[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
   END DISCRIMINATORY STATE TAXES FOR AUTOMOBILE RENTERS ACT OF 2009

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   COMMERCIAL AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   ON

                               H.R. 4175

                               __________

                             JUNE 15, 2010

                               __________

                           Serial No. 111-122

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
  Georgia                            LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               TED POE, Texas
JUDY CHU, California                 JASON CHAFFETZ, Utah
TED DEUTCH, Florida                  TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DANIEL MAFFEI, New York
JARED POLIS, Colorado

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

           Subcommittee on Commercial and Administrative Law

                    STEVE COHEN, Tennessee, Chairman

WILLIAM D. DELAHUNT, Massachusetts   TRENT FRANKS, Arizona
MELVIN L. WATT, North Carolina       JIM JORDAN, Ohio
DANIEL MAFFEI, New York              HOWARD COBLE, North Carolina
ZOE LOFGREN, California              DARRELL E. ISSA, California
HENRY C. ``HANK'' JOHNSON, Jr.,      J. RANDY FORBES, Virginia
  Georgia                            STEVE KING, Iowa
ROBERT C. ``BOBBY'' SCOTT, Virginia
JOHN CONYERS, Jr., Michigan
JUDY CHU, California

                     Michone Johnson, Chief Counsel

                    Daniel Flores, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             JUNE 15, 2010

                                                                   Page

                                THE BILL

H.R. 4175, the ``End Discriminatory State Taxes for Automobile 
  Renters Act of 2009''..........................................     3

                           OPENING STATEMENTS

The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Chairman, Subcommittee on Commercial 
  and Administrative Law.........................................     1
The Honorable Trent Franks, a Representative in Congress from the 
  State of Arizona, and Ranking Member, Subcommittee on 
  Commercial and Administrative Law..............................    12

                               WITNESSES

The Honorable Rick Boucher, a Representative in Congress from the 
  State of Virginia
  Oral Testimony.................................................    14
  Prepared Statement.............................................    16
Mr. Raymond T. Wagner, Jr., Vice President, Government and Public 
  Affairs, Enterprise Holdings, Inc.
  Oral Testimony.................................................    20
  Prepared Statement.............................................    23
Mr. Timothy Firestine, Chief Administrative Officer, Montgomery 
  County, Maryland, on behalf of the National League of Cities, 
  the National Association of Counties, the U.S. Conference of 
  Mayors, and the Government Finance Officers Association
  Oral Testimony.................................................    31
  Prepared Statement.............................................    34
Ms. Sally Greenberg, Executive Director, National Consumers 
  League
  Oral Testimony.................................................    41
  Prepared Statement.............................................    44

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, 
  Chairman, Committee on the Judiciary, and Member, Subcommittee 
  on Commercial and Administrative Law...........................    66
Response to Post-Hearing Questions from Raymond T. Wagner, Jr., 
  Vice President, Government and Public Affairs, Enterprise 
  Holdings, Inc..................................................    69
Response to Post-Hearing Questions from Mr. Timothy Firestine, 
  Chief Administrative Officer, Montgomery County, Maryland, on 
  behalf of the National League of Cities, the National 
  Association of Counties, the U.S. Conference of Mayors, and the 
  Government Finance Officers Association........................    72
Response to Post-Hearing Questions from Sally Greenberg, 
  Executive Director, National Consumers League..................    75
Prepared Statement of Dr. Kevin Neels, The Battle Group..........    78
Prepared Statement of the Federation of Tax Administrator........    98
Prepared Statement of Stephen J. Collins, American Automotive 
  Policy (AAPC) Council..........................................   100
Prepared Statement of Jeffrey Friedman, Sutherland, Asbill & 
  Brennan LLP....................................................   103
Letter from Grover Norquist, President, Americans for Tax Reform.   113
Letter from Richard D. Broome, Sr. Vice President, Corporate 
  Affairs & Communications, The Hertz Corporation................   114
Letter from Chris Russo, President and Chair, American Society of 
  Travel Agents (ASTA)...........................................   116
Letter from Joe B. Huddleston, L.L.D., Executive Director, 
  Multistate Tax Commission (MTC)................................   118
Prepared Statement of the Truck Renting and Leasing Association 
  (TRALA)........................................................   120
Letter from Alan Reuther, Legislative Director, International 
  Union, United Automobile, Aerospace & Agricultural Implement 
  Works of America--UAW..........................................   123


   END DISCRIMINATORY STATE TAXES FOR AUTOMOBILE RENTERS ACT OF 2009

                              ----------                              


                         TUESDAY, JUNE 15, 2010

              House of Representatives,    
                     Subcommittee on Commercial    
                            and Administrative Law,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 11:13 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Steve 
Cohen (Chairman of the Subcommittee) presiding.
    Present: Representatives Cohen, Johnson, Scott, Chu, 
Franks, and Jordan.
    Staff present: (Majority) Norberto Salinas, Counsel; Adam 
Russell, Professional Staff Member; and (Minority) Stewart 
Jeffries, Counsel.
    Mr. Cohen. This hearing of the Committee of Judiciary 
Subcommittee on Commercial and Administrative Law will now come 
to order. Without objection the Chair will be authorized to 
declare a recess of the hearing. I will now recognize myself 
for a short statement.
    The Congress is well aware of the plight of state and local 
governments caused by the current recession. And because state 
and local governments need more revenue, consumers may see an 
increase in taxes to help balance budgets.
    Only in certain states they will see that and some states 
that will see their budgets slashed. With this in mind though, 
many witnesses have urged us not to pass legislation which may 
restrict state's abilities to tax. However, we have also 
written that some state and local taxes unduly burden a single 
industry and its consumers.
    Taxes on the rental of cars and trucks are one such 
discriminatory tax which hits consumers' pocketbooks. Some 
consumers may be shocked when the quoted price of renting a car 
is nowhere near what they pay. I am one of those consumers.
    The shock stems not from the price charged by the rental 
company, oftentimes sounding inviting and low, but because of 
the added taxes and fees which can increase the total rental 
price 15 to 25 percent or more and makes one look at their 
receipt and say, ``What happened to the rate they quoted me 
when I called them on the 800 number?''
    The rate of these taxes is often far higher than the local 
tax rate placed on goods services. No matter the reasoning 
behind these higher tax rates, the taxation of the rental cars 
and trucks is a familiar form of discriminatory taxation which 
may burden interstate commerce.
    These taxes also chill car rental companies from investing 
and expanding. Conventional wisdom tells us that tourists and 
business travelers feel the primary impact of car rental taxes 
and fees and that local governments target these taxes at 
visitors and not their residents.
    It also tells us the local governments adhere to the old 
adage that as I understand Senator Russell Long first coined 
and then a dear colleague, a Republican conservative from 
Millington, Tennessee, Senator Leonard Dunavant of blessed 
memory used to say, ``Don't tax me, don't tax thee, tax that 
person behind that tree.'' So this is perfectly in accord with 
Senator Dunavant's warnings.
    According to a recent report that assumption is incorrect, 
though, statistics reveal that more motor vehicles are rented 
from neighborhood locations than from airport facilities. Thus, 
car rental taxes and fees disproportionately fall on local 
residents who often rent cars while their own vehicles are 
being repaired or vans to ferry little league teams to baseball 
tournaments or other heart-rending activities that we could 
have listed here in this opening statement.
    Today we hold a hearing on H.R. 4175, the ``End 
Discriminatory State Taxes for Automobile Renters Act of 
2009.'' H.R. 4175 would impose a moratorium on any new taxes, 
discriminatory that they may be or not, with respect to the 
rental of motor vehicles, businesses who rent motor vehicles or 
the property of those businesses. The legislation would prevent 
increasing taxes imposed solely on the rental of cars and 
trucks.
    [The bill, H.R. 4175, follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                               __________
    Mr. Cohen. Similar to other tax bills before this 
Committee, the moratorium on new discriminatory taxes should 
encourage the motor vehicle rental industry and local 
governments to come together and work on reforming the current 
tax structure.
    For example, the state and local governments and the car 
rental industry could work together to broaden the tax base 
rather than have state and local governments over rely on a few 
hundred taxpayers. Of course, that would require enlightened 
legislators and local officials. But we will see what happens.
    Such reform would maintain a steady stream of revenue for 
state and local governments while ensuring a fair tax burden 
for consumers such as those who rent cars and trucks. This 
hearing will provide Members of the Subcommittee the 
opportunity to hear testimony about local government's reliance 
on taxes and fees on the rental of motor vehicles.
    Members will also hear testimony about how those taxes and 
fees impact consumers and the car rental industry, and the 
testimony should help determine whether or not Congress should 
intercede with this legislation.
    As you may be aware, 2 months ago this Subcommittee held a 
hearing on the current plight of state and local governments 
that they are experiencing in this recession. I can certainly 
sympathize with their concerns as they receive lower revenues, 
but they are still expected to provide these services that they 
have done over the years.
    However, we need fair tax policies which do not act as 
another regressive tax on consumers, and we need fair tax 
policies which encourage capital investment rather that 
discourage it. Fortunately, to the rescue, comes Representative 
Boucher, who introduced this legislation, drafted it so as to 
not affect current government revenues.
    H.R. 4175 will not prevent taxing authorities from 
continuing to tax the rentals of motor vehicles or the rental 
companies and so that will allow them to continue to fund the 
stadia and arenas and whatever other assorted goods and 
services and products that they have and facilities that they 
fund. Instead, this will impose a moratorium on new 
discriminatory taxes.
    So I thank Mr. Boucher for his work. Accordingly, I look 
forward to receiving today's testimony and I now recognize my 
colleague Mr. Franks, the distinguished Ranking Member of the 
Subcommittee, for his opening remarks.
    Mr. Franks. Well, thank you, Mr. Chairman. I am going to 
get you to introduce me at my next speech somewhere. Just want 
to thank you for the effort to hold this hearing, and I know 
that the Subcommittee has held many hearings on discriminatory 
taxation over the years, but I believe today's hearing is--on 
H.R. 4175, the ``End Discriminatory Taxes for Automobile 
Renters Act,'' I think that it is a first.
    And while the subject of today's hearing, namely rental 
cars, may be new, the general topic of discriminatory taxes--I 
will get that word--is not new. Supporters of H.R. 4175 claim 
that states and localities target rental car companies and 
consumers for unusually high and discriminatory taxes. And I 
think the research is certainly in their favor.
    They claim that these discriminatory taxes are often used 
to pay for new stadiums or other municipal improvements. And in 
other words, while the citizens get to enjoy the benefits of a 
new ballpark, the costs are passed on to tourists and business 
travelers who had no say in the financing decisions behind 
those projects.
    And such exportation of tax burdens, if true, Mr. Chairman, 
of course troubles me. And of course I am also concerned that 
discriminatory taxes are a job killer fundamentally.
    Supporters of H.R. 4175 also point to the economic impact 
that these discriminatory taxes have on our Nation's auto 
industry. Rental car companies purchased over 1 million autos 
from General Motors, Chrysler and Ford in 2008. That 
constituted more than 15 percent of the Big 3 car sales last 
year.
    Given the financial interest the Federal Government has in 
those companies and with no fault in mind, just for the record 
and hence American taxpayers have taken in General Motors and 
Chrysler, we should be aware of state taxation regimes that 
threaten the viability of those entities.
    Now that said, I know that discrimination, at least in this 
context, can be in the eye of the beholder. So to that end, we 
will hear from the states and localities that they are hurting. 
My own state, of course, is currently trying to close a $3 
billion deficit, so I understandably sympathize with their 
plight as well.
    And as I have said repeatedly at these hearings, I am a 
strong supporter of state's traditional powers in this area. I 
mean, I am somebody that has read the 10th Amendment. But even 
when I support legislation like this, state to curb the tax 
authority such as the Cell Tax Fairness Act, I want to make 
sure we do it right and that the relief is targeted in a way 
that it should be.
    So therefore I look forward to hearing from all of the 
witnesses today to determine the scope of the problem and 
whether H.R. 4175, which I have some concerns about, the 
approach that it takes, but I am open to hearing a better 
approach, but I believe it is a sufficiently limited remedy to 
the problem to warrant my support.
    And so I yield back the balance of my time, Mr. Chairman.
    Mr. Cohen. Thank you, Mr. Franks. Isn't the 10th Amendment, 
is that the one ``Thou shalt honor thy state and local 
government?''
    Mr. Franks. That is close enough for a Democrat. 
[Laughter.]
    Mr. Cohen. Yes, I think I am getting them--somehow I am 
getting them confused, yes. And now--thank you for your 
statement.
    I am now pleased to introduce the first panel for today's 
hearing. First thanks to all the witnesses who are willing to 
participate in today's hearing. If Mr. Scott has a statement we 
will enter it in the record without objection.
    Without objection written statements will be placed in the 
record. We ask that you limit your remarks to 5 minutes. We 
have the lighting system which Mr. Boucher is most familiar 
with, and then we will have the questioning period.
    Our first witness is Congressman Rich Boucher of Virginia's 
9th Congressional District. Representative Boucher is in his 
14th term in the United States House of Representatives. He is 
a Member of the House Judiciary Committee, serving on the 
Courts and Competition Policy Subcommittee.
    He sits on House Energy and Commerce Committee, serving on 
two Subcommittees, Communications, Technology and the Internet 
of which he is the Chairman, as well as the Energy and 
Environment Committee.
    He is the author of H.R. 4175, the ``End Discriminatory 
State Taxes for Automobile Renters Act of 2009'' which he 
introduced on December 2, 2009. He is one of the most cerebral 
Members of our Congress, and his district touches Tennessee. 
And for all those good reasons, I thank him for his testimony 
and recognize him now for his statement.

