Lamar Alexander plans legislation to allow states to require online retailers to collect sales taxes

photo Sen. Lamar Alexander, R-Tenn., talks on Capitol Hill in Washington in this 2009 AP file photo by Alex Brandon.
Arkansas-Tennessee Live Blog

NASHVILLE - U.S. Sen. Lamar Alexander told Tennessee state legislators today he plans to reintroduce legislation in the new Congress that would allow states to require online retailers to collect sales taxes on the items they sell.

"I'm going to continue to push something called [the] Marketplace Fairness Act, which is of great importance to Tennessee," the Republican said. "I simply says that you have the right to decide whether you're going to collect the sales tax that's owed from all the people who owe it or from some of the people who owe it."

During his address to a joint convention of the General Assembly, Alexander also said he also resurrect a "grand bargain" he first made while governor in the early 1980s. It calls for the federal government to assume all financial responsibility for states' Medicaid health care programs for the poor.

States, meanwhile, would shoulder financial responsibility for education and other programs. Alexander noted he first proposed the deal while Tennessee's governor to then-President Ronald Reagan. Although Reagan liked it, the idea went nowhere in Congress.

Alexander said he thinks the idea can get more traction given the expansion of Medicaid envisioned by President Obama's federal Affordable Care Act. Tennessee and a number of other states are still weighing whether to expand Medicaid or not.

"I think it's time to do it [propose it] again," Alexander later told reporters of his proposed swap. "Medicaid is going to ruin the states. When I was governor, it was eight percent of the [state] budget. Today it's 26 percent. It's squeezing the life out of our colleges and universities in Tennessee. It's the main reason tuition's going up."