[Congressional Record Volume 144, Number 86 (Friday, June 26, 1998)]
[Extensions of Remarks]
[Page E1262]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        INTERNET TAX FREEDOM ACT

                                 ______
                                 

                               speech of

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                         Tuesday, June 23, 1998

  Mr. PAUL. Mr. Speaker, I rise today to express skepticism regarding 
H.R. 4105, The Internet Tax Freedom Act. The stated goal of H.R. 4105 
certainly is noble: ``A bill to establish a national policy against 
State and local interference with interstate commerce on the Internet, 
to exercise congressional jurisdiction over interstate commerce by 
establishing a moratorium on the imposition of exactions that would 
interfere with the free flow of commerce via the Internet, to establish 
a national policy against federal and state regulation of Internet 
access and online services, and for other purposes.'' The bill's name, 
``Tax Freedom,'' also expresses a laudable notion. One must always be 
wary of misnomers in Washington--the Justice Department comes to mind 
as one quick example. The late economic historian, Murray N. Rothbard, 
Ph.D., so warned when he stated ``when someone in government mentions 
the word `fairness', grab your wallet and run for the hills.''
  I am, nevertheless, always suspicious when a recently-crafted bill 
comes to the House floor not only having bypassed the Committee process 
but without any advance warning. Such was the case with this bill. 
Moreover, this bill comes to the floor under suspension of the rules 
which does not allow for amendments and which limits the debate time to 
twenty minutes on each side. I, in fact, was denied an opportunity to 
speak by those managing the limited time allowable under this process.
  However laudable the stated goal of tax freedom this bill still 
encroaches on state's right to raise revenue and reserves instead 
(establishes) an exclusive right for national and international 
governments to instead impose the ``proper'' form of taxation and 
distribute it to local governments as these larger governmental bodies 
ultimately see fit. At the same time, this particular bill rewards 
those states which were quick to tax their citizens by 
``grandfathering'' their taxes while excluding other States' rights to 
do so certainly making this a bill that lacks uniformity.
  If the intended purpose of the legislation was simply to keep the 
internet tax free, a three paragraph bill would have been adequate to 
accomplish this. Instead, H.R. 4105 is significantly more complex. It, 
in fact, creates a new 30-member federal commission tasked with, among 
other things:

       Examining model State legislation relating to taxation of 
     transactions using the Internet and Internet access, 
     including uniform terminology, definitions of the 
     transactions, services, and other activities that may be 
     subject to State and local taxation, procedural structures 
     and mechanisms applicable to such taxation, and a mechanism 
     for the resolution of disputes between States regarding 
     matters involving multiple taxation;
       Examining a simplified system for administration and 
     collection of sales and use tax for remote commerce, that 
     incorporates all manner of making consumer payments, that 
     would provide for a single statewide sales or use tax rate 
     (which rate may be zero), and would establish a method of 
     distributing to political subdivisions within each State 
     their proportionate share of such taxes, including an 
     examination of collection of sales or use tax by small volume 
     remote sellers only in the State of origin;
       Examining ways to simplify the interstate administration of 
     sales and use tax on remote commerce, including a review of 
     the need for a single or uniform tax registration, single or 
     uniform tax returns, simplified remittance requirements, and 
     simplified administrative procedures; and
       Examining the need for an independent third party 
     collection system that would utilize the Internet to further 
     simplify sales and use tax administration and collection;

  These H.R. 4105-established ``duties'' suggest that the Commission's 
real purpose is to design a well-engineered system of taxation 
(efficient tyranny) rather than keep citizens in a state of ``Tax 
Freedom'' as the bill's name suggests. I encourage my colleagues in 
this House as well as citizens of this country to be wary of federal 
and international encroachment upon the privacy and efficiency 
currently available to individuals around the globe via the internet.

                          ____________________