 TESTIMONY OF THE HONORABLE RICK BOUCHER, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF VIRGINIA

    Mr. Boucher. Well, thank you very much Chairman Cohen. I 
also intend to invite you to come campaign for me this fall. I 
appreciate those very kind remarks. And I thank you and Ranking 
Member Franks and other Members of the Subcommittee for your 
attention today to H.R. 4175, which is designed to prohibit 
prospectively discriminatory car rental taxes imposed by state 
and local governments.
    I am joined in the co-sponsorship of the bill by 10 Members 
of the House, including Mr. Jordan and Mr. Issa, who are 
Members of this Subcommittee. Today, special car rental taxes 
have been enacted by 43 states and by the District of Columbia. 
In 1976 there was one such tax. Today there are 115.
    Localities have found that car rental taxes are an 
attractive means of financing projects that have no direct 
relation to the rental of automobiles. For example, 35 sports 
stadiums have been funded with these discriminatory taxes, a 
performing arts center and a culinary institute have been 
funded by car rental taxes.
    And these taxes carry a huge social cost. They fall 
disproportionately on minority households. Nationwide, minority 
households bear 52 percent of the burden of these taxes. In the 
state of Georgia, for example, minority households constitute 
12 percent of the population, but they bear 27 percent of the 
car rental tax burden.
    And these are not taxes that are simply imposed on non-
residents who are traveling through the state, as the Chairman 
indicated during his opening statement. The bulk of car rentals 
come from neighborhood rental facilities, not from the airport 
located in the various communities.
    These taxes also drive up insurance costs. Since a large 
portion of car rentals are temporary replacement vehicles that 
are rented by insurance companies while an automobile that was 
involved in an accident is being repaired.
    A recent study has shown that these taxes also 
significantly depress new car sales, perhaps by as much as 12 
percent. These social costs are simply far too high. The taxes 
frequently fund projects that are unrelated to car renting. And 
they are discriminatory, since similar taxes are not imposed 
upon the leasing of other tangible personal property in the 
various locality.
    Our legislation prohibits the imposition of new 
discriminatory car rental taxes by states and localities, while 
allowing to remain in effect those taxes that had been enacted 
prior to December the 2nd, 2009. That was the date upon which 
our legislation was introduced, serving notice to localities 
nationwide, that Congress would now be considering respectively 
prohibiting these taxes.
    The taxes that were in effect on December 2, 2009 can 
remain in effect as long as they are not changed, they do not 
lapse, and the rate of those taxes does not increase. We 
inserted the grandfathering provision to acknowledge that 
localities have financed projects in anticipation of these tax 
receipts, and we are carefully avoiding disrupting the 
financing flows that enable those projects to be paid for.
    I would note that the Congress has previously adopted 
similar kinds of legislation that prohibit the imposition of 
local taxes on bus, airplane and train transportation. This is 
very much a corollary and an analogy to those previous 
congressional enactments, and I think very appropriate as a 
complement to them.
    I would note, Mr. Chairman, and Members, that our 
legislation has been endorsed by a large number of 
organizations, including The National Consumers League, The 
National Urban League, The United Autoworkers and the major 
United States auto manufacturing companies.
    I want to thank all of these endorsing organizations and 
the 10 individual Members of the House, who have co-sponsored 
the bill. And I thank you, Chairman Cohen, Mr. Franks and other 
Members of the Subcommittee, for your attention to the merits 
of our legislation today. Thank you for having me here as your 
witness.
    [The prepared statement of Mr. Boucher follows:]

           Prepared Statement of the Honorable Rick Boucher, 
        a Representative in Congress from the State of Virginia







                               __________

    Mr. Cohen. Thank you for your testimony, and for 
introducing the bill, Mr. Boucher. I didn't realize that I was 
not a sponsor of it.
    And maybe, I don't know, maybe it was because of the idea 
of being impartial for the hearing, but we have since the 
hearing has started, we are going to become a sponsor. I think 
it is good legislation, and I appreciate you for bringing it to 
the Committee. I do not have questions for Mr. Boucher.
    Mr. Franks, do you have questions?
    Mr. Franks. Not for Mr. Boucher. We are going to let him 
off the hook.
    Mr. Cohen. Mr. Scott, though, has been waiting to grill 
you. [Laughter.]
    Mr. Scott, you are recognized.
    Mr. Scott. I would like to thank Mr. Boucher for his 
testimony.
    Mr. Boucher. Thank you very much
    Mr. Cohen. The Virginia gentleman that he is. We thank you 
for your testimony and--excuse me, Mr. Jordan, would you like 
to grill?
    Mr. Jordan. No, I am----
    Mr. Cohen. You are a sponsor.
    Mr. Jordan. [Off mike.]
    Mr. Cohen. Well, that ends Congressman Boucher's day on the 
Hill. [Laughter.]
    Mr. Boucher. Thank you very much, Mr. Chairman.
    Mr. Cohen. We thank you for your testimony and for bringing 
the bill.
    Our next panel, are we ready for the next panel? Will the 
next panel of witnesses be seated? Thanks to each of you for 
participating in today's hearing. We had the instructions. We 
didn't do them when Mr. Boucher was there.
    We have got a 5-minute system, lighting system up front, 
and when the light is green that means you have started or at 
least it means that counsel has turned on your light. And it 
means you have got 4 minutes until it turns to yellow. And when 
it turns to yellow that means you have got 1 minute left. And 
when it turns to red that means you should be finished.
    After you finish your statements, each Member of the 
Committee will have five minutes to ask you questions, and we 
will have the same lighting system and can submit the questions 
to you later to ask you to respond to. But we ask you for that.
    First witness will be Mr. Ray Wagner, vice president of 
Enterprise Holdings. He oversees Enterprise's government and 
legislative agenda. Prior to joining Enterprise in 1995, he 
served in the cabinet of two governors, as director of revenue 
in Illinois and Missouri, conflicted in St. Louis on a certain 
football game, that occurs there annually.
    In 2003, Mr. Wagner was unanimously confirmed by the United 
States Senate to serve as a member of the IRS Oversight Board. 
On March 17, 2005, he was unanimously confirmed for his second 
term to the board and served as the chairman of that board for 
2 years.
    He was a municipal judge in the city of Ballwin, Missouri, 
a position he held from April 1999 to May of 2005. And an 
attorney in private practice, in the areas of securities, 
municipal finance, banking, corporate and tax law. Thank you 
Mr. Wagner, you may begin your testimony. And are you in the 
Big 10, the Big 12 or----

TESTIMONY OF RAYMOND T. WAGNER, JR., VICE PRESIDENT, GOVERNMENT 
         AND PUBLIC AFFAIRS, ENTERPRISE HOLDINGS, INC.

