[Congressional Record Volume 144, Number 40 (Wednesday, April 1, 1998)]
[Extensions of Remarks]
[Page E552]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         INTRODUCTION OF ``TAX ON TALKING REPEAL ACT OF 1998''

                                 ______
                                 

                           HON. JENNIFER DUNN

                             of washington

                    in the house of representatives

                        Wednesday, April 1, 1998

  Ms. DUNN. Mr. Speaker, after serving on the House Committee on Ways 
and Means for the past three and one-half years, I continue to be 
amazed at the outrageous provisions that encompass our current tax 
code. In no small part many of these provisions are a function of a tax 
code that is spiraling out of control. The irony is that while our tax 
code has 7 million words it lacks two simple words--common sense.
  One of the most ridiculous tax code provisions I have discovered 
imposes a 3 per cent luxury tax on the telephone service of every 
single American. The legislation I am introducing today, with my 
colleague from Louisiana, Congressman Billy Tauzin, will repeal this 
federal luxury tax on talking. Common sense suggests a number of 
reasons for swift enactment of our legislation to repeal the luxury tax 
on telephone service.
  First, this was a ``temporary'' tax first adopted in 1898 to fund the 
Spanish-American War. One hundred years later this ``temporary'' tax 
still exists. For over fifty years the tax served as a means to meet 
revenue needs imposed by the Spanish-American War, World War I, the 
depression, World War II, the Korean War and Vietnam. In 1965, Wilbur 
Mills, Chairman of the House Ways and Means Committee declared, ``the 
emergency conditions which gave birth to these taxes have long since 
disappeared. The taxes have remained, to become a source of 
discrimination among taxpayers.''
  Secondly, everyone realizes that having a telephone in your home is 
no longer a luxury. Since the enactment of this tax 100 years ago, 
telephone service has evolved into a vital infrastructure for modern 
life. The use of telephone services by a select few in the 1930s has 
exploded to the point that over 90 percent of American homes and 
businesses, across all segments of society, are wired for telephone 
service. In 1990, the Congressional Research Service reported, ``A 
consensus has emerged that the telephone today is no longer viewed as a 
luxury and can best be compared to an item of general consumption. The 
tax bears no direct relation to any government service received by the 
telephone consumer.''
  Third, like all luxury taxes, the federal telephone excise tax is 
regressive. Consumer expenditures on telephone service are a higher 
percentage of income for lower income families than for higher income 
families. In 1987, the Department of Treasury, Office of Tax Analysis, 
determined that ``the communications excise tax causes economic 
distortion and inequities among households and that there is no policy 
rationale for retaining the tax.''
  The repeal of the federal telephone excise tax would instantly 
accomplish what Congress had hoped to do through the Telecommunications 
Act of 1996--lower customer bills. Telephone service in America today 
is a basic necessity, a part of our daily lives. Americans should not 
have to pay a tax to the Federal Government in order to call their 
families on holidays or Mom on Mother's Day. Common sense tells us this 
is an unreasonable tax. Common sense tells us that repeal is necessary.
  In closing, I would like to commend my colleague, Representative 
Billy Tauzin, for his willingness to work with me in moving for swift 
enactment of the Tax of Talking Repeal Act. I urge all of my colleagues 
to join us in supporting this measure.

                          ____________________