Minnesota Senator Al Franken, in bipartisan action with Illinois Senator Mark Kirk, on April 11 introduced legislation (S. 2253) for a three-year delay in implementation of an employer-paid $63 per-person tax provided for under federal healthcare reform. The tax funds a temporary "reinsurance" program that not all businesses are eligible to participate in, creating a situation where some retailers pay in to the program but receive no benefit.

In introducing his Health Care Fairness and Stability Act of 2014, Senator Franken said, "My number one concern is to make sure the Affordable Care Act works for the people of Minnesota. We need to keep moving forward and fix the things that aren't working. Businesses and workers all over Minnesota are concerned about this. Our bipartisan bill would provide relief to employers and workers, and it helps keep costs down for businesses across the country."

"At a time when retailers are digesting the impact of federal healthcare reform on their operations, we appreciate Senator Franken's leadership on an effort to delay the collection of the transitional reinsurance tax. We are hopeful that the Senator's effort will allow the time needed to find a better, fairer funding mechanism for this program," commented Minnesota Retailers Association president Bruce Nustad.

Retailers and employers of all size are negatively impacted by this tax, sometimes referred to as the "belly button" tax because it is assessed for each employee, spouse, dependent and retiree covered by a fully-insured or employer-sponsored, self-insured group health plan. In addition to delaying implementation of the tax, the Health Care Fairness and Stability Act of 2014 proposes to reduce the amount collected for the program by aligning the tax with the actual financial need of the program.  Also, in the U.S. House, bipartisan legislation (H.R. 3489) was introduced last November to repeal the fee.

The Minnesota Retailers Association thanks Senator Franken and co-sponsor Senator Amy Klobuchar, as well as the International Franchise Association, National Retail Federation, and Retail Industry Leaders Association for leadership on this issue.

National reports from Thanksgiving weekend concluded traffic was up at retailers across the country, however there was a slight dip in spending--largely attributed to strong retail competition including deals and "doorbusters". The National Retail Federation reported consumers spent  $407.02 from Thanksgiving through the weekend, down from $423.55 a year ago.

In an unscientific survey of members, the Minnesota Retailers Association (MnRA) found that 55 percent of retailers saw more customers walking through their doors than anticipated, with another 30 percent seeing the level of traffic they expected.

Also in good news for Minnesota's economy, 45 percent of retailers reported more sales Thanksgiving weekend over the same period last year, along with 22 percent saying the two years were about equal.

Despite reports of strong traffic and sales, retailers in Minnesota are cautious when it comes to the economy and consumer spending around the holidays.  Fifty-five percent of retail respondents anticipate this year's holiday season sales to match last year's, and 20 percent said they anticipate sales to be less. Only 20 percent of retailers expect sales to be above the 2012 holiday season level.

This holiday season, small business owners in Minnesota and across the country are sending a single wish list to members of Congress: close the online sales tax loophole, giving all retailers the chance to compete on a level playing field. Local employers are at a severe disadvantage to out of state online-only retailers, especially at this time of year--the busiest and most important season for small retailers.

Today, all local businesses are required to collect and remit sales taxes from customers, while many online retailers without some type of physical presence in Minnesota like Overstock and eBay are not required to do so.  While the Minnesota Legislature passed e-fairness earlier this year, out of state retailers without a presence in the state have a substantial pricing advantage against local small businesses, who cannot compete when the government essentially gives their competitors at least a 6.875 percent pricing advantage.

In September, retailers were encouraged when U.S. Representative Bob Goodlatte, chairman of the House Judiciary Committee, released 'Basic Principles on Remote Sales Tax,' which will serve as a framework for a conservative solution to finally close the online sales tax loophole. The release of these principles shows Chairman Goodlatte's strong commitment to ending the preferential tax treatment for online-only retailers at the expense of main street retailers.   While this is a positive step in the right direction, business owners are calling on Congress to take swift action by drafting legislation based on these principles and passing the bill in the U.S. House of Representatives.

"This needs to be the last holiday shopping season local retailers operate under this disadvantage in Minnesota and across the country," says Minnesota Retailers Association President Bruce Nustad. "At the state level, we have done our job to address this serious issue for retailers, now Congress needs to get e-fairness passed." 

The U.S. Senate, with leadership from Senators Amy Klobuchar and Al Franken, acted on e-fairness legislation earlier this year, when it passed the Marketplace Fairness Act by a wide, bipartisan vote, and a companion bill in the House already enjoys the support of over 60 bipartisan co-sponsors.  A recent study conducted by President Ronald Reagan's economist, Art Laffer, showed that e-fairness legislation coupled with state tax cuts would increase our nation's prosperity and employment-resulting in 1.5 million jobs in the next 10 years and creating an additional $563.2 billion in Gross Domestic Product (GDP). 

Governors, small business owners, and free market conservatives across the country have expressed their support for e-fairness legislation and agree that Congress needs to pass e-fairness legislation to give states the ability to collect these taxes online, as soon as possible.