    Mr. Wagner. I haven't read this morning's newspaper, so I 
don't know---- [Laughter.]
    Mr. Cohen. Moving around. Thank you, sir.
    Mr. Wagner. Mr. Chairman, Ranking Member Franks, Members of 
the Subcommittee. Again, my name is Ray Wagner----
    Mr. Cohen. I think it might be. I didn't tell you about the 
microphone. You have got to punch it, is the light on?
    Mr. Wagner. Is it on? Right? Better?
    Mr. Cohen. Better, better, I guess it is.
    Mr. Wagner. Can you hear me?
    Mr. Cohen. Yes, I can.
    Mr. Wagner. Now it seems to be working, okay. Mr. Chairman, 
Ranking Member Franks, Members of the Subcommittee, again, my 
name is Ray Wagner, and I am the vice president of government 
and public affairs for Enterprise Holdings.
    As the Chairman suggested, I served as director of revenue 
of two states, Missouri and Illinois. I believe in a fair 
system of taxes, and in the Federal system of government.
    I am testifying in support of the bipartisan bill, that 
serves both of these American ideals of fairness and federalism 
on behalf of a coalition that spans in spectrum from Grover 
Norquist to the UAW.
    The End Discriminatory State Taxes on Automobile Act, 
EDSTAR, seeks to address an increasing propensity of state and 
local governments to target, or in other words discriminate 
against rental car consumers.
    Prohibiting such taxation, which burns interstate commerce, 
is a valid use of congressional power under the commerce 
clause. With the 4R Act and similar laws, Congress, as our 
sponsor suggested, has prevented discriminatory taxes on 
railroads, trucks, buses and airlines.
    Rental cars equally cross state lines and when they don't, 
renters drive on federally funded highways, roads, bridges and 
tunnels. Make no mistake, rental cars are a part of interstate 
commerce.
    Yes, the rental car industry accepts fair taxation, but 
that doesn't mean our consumers should pay at a higher rate. 
These taxes are simply wrong and millions of Americans 
understand why. Have you ever rented a car that you thought 
would be at a great rate of $35 a day only to find out that the 
bill wound up being close to $45 or greater?
    Part of that increase may be the result of the 
discriminatory taxes imposed by state and local governments. 
These extra taxes come on top of the broad base of general 
taxes, registration fees, personal property taxes, gasoline 
taxes, airport user fees--every other tax already imposed on 
all car owners and users.
    We don't object to the broad base of taxes. EDSTAR will not 
affect these. We do, however, object to taxes that specifically 
target, unfairly discriminate and single out rental car 
customers. Let me be clear. The coalition is not asking for any 
sort of handout.
    We are merely asking local governments to take their hands 
out of our customer's pockets. Let me explain what else EDSTAR 
will and will not do. It will only prohibit state and local 
governments from enacting future discriminatory rental car 
taxes.
    It will not affect any of the 118 existing rental car taxes 
or the projects they fund, including the sport stadiums. Local 
officials find these taxes so seductive because many believe 
car rental taxes export the tax burden to non-resident voters.
    They also believe that all car renters can afford these 
extra taxes. Rental cars do, indeed, affect airport renters, 
but there is a whole segment of renters who go largely 
unnoticed. Contrary to popular belief, as has been suggested, 
most rental car companies are not business travelers.
    The majority rent cars as individuals. Some are renting to 
replace their own car while it is repaired, while others rent 
because they don't own a car at all. And of course, many rent 
cars for vacation or other special occasions.
    Singling out renters is unfair because there is rarely a 
connection between renting a car and the purpose for which the 
tax was enacted. Not only that, but these taxes are regressive. 
They have proportionally greater impact upon people of modest 
means than they do on the wealthy, many of whom are reimbursed 
for business expense.
    They also impact minorities disproportionately. As the 
respected economics firm The Brattle Group reported in a recent 
study, minorities are approximately 75 percent more likely to 
rent than Whites.
    The African Americans are 12 percent of the population. 
They account for 27 percent of the rentals, car demand, and pay 
28 percent of rental car taxes. That is one reason why the 
National Urban League is concerned with this issue.
    Finally, these taxes even impact those who don't rent cars 
at all. As Congressman Boucher indicated, auto insurance 
companies are forced to pay rental taxes through the claims 
process, and these costs are passed along to all policyholders 
whether they have ever rented a car or not.
    These taxes are not only unfair to consumers they are bad 
for the economy. They suppress the demand for rental cars. That 
leads to slower growth and fewer job opportunities in the 
industry. That also results in reduced purchases of new cars by 
the rental car companies that ordinarily account for 1.2 
million vehicles or 12 to 15 percent of all vehicles sold in 
the country.
    And that means fewer jobs for the American autoworkers at a 
time when their industry is struggling in this recession. 
Unfair and harmful as these taxes are, many public officials 
like them because they are so easy to impose.
    While aimed at those from out of town who don't vote, these 
taxes are more likely to hurt economically vulnerable 
households with little political influence. This is a modern 
day version of taxation without representation or maybe again, 
as Senator Russell Long said it best, ``Don't tax me, don't tax 
thee, tax that fellow behind the tree.''
    Well, let me close by adding working families depend upon 
the health of the auto industry and the entire economy. Working 
families deserve the opportunity to rent cars for special 
occasions and urgent emergencies. And finally, working families 
demand and deserve fairness in our tax system.
    Thank you for the opportunity to speak for those families 
and for that fellow behind the tree.
    [The prepared statement of Mr. Wagner follows:]

              Prepared Statement of Raymond T. Wagner, Jr.



















                               __________
    Mr. Cohen. Thank you for remembering Senator Long's quote, 
which you might hear again today. Our next witness is Mr. 
Timothy Firestine, chief CAO from Montgomery County, Maryland, 
appointed to that position November 2006.
    Prior to that, he was the county's director of Finance for 
15 years. Twelve years of management positions in the Office of 
Management Budget and before coming to Montgomery County, he 
was in Allegheny County, Pennsylvania in the Comptroller's 
office, currently a member of the Executive Board of the 
National Government Finance Officers Association and vice chair 
of its Committee on Debt Management.
    He is a member of District of Columbia Water and Sewer 
Authority--excuse me--where he currently serves as vice chair, 
plus an adjunct professor at the University of Maryland 
Graduate School of Public Policy where he taught public 
finance.
    Thank you, Mr. Firestine.

 TESTIMONY OF TIMOTHY FIRESTINE, CHIEF ADMINISTRATIVE OFFICER, 
 MONTGOMERY COUNTY, MARYLAND, ON BEHALF OF THE NATIONAL LEAGUE 
   OF CITIES, THE NATIONAL ASSOCIATION OF COUNTIES, THE U.S. 
   CONFERENCE OF MAYORS, AND THE GOVERNMENT FINANCE OFFICERS 
                          ASSOCIATION

