = Years as Chair of Committee RM = Year as Ranking Member Committee Seniority over Chair/Ranking Member
House Judiciary Committee Current Ratio: 24-17 9 Democrats Jerry Nadler (NY), Chair Zoe Lofgren (CA) Sheila Jackson Lee (TX) Steve Cohen (TN) Hank Johnson (GA) Ted Deutch (FL) Karen Bass (CA) Hakeem Jeffries (NY) David Cicilline (RI) Eric Swalwell (CA) Ted Lieu (CA) Jamie Raskin (MD) Pramila Jayapal (WA) Val Demings (FL) Lou Correa (CA) Mary Gay Scanlon (PA) Sylvia Garcia (TX) Joe Neguse (CO) Lucy McBath (GA) Greg Stanton (AZ) Republicans Jim Jordan (OH), Ranking Doug Collins (GA) Stepped down as Ranking to run for Senate Jim Sensenbrenner (WI) Steve Chabot (OH) Louie Gohmert (TX) Ken Buck (CO) Martha Roby (AL) Matt Gaetz (FL) Mike Johnson (LA) Andy Biggs (AZ) Tom McClintock (CA) Debbie Lesko (AZ) Guy Reschenthaler (PA) Ben Cline (VA) Kelly Armstrong (ND) Greg Steube (FL) Tom Tiffany (WI) Madeleine Dean (PA) Debbie Mucarsel-Powell (FL) Veronica Escobar (TX) Strike Through: Leaving House
House Appropriations Committee Current Ratio: 30-22 10 Republicans Kay Granger (TX), Ranking Hal Rogers (KY) Robert Aderholt (AL) Mike Simpson (ID) John Carter (TX) Ken Calvert (CA) Tom Cole (OK) Mario Diaz-Balart (FL) Steve Womack (AR) Jeff Fortenberry (NE) Chuck Fleischmann (TN) Jamie Herrera Beutler (WA) David Joyce (OH) Andy Harris (MD) Martha Roby (AL) Mark Amodei (NV) Democrats Nita Lowey (NY), Chair Marcy Kaptur (OH) Possible new chair Pete Visclosky (IN) Jose Serrano (NY) Rosa DeLauro (CT) Possible new chair David Price (NC) Lucille Roybal-Allard (CA) Sanford Bishop (GA) Barbara Lee (CA) Betty McCollum (MN) Tim Ryan (OH) C.A. Dutch Ruppersberger (MD) Debbie Wasserman Schultz (FL) Possible new chair Henry Cuellar (TX) Chellie Pingree (ME) Mike Quigley (IL) Derek Kilmer (WA) Chris Stewart (UT) Steven Palazzo (MS) Dan Newhouse (WA) John Moolenaar (MI) John Rutherford (FL) Will Hurd (TX) Grace Meng (NY) Mark Pocan (WI) Katherine Clark (MA) Pete Aguilar (CA), Vice Chair Lois Frankel (FL) Cheri Bustos (IL) Bonnie Watson Coleman (NJ) Brenda Lawrence (MI) Norma Torres (CA) Charlie Crist (FL) Ann Kirkpatrick (AZ) Ed Case (HI) Matt Cartwright (PA) Strike Through: Leaving House
2020 Presidential Candidates Positions on E-fairness 11 President Donald Trump President Trump tweeted his support for the South Dakota v. Wayfair SCOTUS decision. In 2018, Treasury Secretary Mnuchin said President Trump strongly favors an Internet sales tax. Vice President Joe Biden In 2013, the Obama Administration supported an online sales tax bill.
Political Outlook post 2020 Elections 12 Supreme Court nomination will move forward Election results will likely be challenged Trumpism will continue regardless of the election outcome The worst thing for a political party is to be in complete control of both executive and legislative branches Twitter policymaking vs. traditional governance
116th Congress: SST E-fairness Legislative Position 14 SST is not advocating for federal e-fairness legislation at this time. States are demonstrating that they can implement this fairly and in a transparent manner. Critics concerns after the announcement of the South Dakota v. Wayfair SCOTUS decision remain a part of the conversation: Retroactivity Small seller exemption levels Implementation dates by the states Creating and implementing new state compacts to streamline sales and use tax systems State overreach
116th Congress: E-fairness Legislative Action in 2019 15 Wayfair v. South Dakota SCOTUS decision has not stopped congressional interest in e-fairness Federal legislative bills introduced during this Congress before March 2020: 4 House bills 2 Senate bills No legislative action taken in 2019
116th Congress: Legislation Introduced 16 H.R. 379, Protecting Businesses from Burdensome Compliance Cost Act Introduced: January 9, 2019 Sponsor: Rep. Bob Gibbs (R-OH) Cosponsors: 1 Republican (Rep. Greg Gianforte (R-MT)) Committee: House Judiciary Committee Key aspects of the bill: Limit the authority of a state to require remote sellers to collect taxes and fees owed by purchasers Single rate per state Single point of collection per state Nexus is referring to physical nexus, not economic nexus
116th Congress: Legislation Introduced 17 S. 128, The Stop Taxing Our Potential (STOP) Act Introduced January 15, 2019 Sponsor: Jon Tester (D-MT) Cosponsors: 4 Democrats (Sens. Jeanne Shaheen (D-NH), Jeff Merkley (D-OR), Maggie Hassan (D-NH), and Ron Wyden (D-OR)) Committee: Senate Finance Committee Key aspects of the bill: Imposes a strict physical nexus standard Overturns the U.S. Supreme Court s decision (Wayfair v. South Dakota).