    Mr. Firestine. Good morning, Chairman Cohen, Ranking Member 
Franks, and other Members of the Subcommittee on Commercial and 
Administrative Law. I am Tim Firestine, Chief Administrative 
Officer of Montgomery County, Maryland.
    On behalf of the National League of Cities, the National 
Association of Counties, U.S. Conference for Mayors and the 
Government Finance Officers Association, I am pleased to 
testify on H.R. 4175. As our organizations have noted in the 
past, we respectfully oppose H.R. 4175.
    This legislation would preempt the ability of states and 
localities to make their own determinations regarding the 
appropriate taxation of businesses within their communities. It 
also represents an unwarranted Federal intrusion into the long 
recognized authority of local and state governments to make tax 
classifications, and opens the door to unprecedented Federal 
control and oversight of local and state tax authorities.
    Over the past year, states and local governments have 
witnesses a parade of various industries coming forward to 
request that Congress preempt state and local government taxing 
authority of their particular industry, first the 
telecommunications industry, then the hotel industry, and today 
the rental car industry.
    Our associations have always maintained that any industry's 
plea for federally mandated tax favoritism would open the door 
to other industries asking Congress for similar special 
exemptions for protections from state and local taxing 
authorities.
    That is what we are now witnessing. H.R. 4175 and other 
legislation of its kind pose a dire threat, not merely to state 
and local tax revenues, but to the entire existence of 
independent state and local taxation authorities and our system 
of federalism.
    The requirements of H.R. 4175 would, if enacted, open the 
door to unchecked Federal oversight, and rewriting of all state 
and local tax laws and classifications. Since state and local 
governments must balance their budgets, such a federalization 
of state and local tax classifications would not lower total 
taxes paid by state and local taxpayers, but rather just shift 
the tax burden to other types of taxes.
    Moreover, the ability to tailor taxing authority at the 
local level is extremely important. For example, Washington 
State permits all counties to impose a 1 percent tax on car 
rentals, yet only four counties in the state impose such tax.
    H.R. 4175 departs radically from long standing principles 
of federalism, and sets an unprecedented and dangerous new 
standard of Federal intervention into state and local 
government tax classifications.
    If the standard for Federal intervention into supposedly 
discriminatory state and local taxation becomes that every 
economic sector in every service has to be taxed at the same 
rate when measured against other sectors, then there would be 
no limit at all to Federal intervention in state and local tax 
classifications.
    Indeed, such a standard for discriminatory state and local 
taxes would mean contrary to long-established precedent, that 
the Federal Government has the power to preempt all state and 
local tax classifications and to impose a federally mandated 
state and local tax code of only a single tax rate for all 
businesses. That would mean the end of state and local tax 
classification authority.
    Furthermore, Congress adds insult to injury by entertaining 
any such measures during today's difficult economic times, for 
states continue to struggle to balance their budgets and often 
do so by dramatically decreasing the assistance they provide to 
local government.
    It is arguable that the worst recession since the Great 
Depression is not time for Congress to limit any local or state 
tax receipts. State and local government budgets face billions 
of budgetary shortfalls over the next couple of years.
    In most places, the local response to shrinking revenue has 
consisted of a round of unfortunate, but unavoidable, layoffs, 
service cut backs, and in some cases, increasing fees and 
taxes.
    It is clear that Congress recognizes the struggle of states 
and localities, which have included a surge in unemployment as 
well as an increase in individuals and families dependencies on 
municipal services and responded with the adoption of the 
American Recovery and Reinvestment Act.
    But it is ironic that at the same time Congress supports 
and enacted such measures, that it would be considering 
legislation such as H.R. 4175, which would provide states and 
localities far less flexibility to make decisions to enable our 
leaders to confront the economic crisis and ultimately assist 
in providing services such as police, fire, education, housing 
and job training.
    We urge Congress not to give with one hand and take away 
with the other. Finally, I would like to briefly discuss 
briefly what is done with the tax dollars state and local 
governments collect from rental car companies and how they are 
used to enhance the quality of life in hometowns, small and 
large.
    As noted in the written testimony, communities across the 
country depend on these taxes to provide a variety of 
improvements in their state, counties and cities, including 
ones that help the rental car companies through capital 
improvements to airport facilities and tourism initiatives that 
serve to bring more customers to them.
    There are other examples of the funds being used for a 
variety of government services and programs including public 
safety programs and road and transit improvements. In Maryland, 
the state collects an 11-1/2 percent tax on rental cars, which 
is estimated to bring in $52 million in fiscal year 2011.
    Our statutes dictate that these funds go into the state's 
Chesapeake Bay Trust Fund and the Transportation Trust Fund. 
Montgomery County benefits from both of these initiatives. The 
Bay Trust Fund pays for projects that control storm water run-
off.
    And monies from the Transportation Trust Fund helps fund a 
variety of projects in the county including resurfacing and 
maintaining roads, replacing and installing streetlights, 
implementing pedestrian safety measures, snow removal and 
various transit initiatives throughout our community. Thank 
you.
    [The prepared statement of Mr. Firestine follows:]

                Prepared Statement of Timothy Firestine















                               __________

    Mr. Cohen. Thank you, Mr. Firestine.
    Ms. Sally Greenberg, Executive Director of the National 
Consumers League--not to be confused with the National Football 
League--her focus in NCL, four key priorities, fraud, child 
labor, health care and the NCL's Team Consumer Education and 
Financial Literacy Program.
    She came to the National Consumers League from the 
Consumers Union, where she worked from 1997 until 2007 on auto 
safety, product safety, civil justice reform, including keeping 
the justice system open, accessible and accountable for all 
consumers, advocated for enhanced auto and product safety, 
intellectual property, securities reform and investor 
protections and civil justice reform.
    She had worked at the U.S. Department of Justice Foreign 
Claims Settlement Commission and first served as a time as 
Eastern States Civil Rights Counsel for the Anti-Defamation 
League in Boston.
    Ms. Greenberg, thank you, and we begin your testimony.

  TESTIMONY OF SALLY GREENBERG, EXECUTIVE DIRECTOR, NATIONAL 
                        CONSUMERS LEAGUE

    Ms. Greenberg. Thank you so much, Chairman Cohen, Ranking 
Member Franks, Members of the Subcommittee. Thanks for the 
opportunity to appear before you today in support of H.R. 4175, 
a bill entitled the ``End Discriminatory State Taxes for 
Automobile Renters Act of 2009.''
    I am, indeed, an Executive Director of the National 
Consumers League. We are the Nation's oldest consumer 
organization founded in 1899 with a mission of protecting the 
interest of both workers and consumers in creating a more fair 
marketplace for both.
    Mr. Chairman, today's consumers feel that many of their 
transactions they are nickeled and dimed, whether it is on 
their cell phone bills, late fees and finance charges on credit 
and debit cards, bogus convenience fees slapped on the tickets 
for live entertainment performances or extra fees imposed on 
just about everything else we consumers do when purchasing 
goods and services.
    Indeed, a good example is the recent survey from ``Consumer 
Reports'' that finds that travelers hate--the fees that 
travelers hate most are the extra fees they have to pay for 
luggage and airline ticket fees.
    The National Consumers League feels consumer's pain and 
unfortunately most of the time we have little power to change 
these fees. However, today we are here to support legislation 
that says enough. Consumers need to fight back and H.R. 4175 
will prospectively bar discriminatory car rental taxes which 
are really added fees imposed by states and localities.
    As of February 2010, 43 states and the District of Columbia 
have imposed 118 excise taxes on car rentals. This is eight 
times the number of these taxes that existed in 1990. My 
grandmother would have said the word goniff comes to mind.
    Rental car taxes tend to pay for entertainment items like 
stadiums, performing art centers, culinary institutes, and not 
for vital services like schools, libraries, hospitals or 
services to the elderly.
    Industry research indicates that rental car consumers spent 
more than $7.5 billion in taxes to fund pet projects of elected 
officials. A perfect example is the situation unfolding right 
now in my hometown of Minneapolis.
    The Minnesota Vikings already have the Metrodome. It is a 
beautiful indoor stadium right in the middle of downtown 
Minneapolis. But Zygmunt Wilf, the Vikings billionaire owner, 
he wants another one.
    He wants one with a retractable roof, and he wants 
consumers who rent cars to help pay for it. So the state is now 
considering levying a 2.5 percent tax on rental cars to finance 
a new billion dollar stadium.
    More than half of those who rent cars in Minnesota are 
residents of the state. But to add insult to injury, Minnesota 
residents are already paying a special 6.2 percent excise tax 
on car rentals, a tax that was adopted to pay for the cost to 
the state of trying to attract the Super Bowl. That tax was 
supposed to expire in 2005 but it was extended even though the 
revenue it raised far exceeded its original purpose.
    Tourists are also affected by these pervasive fees. 
Tourists may be easier to tax as non-constituents but fees on 
tourists are also spiraling out of control. According to the 
New York Times, taxes and other fees such as vehicle licensing 
fees or high levels of excise taxes raise the average rental 
bill 28 percent at airport locations.
    In addition, from my professional vantage point as head of 
a nonprofit overseeing a staff of 14, when we travel or have 
meetings locally and don't have access to a car, we have to 
rent cars. I see the bills come in and often the excise fees 
and the sales taxes together represent a hefty percentage of 
the entire bill.
    These added costs hurt nonprofit organizations like mine 
that operate on modest bills but are vitally important to civil 
society. Unfortunately, politicians who pass these taxes are 
operating on several false assumptions.
    First, there is the misconception that the vast majority of 
people who rent cars are from outside the state or locality. 
Second, there is the misperception that most consumers who rent 
cars are either businesses who won't feel the extra charge or 
affluent consumers who won't notice an extra $10 or $15 on a 
car rental.
    First, the first myth is that people who rent cars are from 
out of state. If local officials gave some thought to the idea, 
they would understand that many people who don't own a car 
because they can't afford one might rent when they have a 
special need.
    And the other misperception is that consumers that rent 
cars for these reasons are not affluent out-of-town business 
people that state and local legislators seem to believe rent 
most of the cars. Far from it, and they need affordable rental 
car options.
    There have been several studies mentioned. One is the 
Brattle Group Study that Ray Wagner mentioned. It shows the 
revenues in 2004 from car rentals were about $17.6 billion. 
Half of that was from home-city rentals.
    Another study that was commissioned by the Brookings 
Institution analyzed the impact of a $4 per day rental car tax 
in Kansas City. The researchers found that piling taxes onto 
car rental customers is both inefficient because it distorts 
choices about modes of transportation, and it is inequitable. 
Communities that are already taxing car rental customers might 
want to take a look at their long-term strategy.
    So in conclusion, Mr. Chairman, with an eight-fold increase 
in taxes on rental cars since 1990, it seems clear that the 
piling on of these excise taxes has gotten out of hand. NCL 
understands the importance of citizens paying his or her share 
of taxes for schools, libraries, roadways, and for clean water 
and other very worthy projects.
    But when rental car customers are asked to pay for stadiums 
or art centers and taxes imposed seem to have no limits, it is 
time to say enough.
    I appreciate the opportunity to testify and look forward to 
your questions.
    [The prepared statement of Ms. Greenberg follows:]

                 Prepared Statement of Sally Greenberg













                               __________
    Mr. Cohen. Thank you, Ms. Greenberg, and we will now have 
the questioning session, and I will recognize myself for 5 
minutes of questioning. Mr. Firestine, you have got the 
government perspective. Taxes--if you have a property tax, 
everybody pays at the same rate. Sales tax, pay at the same 
rate.
    Why do people that rent cars pay higher taxes than those 
people proportionately than those that own cars? Why should 
there be a special tax on folks that rent the car and use it 
for a week or short term than those who have it for a year? 
There is not such a tax on renters of apartments per month or 
necessarily. Why is that? Is that fair?
    Mr. Firestine. Okay, I am glad to respond to that. And 
again, our emphasis here is that state, you know, tax policy is 
a decision made at the local and state level by elected 
officials. There is a whole combination of factors that go into 
deciding what is the right portfolio of taxes to have to 
support services.
    Once you have decided what you are going to offer whether 
it is education, all the community needs that are trying to be 
met through these local governments, let us start with the 
property tax.
    Even though everybody may pay the same rate, the burden is 
going to be different from taxpayer to taxpayer. There are tax 
credits that are included. It is based on the assessment of the 
house. Likewise with----
    Mr. Cohen. But the assessment, there is a correlation in 
your ability to pay because there is ability to purchase. So if 
you can purchase a $100,000 house, your assessment is at that 
rate or if you purchase a million dollar house your assessment 
is at that rate. There is some correlation.
    What is the correlation with having a car for a week that 
you rent as distinct from having a car for a year that you own?
    Mr. Firestine. Well, again, I would----
    Mr. Cohen. And I am not asking--and I appreciate your 
knowledge, and your acumen and your professorial experience, 
but I am asking you this question not as a government witness, 
to give me a government answer, because obviously I know that. 
I am asking you as a person who considers justice and fairness 
and the philosophy professor to give me the answer.
    Mr. Firestine. And that is what I am saying. I would say, 
you know, from a tax policy perspective, you know, since it is 
a consumption tax like the sales tax that you mentioned 
earlier, you can choose whether or not you want to participate 
in that service, whether you----
    Mr. Cohen. You can choose--if you travel to Los Angeles, 
you can say I am going to be in Los Angeles and instead of 
renting a car I am going to walk?
    Mr. Firestine. No, you could----
    Mr. Cohen. You could. You would have a very weird trip.
    Mr. Firestine. You have other alternatives. You could 
take----
    Mr. Cohen. What are your alternatives? A cab?
    Mr. Firestine. A cab.
    Mr. Cohen. That is insane in Los Angeles. Nobody takes the 
cab. I tried to find one last week. They don't have cabs. It is 
not New York.
    Mr. Firestine. But again, I--my point is these are local 
taxes decisions. There are other taxes out there that are very 
similar to the rental car taxes. I mean, cell phone taxes were 
mentioned. They are a primary source of funds for Montgomery 
County. We tax cell phones. There are tobacco taxes in the 
state of Maryland----
    Mr. Cohen. But you tax cell phones based on having a cell 
phone, not on having it for a week. You are really not getting 
to the point that I think is germane. You discriminate and 
charge people that rent cars a large tax, and what is the 
basis?
    What is the rational connection? What is the nexus? Is 
there one or is it just we trust and put in our elected 
officials total discretion?
    Mr. Firestine. Again, I think that is my point is that, you 
know, that is a local elected official's decision to make in 
terms of how much to tax.
    Mr. Cohen. I got you. I got you.
    Ms. Greenberg, your grandmother's philosophy, we have heard 
from people that want to have us protect them from Internet 
access taxes, from--from hotel industry wants us to talk about 
taxes, and satellite television. They all claim that these 
taxes are goniff taxes, too. To paraphrase your grandmother, 
why should this goniff be different from all other goniffs?
    Ms. Greenberg. Well, you know, I said in my statement that 
consumers feel like they are getting nickel and dimed, and they 
are. This bill is an opportunity to say no and say enough with 
regard to this particular tax.
    I mean, I would be right there fighting a lot of the taxes 
and fees that are imposed on consumers which we as consumers 
don't have any understanding where that money goes. So here we 
have a bill that gives us an opportunity----
    Mr. Cohen. So you have got a forum?
    Ms. Greenberg [continuing]. To articulate some of the----
    Mr. Cohen. Right.
    Ms. Greenberg [continuing]. Concerns we have about this fee 
but I don't love the fees that I have to pay on my cell phone 
bill either.
    Mr. Cohen. I got you. Ms. Greenberg or Mr. Wagner, do you 
see any connection, any nexus, logical nexus other than this is 
an opportunity to grab some money on having this extra tax on 
rental car users? Nobody sees a nexus?
    Mr. Wagner. Chairman, I will speak to that. On the--I think 
you have captured the essence of the issue here about fairness. 
There truly is no nexus typically between the taxes imposed and 
the purpose for which the rental itself.
    The issue here is generally that the taxpayer or the taxing 
entity sees these as easy targets; that these people are non-
voting residents who typically live out of town. They are taxes 
have the end impact of discouraging travel, punishing the low 
and moderate income individuals and throwing a wrench into the 
American auto industry.
    Mr. Cohen. Thank you, Mr. Wagner.
    My 5 minutes have expired, and I will now recognize Mr. 
Franks.
    Mr. Franks. Well, thank you, Mr. Chairman. You know, it is 
always a challenge when you are dealing with competing 
interests like this. I think it was Fred Bastiat said that, you 
know, ``Government is that great fiction through which everyone 
endeavors to live at the expense of everyone else.''
    And one of the challenges we are having to deal with here 
is one that some of the founders had to deal with as well. You 
know, when they had the Articles of Incorporation they needed 
some kind of a mechanism to create interstate commerce. And 
they knew that if they just let, you know, it would be a free-
for-all. That it would end up being kind of a disaster.
    And yet I am afraid that some of my liberal colleagues 
would, if they decided to mandate that all Members of Congress 
had flying saucers, that they would reference the commerce 
clause in the Constitution as a basis for giving them that 
authority.
    So it is kind of a, you know, kind of a tug-of-war here 
between the commerce clause rightfully interpreted and the 
second--I am sorry, the 10th Amendment.
    And so, you know, I am convinced here that the real issue 
is discriminatory. What is a discriminatory tax? And if there 
is a discriminatory tax, then it seems to be something that 
needs to be addressed. And that is my own position that there 
is evidence that there is a discriminatory tax burden here and 
that that is why we should address it.
    Now I am not sure, as I said in my opening statement, that 
this bill is the best way to do that. And I am hoping that 
somehow it will catalyze a discussion that will make sense to 
everyone, you know, at least every reasonable person and that 
we can deal with that.
    So I guess with that, Mr. Wagner, I would like to start 
with you. What is the dollar burden on rental car companies and 
consumers of these discriminatory taxes? Just give us a little 
kind of a picture of it.
    Mr. Wagner. The collective amount of dollars that have been 
raised is typically over $7 billion a year. That is the amount 
of revenue that is being collected from the travelers that fly 
into a particular town to rent cars or from in-state, in-
community renters.
    Mr. Franks. Well, I know the big challenge is 
distinguishing between an ordinary taxation and a 
discriminatory taxation regime. How would you make an effort to 
make that distinction between ordinary taxation and 
discriminatory taxation?
    Mr. Wagner. Well, I think when the tax that is applied to a 
single group of individuals that is not generally based upon or 
imposed upon a broad base of taxpayers, a tax that is 
disproportionate and falls upon a segment of the community 
would be discriminatory.
    And I think these rental taxes are very clearly 
discriminatory when you look at the other modes of 
transportation in interstate commerce which have been regulated 
and addressed already by Congress. With the 4R Act, the 
railroads were protected, the buses were protected, trains.
    And I think at one point in time states targeted bus 
tickets and interstate bus travelers and Congress stepped in to 
protect them because those taxes were discriminatory in that 
mode of transportation.
    And I think this is a similar situation where a particular 
group of taxpayers has been identified and has been targeted 
and discriminated against with a specific tax that the rest of 
the population and the rest of the community does not need to 
pay.
    Mr. Franks. Well, Mr. Firestine, I might ask you the same 
question. How would you distinguish between a discriminatory 
tax and--and an ordinary tax? Or would you make that 
distinction given some of your fundamental predicate?
    Mr. Firestine. Well, I think it is a good question because, 
you know, I think discrimination, trying to define that, would 
be a challenge. And I guess my point is those are issues that 
are best left to local elected officials to try to come up with 
a group of taxes on--and where the burden falls relative to 
thinking about this issue of discrimination.
    Certainly local and state officials don't want to tax a 
business out existence and to the extent a business is needed 
for--I mean, rental car companies do provide jobs in our 
community so certainly we are not going to do something that 
would jeopardize the ability to have those jobs continue in our 
community.
    Likewise, it is instrumental because people won't take a 
cab, they would rather have a rental car, and it is critical to 
people coming to the state of Maryland because they want to be 
able to drive around and see the Bay and certainly you are 
going to set your tax policy so that it doesn't preclude those 
rental car companies from doing business in the state of 
Maryland.
    But again, you know, those are local decisions that are 
made in that context. You know, in terms of nexus too, if I 
could just make a point about that, I have heard several times 
the comment that, you know, they are being used for stadiums 
and other things.
    First of all, it is a tax. It is not a fee, so it--to me, 
since it is a tax, it can be utilized for various purposes. 
Tobacco taxes, for example, go to the general fund and aren't 
necessarily used for smoking cessation programs. Cell phone 
taxes aren't used to build cell phone towers, things like that. 
So I do think those, again, are local decisions for local 
elected officials to make.
    Mr. Franks. Well thank you. The Chairman is indulging me 
here very briefly. Mr. Wagner, assuming the Congress agrees 
with you and passes H.R. 4175, how do you distinguish between 
rental cars and other businesses that may come looking for what 
might be considered preferential tax treatment from Congress?
    Mr. Wagner. Well, again, rental car companies, the rental 
car industry, is uniquely a form of interstate commerce 
transportation very similar to buses, trains, automobiles. We, 
by virtue of the fact that the automobiles are transported and 
drive across state lines, that they use and travel upon 
federally-funded highways, I think that does set them apart. 
And much the way that buses, trains, and airplanes were taken 
care of.
    Mr. Franks. Mr. Chairman, it seems like one of the key 
problems here is that much of the tax burden falls on those 
without a local vote and that is one of the challenges. So 
thank you for the extra time.
    Mr. Cohen. Thank you. Since I gave you an extra minute, I 
will take the privilege to distinguish your last remark. I 
think that it falls on those that have the appearance of not 
having a vote but the reality from the testimony which we found 
which was news to me is it really falls on the people who have 
a vote. It is just they don't realize it or think about it.
    And so that is--when I voted for those taxes, I thought 
about, well, they use the stadium. They go to the convention 
center. But when I realized that most of the people in fact 
were local residents who would have a fender bender or some 
other problem with their car, then it does fall and you just 
don't think about it per se.
    With that, Mr. Scott of Virginia is recognized.
    Mr. Scott. Thank you. Mr. Wagner, can you respond to the 
question I think Mr. Franks raised the question on what the 
Federal role in all this is. Can you respond to that?
    Mr. Wagner. Well, I think under the commerce clause, 
Representative, Congress is charged to regulate interstate 
commerce. And I think with respect to this notion that Congress 
at this very moment is considering stimulus packages and relief 
for local governments, this bill in no way conflicts with that 
but in essence complements that.
    The stimulus money, the other revenues that are provided to 
local governments generally are from broad-based taxes. These 
particular rental car taxes are not from broad-based imposition 
of----
    Mr. Scott. Well, the question was what the Federal role is 
in all of this because in stimulus package a lot of, I mean, 
states tax a lot of things and I mean we have had other 
hearings on that various question because they start crossing 
state lines and every state whose line is crossed wants to get 
a little piece of it. Where is the Federal role for deciding 
how the tax would be imposed?
    Mr. Wagner. Well the authority for Congress to become 
involved centers around the commerce clause of the 
Constitution, interstate commerce. And I think again that the 
rental car tax is this Congress or Congress has already 
suggested and incorporated into legislation in the past that 
the rental car industry is a part of the interstate commerce 
system. And so that is the authority by which the courts have 
been----
    Mr. Scott. Well, yes, I know we have the authority but I 
mean what is the rationale to dip into this tax and not every 
other local decision?