116th Congress: Legislation Introduced 18 H.R. 1933, The Online Sales Simplicity and Small Business Relief Act Introduced: March 27, 2019 Sponsor: Jim Sensenbrenner (R-WI) Cosponsors: 12 Cosponsors 7 Republicans and 5 Democrats Committee: House Judiciary Committee Key aspects of the bill: Prevent retroactive collection (prior to June 21, 2018) Sets a small business exemption of $10 million that will be eliminated upon congressional approval of a state compact on simplification Relies on an physical presence concept struck down by the Supreme Court in South Dakota v. Wayfair
Congressional Bills Introduced 19 H.R. 3063, The Business Activity Tax Simplification Act Introduced: June 3, 2019 Sponsor: Steve Chabot (R-OH) Cosponsors: 2 Republicans (Reps. John Joyce (R-PA) and Ben Cline (R- VA)) and 1 Democrat (Rep. Bobby Scott (D-VA)) Committee: House Judiciary Committee Key aspects of the bill: Expands federal prohibition against state taxation of interstate commerce to include taxation of out-of-state transactions involving all forms of property and services, including the furnishing or gathering of information and sales or transactions involving digital goods or services. Prohibits state taxation of an out-of-state entity unless the entity has a physical presence in the taxing state. Sets forth criteria for determining physical presence in a state. Specifies requirements for computing the tax liability of affiliated businesses operating in a state.
Congressional Bills Introduced 20 H.R. 1725/S. 765, The Digital Goods and Services Tax Fairness Act of 2019 Introduced: March 13, 2019 Sponsor: Steve Cohen (D-TN) and John Thune (R-SD) Cosponsors: House 3 Republicans (Reps. John Ratcliffe (R-TX), Debbie Lesko (R-AZ), and Bill Flores (R-TX)) Senate 1 Democrat (Sen. Ron Wyden (D-OR)) Committee: House Judiciary Committee and Senate Finance Committee Key aspects of the bill: Prohibits a state or local jurisdiction from imposing (1) multiple taxes on the sale of a covered electronic good or service, or (2) discriminatory taxes on the sale or use of a digital good or service. Specifies services that are excluded from the definition of "digital service." Restricts taxation of a covered electronic good or service to taxation by a state or local jurisdiction whose territorial limits encompass a customer tax address, as defined by this bill.
116th Congress: Pre-COVID E-fairness Legislative Action in 2020 21 March 3, 2020 House Small Business Subcommittee on Economic Growth, Tax, & Capital Access Hearing Hearing focus Online Sales Taxes and their impact on Main Street post South Dakota v. Wayfair 4 hearing witnesses 3 witnesses represented business community SST submitted statement for the record Late March 2020 Senate Finance Committee Hearing Hearing focus - State and local sales tax policy issues focused on online sales and digital goods 4 hearing witnesses expected SST invited and confirmed to testify
116th Congress: Legislative Action during COVID-19 Pandemic 22 Mobile Workforce Senate Republican COVID-19 Phase IV Economic Stimulus Legislation The HEALS Act (Health; Economic Assistance; Liability Protection; and Schools Act Released on July 28, 2020 Includes section to allow for COVID-19 assistance provided to independent contractors Establishes a safe harbor allowing marketplace platform companies to provide certain COVID-19 related assistance to service providers, such as gig-economy workers, without jeopardizing the service provider s independent contractor status under the Internal Revenue Code. Benefits covered include financial assistance due to lost business, health care expenses, including for COVID-19 testing, or personal protective equipment, and cleaning supplies or training related to COVID-19. Benefits (other than cash payments) received by the service provider will be treated as qualified disaster relief payments for purposes of Section 139, which excludes the payments from the service provider s taxable income. Applies to benefits provided after March 12, 2020 and before January 1, 2021 Not enacted into public law to date
116th Congress: Legislative Action during COVID-19 Pandemic 23 Online Competition House Judiciary Committee Majority Report Title: Investigation of Competition in Digital Markets Majority Staff Investigation and Recommendations Released October 6, 2020 House Judiciary Committee Chairman Jerry Nadler (D-NY) and House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law Chairman David Cicilline (D-RI) Section focused on online commerce and third party sellers No direct mention of SST No direct mention of remote sales taxes and/or tax collection
Post COVID-19 Pandemic Action Forecast 24 Congressional interest to review Wayfair SCOTUS decision and business impact remains strong State implementation being watched closely by federal policymakers, especially those representing no sales tax states Not a matter of if , but a matter of when
SST Action Items 26 State Implementation Congressional and Administration Action COVID-19 Pandemic Response Business concerns and impact State overreach Congressional Champions Development
Questions / Comments Randi Reid Kountoupes Denham Carr & Reid 607 14th Street, NW Suite 750 Washington, DC 20005 (202) 281-9954 randi@kdcrpartners.com www.kdcrpartners.com