    Ms. Greenberg, do you want to have a comment on that?
    Ms. Greenberg. Well, I think I--in terms of----
    Mr. Scott. Not the policy----
    Ms. Greenberg. Right.
    Mr. Scott [continuing]. Whether it is a good idea or bad 
idea but----
    Ms. Greenberg. Why this?
    Mr. Scott [continuing]. Why--why should the Federal 
Government dip into this decision?
    Ms. Greenberg. Partly I think it is there has been this 
explosion in rental car taxes beyond what you see in other 
areas. And the bill does a pretty good job, I think, of 
defining what discriminatory means. We have really seen an 
explosion, and as we have said in our testimony and other 
witnesses----
    Mr. Scott. Well, is that not a local decision rather than a 
Federal decision?
    Ms. Greenberg. Well, there comes a point at which they are 
really gouging consumers, so I am speaking from a consumer 
perspective and----
    Mr. Scott. That is the policy.
    Ms. Greenberg. Right and we, you know, I see this as an 
opportunity for consumers to fight back because there is, you 
know, there is misperceptions that were really taxing out-of-
staters.
    We are doing that with these taxes but we are also taxing 
primarily people who live within the state. Many of those 
people are lower income people who can't afford to own a car.
    Mr. Scott. Mr. Firestine mentioned the question--I think 
somebody mentioned the idea that the taxes have nothing to do 
with the purpose to which the revenues are put. And I think Mr. 
Firestine said that that is irrelevant. Anyone want comment on 
that?
    Mr. Firestine. Well, I--a couple things. I am saying that 
some cases it is relevant but it is a local policy decision. I 
mentioned in Maryland----
    Mr. Scott. Well I mean there is no--what you are saying 
there is no requirement that you--that the taxes----
    Mr. Firestine. There is no----
    Mr. Scott [continuing]. Go to any particular use.
    Mr. Firestine. No.
    Mr. Scott. Sometimes it is convenient and sometimes it is 
easier to raise the tax. But from a Federal perspective what 
difference does that make? That they are not using it for 
something related to rent a car?
    Mr. Firestine. And I guess that is my point, I don't think 
it has to be used even though for example in Maryland it is.
    Mr. Scott. Well let us let the others comment on that.
    Mr. Firestine. I am sorry.
    Mr. Scott. Okay.
    Ms. Greenberg, is that a relevant factor from the Federal 
perspective?
    Ms. Greenberg. I think for consumers who see their bills 
almost double, and I have been in that position. I have been 
thinking about this issue since I was at Consumers Union, and 
now I am in the National Consumers League.
    You know, you go in and rent a car and it--you might get a 
great deal but you have got, you know, 30 or 40 percent added 
on to the rate of the car. You feel like you are--okay, well if 
you are paying for something related to this rental, that is 
one thing, if it is going to build the stadium for a 
billionaire in Minneapolis because he needs a new toy, those 
are the kinds of things that drive consumers crazy.
    Mr. Scott. Okay. Well that is the policy question and let 
me--we have taxes at airports like we charge taxes, a little 
fee to pick somebody up at the airport, parking fees and things 
like that. Why would this be different if we add on a little 
fee at the airport?
    Mr. Wagner. Well, I will speak to that, Representative. 
First of all, I think this is an appropriate place for Congress 
to steer the course. You know, these taxes are proliferating at 
a rapid rate, eightfold rate since 1990 as was stated earlier.
    So it is appropriate for Congress to get involved in here. 
State and local governments are not acting in the best interest 
of interstate travelers and out-of-state travelers or for that 
matter, the other individuals who are saddled with these taxes, 
nickeled and dimed with these taxes at the local level.
    The industry is suffering a death by a thousand nicks in 
many respects with respect to the taxes that are being imposed.
    Your question about concession fees that are paid at the 
airport, those in essence are user fees. Those in essence 
constitute the taxes that are--or fees that are levied upon 
rental car companies for the privilege of operating at an 
airport, which are entirely different from a tax imposed on a 
rental car company that goes into some other purpose, 
completely unrelated to the rental car industry or as was 
suggested perhaps into some general revenue account.
    So a user fee, a personal property tax fee, a gasoline tax, 
a vehicle licensing fee, a registration fee, all of those are 
appropriate fees that relate to the rental car business and to 
the cost of--of that car operating in the community.
    Mr. Scott. So if a locality called it a fee rather than a 
tax, it would be different?
    Mr. Wagner. No, I don't think it would necessarily be 
different because many of the fees that I outlined are indeed 
taxes, personal property taxes, that sort of thing.
    But if it is a tax which is aimed to generate revenues for 
a purpose wholly unrelated to the car rental business, then it 
would be a discriminatory tax, and it would be appropriate for 
Congress to step in to intervene in protection of the 
interstate commerce system, like it has done with the buses and 
the airplanes and the railroads.
    Mr. Scott. I think Mr. Firestine wanted to comment on----
    Mr. Cohen. You may go on if you would like, Mr. Scott.
    Mr. Firestine. Let me comment, just----
    Mr. Cohen. You are recognized.
    Mr. Firestine. Generally a fee does require an access to 
some service being provided, whereas the tax doesn't. And 
second, just to comment about, if I may, on the discrimination 
issue, it does appear there are legal remedies that somebody 
could pursue if they feel they are being discriminated relative 
to a tax.
    Montgomery County just instituted a new carbon tax on a 
facility in the county. The power plant and certainly the owner 
of the plant is going to seek whatever legal remedy they can 
get and then the courts will help to decide. So in addition to 
elected officials making decisions, there certainly are other 
mechanisms in place if it truly is a discriminatory tax.
    Mr. Cohen. Thank you.
    Ms. Chu?
    Mr. Johnson, I don't how to really--Ms. Chu is recognized, 
the lady from California, very knowledgeable about these taxes.
    Ms. Chu. Thank you so much, Mr. Chair.
    I was a city council member and mayor of a city near Los 
Angeles for a period of 13 years. And it was a city that was 
popular with tourists, so I know what extra impacts tourists 
have on a city. We did not have a car rental tax, but I could 
see why our city would impose such a thing.
    And in fact I have a situation at the LAX airport, who have 
raised concerns with your bill as it is currently written 
because it would prohibit a customer facility charge, which is 
clearly an airport and travel-related fee.
    Currently LAX is using these fees to finance the design, 
consolidation and maintenance of a consolidated rental car 
facility. Currently, the rental car facilities are 
decentralized and they are spread out within a three mile 
radius of the airport.
    And LAX passengers wishing to rent or return a car must use 
one of several car shuttles to reach their destination. And as 
a result, there are 800,000 shuttle trips during the year 
causing significant traffic congestion.
    So the city of Los Angeles is seeking to address these 
concerns through the construction of a consolidated rental car 
facility, which would be the largest such facility in the 
United States, and it would significantly reduce the numbers of 
shuttle trips and their impact on nearby communities.
    But is dependent on this fee and this charge and without 
this charge, LAX and dozens of other airports throughout the 
country would not be able to build these facilities.
    So Mr. Wagner, you argue that these taxes and fees are 
often used to pay for unrelated services. However, a number of 
airports including my hometown airport, LAX, uses customer 
facility charges to pay for the construction of these 
consolidated rental car facilities.
    And as it is currently written, I understand that this bill 
would eliminate these fees as well. So are you saying that 
these fees are inappropriate and should be forbidden by 
Congress?
    Mr. Wagner. Thank you, Representative Chu. I respectfully 
suggest that perhaps the LAX officials misread the bill, too, 
because in--the bill intend to carve out and protect 
consolidated facility type fees.
    In my remarks and in my comments a few moments ago, I 
suggested that user fees, taxes, fees that related directly to 
the automobile industry or the airport are indeed protective of 
the industry and the coalition has no objection to those.
    In fact, I think if you look at H.R. 4175 on page five, it 
expressly says the term ``tax'' does not include any charge 
imposed by state or locality with respect to a concession 
agreement at a federally assisted airport.
    And so we would have no objection to those types of taxes, 
nor do we have any objections to the other taxes and fees which 
are imposed on all owners of cars and all users of cars.
    Ms. Chu. Well as the former mayor of a city that had a lot 
of tourism, which had tourists drive through the streets and 
use our facilities, I would wonder if local government might be 
in a better position to determine these things? And therefore I 
would like to ask Mr. Firestine why is it that local government 
could be in a better position to make such a determination?
    Mr. Firestine. Well, I think for the reasons you just 
stated. And that has been the point of our testimony is these 
are local decisions, state decisions that should be left up to 
local officials.
    You know, balancing the tax burden within the communities 
to take into account factors such as if it is something that 
you want to do to promote tourism and you feel that a high tax 
would discourage that, then certainly that is a local decision.
    And if the local community doesn't feel that you are making 
the right decision, they can elect somebody else to do that. 
But I do think that those are local matters.
    Ms. Chu. In fact, the money might not be used directly for 
a rental car facility consolidation such as the example, I used 
but it could be for other impacts and are there examples where 
it is used for other types of impact?
    Mr. Firestine. Yes, in my testimony I noted in Maryland for 
example, there is an 11-1/2 percent tax on rental cars. It is 
split. Basically it goes into the Transportation Trust Fund and 
into the Chesapeake Bay Trust Fund.
    So part of the initiative is--part of the money is 
distributed to the counties in the state of Maryland to pay for 
road maintenance, replacing and installing street lights, 
pedestrian safety initiative, things like that.
    But it also goes to help support Bay initiatives, reducing 
run-offs into the Bay. You know, the Bay is related to tourism 
in the state of Maryland and certainly people come there to 
participate in Bay activities.
    These monies would help clean up the Bay, although I don't 
believe, as I said earlier, it necessarily is required that 
there be a nexus between the tax and the services provided.
    Ms. Chu. And what impact would this legislation have on 
state and local revenues?
    Mr. Firestine. Well, again, at a time when we are 
scrambling to identify any revenues possible to keep our 
budgets balanced because we do have to stay balanced, as I 
indicated this is another tool in the toolbox, and it is 
another place to go to manage that.
    Property taxes at the local level are the primary source of 
revenue. We all know what has happened to--home values have 
declined, therefore, you know, making that a difficult tax to 
be a productive tax. So we do look to other taxes.
    I did indicate in Montgomery County for example, we have 
instituted a higher cell phone tax. We instituted a carbon tax 
on a power plant, so we do look at other options that are out 
there relative to the total burden within the community.
    Ms. Chu. Thank you. I yield back.
    Mr. Cohen. Ms. Chu.
    And now Mr. Johnson, the distinguished Subcommittee 
Chairman recognized from Georgia.
    Mr. Johnson. Thank you, Mr. Chairman.
    I don't know I am suspicious about the statistics that I 
have heard that would lend credence to the theory that car 
rental taxes are primarily born by minority consumers. Take a 
place like Miami for instance, heavily--a tourist haven. I 
would suppose that you would have more car rental facilities 
there than you would in another part of Florida that did not 
see a lot of tourists.
    A place like Atlanta, convention industry being a major 
source of car rental demand, so I question the stats that have 
been cited. And I have not been here for the full hearing but I 
have kind of read over the hearing materials.
    The statistics that have been cited to support the notion 
that these car rental taxes are borne primarily by minorities, 
distinguish between locations where tourism and business 
activities were the primary source of the revenues? Did they 
cut out those kinds of locations in compiling the statistics?
    Mr. Wagner. Well, Representative, the study was conducted 
by the Brattle Group, and it did take a number of communities 
and analyzed the rental revenues and----
    Mr. Johnson. So it did not take all 16,000 car rental 
locations into effect?
    Mr. Wagner. No, sir it did not study the entire country and 
16,000, you know, offices across the country, but rather took a 
representative sample in Georgia and other communities, looked 
at industry statistics, applied a number of other data points, 
census data and so on to it and engaged in a statistical 
analysis.
    I would be very happy to share with you that study and meet 
with you about it to talk further about the particulars if you 
would be interested.
    Mr. Johnson. What group commissioned the study?
    Mr. Wagner. The study was commissioned by Enterprise 
Holdings in consultation with members of the coalition that 
existed at the time that the study was undertaken.
    Mr. Johnson. Is that connected to Enterprise Leasing at 
all?
    Mr. Wagner. Yes. Yes, sir. Yes, sir, Enterprise Holdings is 
the holding company for Enterprise Rent-A-Car and Alamo and 
National.
    Mr. Johnson. Yes, is there any--does anyone think that if 
the local and state abilities to apply a tax to car rental 
activity would result in a reduction of the price of car 
rentals to consumers?
    Ms. Greenberg. If I can respond to that. I think consumers 
would be greatly relieved to get a quote on a car rental and 
have the final bill be far closer than it is today.
    When you rent a car, you can, you know, you can get a car 
for $25 or $35 a day and end up with a $60 bill. And that added 
amount is not anticipated by many consumers, and it ends up 
being taxes and fees and things that you have, you know, no 
real ability to predict.
    Mr. Johnson. So are you saying that there are some car 
rental taxes that are 100 percent or, you know 75 percent on 
the tax--I mean on the rental cars?
    Ms. Greenberg. When you add up the local tax, the state 
tax, various fees for delivery, there is sometimes convenience 
fees. I may be getting the names of the fees wrong, but I rent 
cars all the time and I am absolutely astounded by how much 
those fees add up onto the actual, you know, the base price of 
the car.
    Mr. Johnson. But you are not going to suggest or you are 
not suggesting that local and state taxes would cause a 100 
percent jump in the amount of the car rental?
    Ms. Greenberg. Well, I have rented a car for as low as $25 
and seen $15 worth of taxes added on, so it is not 100 percent 
but it can get up there to a hefty percentage. And that is I 
think something that is distressing to consumers.
    Mr. Wagner. Representative, I might also add from our 
information and our studies and our practice in the industry, 
it is clear to us that rental car prices are very price 
sensitive, very tax sensitive. And with the continued piling on 
of these sorts of taxes, again as I said earlier, the industry 
in essence is suffering a death by a thousand nicks.
    These taxes do pile up. Most recently in the State of 
Wisconsin, an $18 transaction tax was passed and authorized. In 
Kansas City there is a $4 per day tax, and I can go on and on 
with a list of taxes that really do reach that point where the 
consumer says, ``I will take a cab.'' as was suggested earlier, 
at which point that eliminates choices, reduces choices.
    And is--really discourages travel in particular, and 
punishes the low and moderate income renters, who maybe don't 
have that extra $18, who don't have that $4 a day. They don't 
have that $10 a day.
    So a tax in and of itself may--is a significant factor. But 
the taxes that we are talking about are the discriminatory 
taxes that are added on top of all of the other broad base of 
taxes which the industry and the rental car company pays, which 
include personal property taxes, certainly general sales taxes, 
local sales and use type taxes, registration fees and so on and 
so forth.
    So in essence, it is the same rationale that prompted 
Congress into saying enough is enough with additional 
discriminatory taxes being placed on bus tickets in 1995 when 
Oklahoma in that particular case that led to the congressional 
activity imposed a tax on bus tickets.
    And consumers were already burdened with other taxes that 
existed on those tickets and Congress said it was the proper 
place for Congress to step in and regulate interstate commerce.
    There is the rental car industry I think by all accounts 
through the court cases, through congressional action and so on 
is clearly a part of the interstate commerce system. And it is 
appropriate for Congress to take a good look at this issue and 
say enough is enough with respect to the piling on of these 
taxes on behalf of consumers, which again adversely impact the 
entire automobile industry.
    Mr. Johnson. Well, I certainly agree that Congress 
maintains and in fact should do exactly what we are doing 
today, which is to take a look at these rates. I am just kind 
of seeking addition information.
    The majority of cars rented in America are to business and 
tourist travelers or to people who have had an accident and 
need temporary rental or somebody who just wants to rent a car 
for the weekend or something like that?
    You know, what makes up the most significant share of the 
market, business and tourism or consumers, just regular, every 
day Joe Blow consumers?
    Mr. Wagner. If you group business and tourism together that 
would be the largest segment. The notion that rentals happen 
for business purposes predominantly or exclusively that is not 
true, business rentals comprise of less than half of the 
overall rental business by 46 percent.
    Local, the home city market that I think you are alluding 
to is generally 54 percent, but part of that same 54 percent is 
indeed business travel but otherwise it is leisure, replacement 
business, renting a car to replace another car because your car 
is in the garage, having warranty work, that sort of thing 
done.
    So a significant portion, a dominant portion is indeed home 
city, local, non-business, non-vacation type rentals.
    Mr. Johnson. Okay, and my last question, Mr. Chairman, if I 
may. Gosh, and I had it right there on the tip of my tongue. 
Yes, what are state and local governments to do when all of the 
fingers of revenue raising for purposes such as the police, 
fire, ambulance, roads and drainage, parks and rec, just all of 
the things that local government is responsible for.
    And if we cut off all of the fingers on both hands of local 
and state governments to address those concerns through things 
like car rental taxes, what happens to--what is the impact on 
state and local governments, local governments in particular?
    Mr. Firestine. If I could answer that, as I indicated in my 
testimony, you know, times have gotten tough, and we have 
started to run out of options. We do look for wherever we can 
to create diversification in our tax structure. But as property 
tax revenues have declined across the country, as income tax 
revenues have declined, we have looked for other alternatives.
    I would also like to comment if I can for a minute, on the 
issue of minority and low income participation in rental car 
usage. You know, coming from a diverse county in this region, I 
have to say that if 54 percent of the use of rental cars is 
local, home city usage.
    Quite frankly minorities and low income folks in Montgomery 
County are not using rental cars, they are using mass transit. 
If they drop their car off for a repair, if they have a car, 
they hop on the bus to go to work.
    So if the majority of it is home city, then it seems to me, 
you know, to make this argument that has a disproportionate 
impact on minorities than low income is not appropriate.
    Second, in an urban area, again from a policy perspective, 
the local elected officials might be trying to encourage the 
use of mass transit. And to that extent, how they tax 
automobile rentals may play into that local policy decision, to 
discourage use of vehicles to the extent they are available.
    Mr. Johnson. Thank you.
    Mr. Wagner. Representative, if I might----
    Mr. Cohen. Thank you, Mr. Johnson.
    Let me ask you this, if--Mr. Firestine, what is the tax in, 
say, Baltimore. I go to rent a car in Baltimore, how much is 
the rental car tax?
    Mr. Firestine. Eleven and a half percent.
    Mr. Cohen. Eleven and a half percent.
    Mr. Firestine. That is the state tax, yes on----
    Mr. Cohen. And that is on the total commercial transaction, 
and it is in addition to any other fees and taxes, right?
    Mr. Firestine. That is correct.
    Mr. Cohen. All right. So let us ask--then I got there and 
the car is give or take 50 bucks, and I am there for 3 days, so 
my contribution to Baltimore is--and what is the county?
    Mr. Firestine. It would either be Baltimore City or 
Baltimore County but----
    Mr. Cohen. It is the same county, so my----
    Mr. Firestine [continuing]. It would go into the state 
trust fund and then be distributed to the counties. But you are 
talking what 15, 16 bucks over that 3-day period.
    Mr. Cohen. Right. How does--but again and I know you--
basically you said that other fees are supposed to have a nexus 
and taxes and don't have to. But logically shouldn't they?
    I mean do I really cause $16 more cost to the state of 
Maryland than somebody who is driving their car 365, 52 weeks a 
year, in which case you could raise taxes on the registration 
fees to deter people from owning cars and going to mass transit 
too. But do I really contribute $16 more use of the roads than 
somebody else or anything else?
    Mr. Firestine. And again, that is my point about the 
relationship between a tax and a fee. I mean if you are a 
property taxpayer in Montgomery County but you don't have kids 
in the school system, you are going to complain that why do I 
pay property taxes? So to the extent you are collecting more 
than you actually----
    Mr. Cohen. You could, but of course having kids in school 
helps everybody. An educated society is going to have more 
productivity, create more jobs, less crime. I am a single guy. 
I benefit from public schools because if we didn't have public 
schools, I am more likely to be the victim of crime.
    I am more likely to have a community that doesn't have 
educated, trained people to have jobs and productivity and 
culture and blah, blah, blah. I don't buy that, but I cannot 
see that--I don't think works----
    Mr. Firestine. But again----
    Mr. Cohen [continuing]. With the rental car situation. I 
don't--the 16 bucks, where does that cost?
    Mr. Firestine [continuing]. And if that $16 bucks goes 
toward transit initiatives, that helps everybody. It----
    Mr. Cohen. Right but why should I pay for it? Why should 
the person who rents a car pay for it and not the person who 
just drives the car?
    Mr. Firestine. Again, I think those are all questions we 
have about how taxes and what the impact is of this.
    Mr. Cohen. So what you are basically saying is we--in our 
system we allow the local governments, the state governments to 
do things that we can't explain rationally. It couldn't be fees 
because there is no nexus, but that they do because they think 
it is for the good of their constituencies.
    Mr. Firestine. Well, I think there is a rationale behind 
all of our tax policy and as I said earlier, you get elected to 
make those decisions at the local level. And if folks don't 
like the way you made those decisions, they can un-elect you.
    Mr. Cohen. But what if the people who are affected by it 
are the people that are from out of town?
    Mr. Firestine. But we just heard----
    Mr. Cohen. That you can't vote.
    Mr. Firestine [continuing]. Fifty-four percent of rental 
car usage in the home city.
    Mr. Cohen. Yes, but those people don't expect to have to 
rent a car. Nobody expects to have an automobile accident. 
Those are the lotteries of life and those are the people that 
have to go rent the car.
    Some people plan on it and go, ``Oh, I am going to drive to 
Philly and I am--''
    But for most people it is something they don't foresee. So 
when that tax comes about they don't think ``I am going to be 
renting a car because I am going to have a wreck in 2 weeks.''
    Mr. Firestine. And I would offer up in that case most 
likely your rental car costs are paid for by your insurance 
company. That is what you have insurance for.
    Mr. Cohen. So and because of that all your rates go up and 
you pay more, and so as long as you pass along it is okay. You 
have got a tough job. You have done a good job. I am not going 
to grill you any longer.
    Mr. Wagner, what if these taxes were all required to go to 
things like airport fees, facilities that Ms. Chu mentioned or 
toward convention and visitor's centers and/or stadia that do 
attract people that would oftentimes need rental cars and even 
though if we have the 54 percent argument, would that make it 
more palatable or still outside the----
    Mr. Wagner. Well, to the extent that they did go to those 
types of facilities, or consolidated facilities, airport 
terminals and so and so forth then the need to raise taxes 
higher would go down because the cost of those facilities would 
be considerably less.
    It would be the industry has no problem with paying a fair 
amount of taxes for a consolidated facility or airport rental 
car purposes. But the notion is the tax is above and beyond 
that the taxes needed to underwrite those facilities to pay for 
purposes or projects unrelated to the taxes is where the 
problem lies.
    Mr. Cohen. And you said that there is an exemption in the 
bill for the type of facility at LAX that they are coming up 
with. Is there exemptions for any other type of facility or is 
it just the ones that become the major homes of rental cars?
    Mr. Wagner. The bill is not intended to apply to any 
project related to rental cars, operation rental facility 
operations. Again it would not in any way touch personal 
property tax assessed against rental cars or all car owners, 
consolidated facility type fees, registration fees and so on. 
So the bill only applies to those taxes that are levied for 
unrelated purposes.
    Mr. Cohen. Thank you.
    Ms. Greenberg, do you have any last things for consumers? I 
will give you the last statement.
    Ms. Greenberg. Well one thing that I think needs to be said 
is that these taxes are regressive taxes. And if the statistics 
from the Brattle Group study is that 26 percent of the car 
rentals and 27 percent of excise taxes are generated by African 
Americans and 13 percent generated by Hispanics, these are 
regressive taxes.
    And if, you know, our thinking is if local governments need 
to raise revenue, we understand they do. And I said in my 
testimony I believe in tax policy and I think it is perfectly 
legitimate to pay for hospitals, schools, playgrounds and 
things that benefit the general public.
    But if you want to raise taxes, you should do so in a 
progressive tax system that doesn't fall so heavily on those 
who can least afford it.
    And also consumers don't want to pay for stadiums that 
billionaires want to build because they want another additional 
toy when they already have--the Minneapolis example, when they, 
you know, why should people who rent cars be paying for things 
that ought to be paid for by people who can well afford to do 
so?
    And we see a lot of that in these taxes, so thank you for 
the opportunity to share my thoughts on those issues.
    Mr. Cohen. I want to thank all of the panelists. And I want 
to thank the Committee Members who attended and participated. 
The witnesses all did a good job defending their positions and 
advocating.
    Without objection, Members will have 5 legislative days to 
submit any additional written questions which we will forward 
to the witnesses and ask you to answer as promptly as possible, 
and it will be part of the record.
    Without objection, the record will remain open for 5 
legislative days for the submission of any other additional 
materials. Thank you everyone for their time and patience. The 
hearing on the Subcommittee on Commercial and Administrative 
law is adjourned.
    [Whereupon, at 12:35 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

Prepared Statement of the Honorable John Conyers, Jr., a Representative 
  in Congress from the State of Michigan, Chairman, Committee on the 
 Judiciary, and Member, Subcommittee on Commercial and Administrative 
                                  Law









                                

    Response to Post-Hearing Questions from Raymond T. Wagner, Jr., 
  Vice President, Government and Public Affairs, Enterprise Holdings, 
                                  Inc.









                                

 Response to Post-Hearing Questions from Mr. Timothy Firestine, Chief 
 Administrative Officer, Montgomery County, Maryland, on behalf of the 
 National League of Cities, the National Association of Counties, the 
    U.S. Conference of Mayors, and the Government Finance Officers 
                              Association









                                

       Response to Post-Hearing Questions from Sally Greenberg, 
             Executive Director, National Consumers League









                                

        Prepared Statement of Dr. Kevin Neels, The Battle Group











































                                

       Prepared Statement of the Federation of Tax Administrator






                                

               Prepared Statement of Stephen J. Collins, 
               American Automotive Policy (AAPC) Council









                                

                Prepared Statement of Jeffrey Friedman, 
                    Sutherland, Asbill & Brennan LLP























                                

    Letter from Grover Norquist, President, Americans for Tax Reform





                                

Letter from Richard D. Broome, Sr. Vice President, Corporate Affairs & 
                 Communications, The Hertz Corporation







                                

             Letter from Chris Russo, President and Chair, 
                American Society of Travel Agents (ASTA)







                                

      Letter from Joe B. Huddleston, L.L.D., Executive Director, 
                    Multistate Tax Commission (MTC)







                                

Prepared Statement of the Truck Renting and Leasing Association (TRALA)









                                

 Letter from Alan Reuther, Legislative Director, International Union, 
    United Automobile, Aerospace & Agricultural Implement Works of 
                              America--UAW






                                 
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