[Congressional Record Volume 144, Number 130 (Friday, September 25, 1998)]
[Senate]
[Pages S10969-S10971]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              INTERNET TAX FREEDOM ACT--MOTION TO PROCEED


                             cloture motion

  Mr. McCAIN. Mr. President, I still have the floor.
  In light of the objection, I now move to proceed to the consideration 
of S. 442 and I send a cloture motion to the desk. I announce this 
cloture vote would occur on Tuesday of next week.
  The PRESIDING OFFICER. The cloture motion having been presented under 
rule XXII, the Chair directs the clerk to read the motion.
  The legislative clerk read as follows:

                             Cloture Motion

       We the undersigned Senators, in accordance with the 
     provision of Rule XXII of the Standing Rules of the Senate, 
     do hereby move to bring to a close debate on the motion to 
     proceed to Calendar No. 509, S. 442, the Internet 
     legislation:
         Trent Lott, John McCain, Dan Coats, Chuck Hagel, Larry 
           Craig, Christopher

[[Page S10970]]

           Bond, Wayne Allard, Paul Coverdell, Tim Hutchinson, Jim 
           Inhofe, Mike DeWine, Dirk Kempthorne, Strom Thurmond, 
           Jeff Sessions, Conrad Burns, and Robert F. Bennett.
  Mr. McCAIN. I now ask the mandatory quorum under rule XXII be waived.
  The PRESIDING OFFICER. Is there objection to the motion to waive the 
mandatory quorum? Without objection, it is so ordered.
  The Senator from Arizona.
  Mr. McCAIN. Mr. President, let me just point out the President of the 
United States is in Silicon Valley today and the people in Silicon 
Valley were under the impression that we were going to move forward 
with this bill and resolve it next week. I hope that is duly noted.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Mr. President, I am very hopeful that the Senate will not 
have to get into this cloture matter with respect to the Internet tax 
bill. The Senator from Florida is one of the Senators that I most 
respect in this body. I find myself agreeing with him on just about 
everything that comes before the Senate. As he knows, we have, over 
many, many months, tried to address the host of legitimate concerns 
that the States have. We have a number of Governors--the Senator from 
Florida having served as Governor, as have others here--who know a 
tremendous amount about this. I have tried to make clear, as the 
principal sponsor of this legislation, all we are seeking is 
technological neutrality with respect to the Internet. The Internet 
would be treated like everything else--nothing favorable, nothing 
discriminatory.
  Because many of the Nation's Governors are concerned about other 
issues, particularly the question of out-of-State sales, this 
legislation, S. 442, has become a magnet for a variety of other issues.
  The sponsors, Senator McCain and I, especially have, in my view, done 
somersaults now to make sure there was a fair evaluation of all the 
important issues with respect to out-of-State sales. Let me say, in 
doing that, there have been a number of other Senators--Senator Gregg 
and Senator Lieberman--who I think have been very fair in an effort to 
try to get to a compromise on this matter. As the Senator from Florida 
knows, just a few minutes ago Senator McCain and I were willing to make 
additional changes in the managers' amendment to ensure that there 
would be a fair study of both the Internet and commercial activities, 
which is the precise language that the Governors have sought.
  I don't think there is anything else that Senator McCain, I, or 
others can offer at this point to ensure that a fair and objective set 
of studies and analyses go on by the commission.
  I hope that if there continues to be opposition to this legislation, 
that those who oppose the legislation simply say that they are opposed 
and not, in effect, produce a situation which I think is going to turn 
what ought to be a bipartisan and thoughtful fight into what will be a 
very bloody battle.
  I see my friend from North Dakota here. The Senator from North Dakota 
has had strong views on this, and over many, many months we have been 
negotiating on it. He did not come to the floor today to object as a 
result of that work, nor did Senator Bumpers.
  I am hopeful that particularly Senators on the Democratic side are 
not going to force what I think will be a very unfortunate and bloody 
fight with respect to a bill that has undergone more than 30 separate 
and important changes since it was originally introduced to accommodate 
the concerns of the States and localities. Those folks were very, very 
opposed when this discussion started. They raised legitimate issues. We 
have sought to deal with them. I am hopeful we will be able to go to a 
motion to proceed early next week and not have a bitter fight as I 
think we have over cloture.
  Let me conclude by way of saying that I and my staff are prepared to 
continue to work around the clock with the Senator from Florida and 
others who may have questions about how this legislation will affect 
the States, but let us go forward in an effort to try to resolve this 
and not just get to a solution with respect to one section and then 
say, ``Well, I have another one that we have to deal with,'' which, 
regrettably, has been the case. I have enormous respect for the Senator 
from Florida and I think one of the more unpleasant tasks is to have an 
argument with him. I hope this can be resolved.
  Mr. President, I yield the floor.
  Mr. GRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, I appreciate those kinds words from my 
good friend from Oregon. I share the hope that we can arrive at a 
reasoned resolution of this matter.
  I will briefly state why I think this is such an important piece of 
legislation. First is fundamental fairness. We have a situation now in 
which remote commerce--that is, commerce that is not conducted through 
the traditional retail sales outlet--is effectively exempted from State 
sales taxes. The same sweater that one would buy at the local 
department store, subject to local and State sales taxes, is exempt 
from those taxes, for practical purposes, if it is purchased by a 
remote sale, either the traditional postal sales or by the 
newer electronic commerce.

  The U.S. Supreme Court has ruled that that degree of unfairness as to 
taxability of the form of sales is a decision which has been made by 
the Congress. It is, as Harvey Cox once observed, not to decide is to 
decide. Our decision not to authorize the States to impose a tax on the 
seller using a remote sales method has resulted in the inability of the 
States to impose that tax.
  Therefore, as we are looking at the issue of Internet sales, those of 
us who are concerned about this unfairness in the marketplace where our 
local merchants are required to collect the sales tax and, therefore, 
are subject to the competitive disadvantage of their remote sales 
brethren who are not--that this commission should study that issue. 
That is one of the concerns that those of us who have been negotiating 
on this matter want to see achieved.
  But there is really a larger issue at stake here, Mr. President. Many 
of our States, including my own, are very heavily dependent upon the 
sales tax as the means for financing their basic responsibilities, and 
the most basic responsibility of State government is education. In my 
State, some 35 to 40 percent of its tax collections, which are 
predominantly sales tax, are used to finance education.
  What is happening is that as the new forms of commerce, particularly 
electronic commerce, become more attractive and more available and more 
familiar, they are gathering a larger and larger share of all retail 
sales in the United States. If we adopt the policy that they should not 
be subject to tax, as we have adopted the policy by inaction that 
postal long distance sales should not be subject to tax, we are going 
to substantially erode the ability of State government to carry out its 
most fundamental responsibility, which is to educate the next 
generation of Americans.
  That is the fundamental issue which I think is at stake here. The 
idea of having a short pause so that we can arrive at a rational way to 
deal with all of these issues is appealing. I think the idea of this 
bill, as reported by the Finance Committee, to have a 2-year pause in 
any discriminatory taxation relative to Internet sales or charges to 
have access to the Internet, and during that period to have a 
commission that would look at all of this interrelated set of issues, 
is a proposition that I can support.
  I just want to be personally satisfied that, in fact, that is going 
to be the result and that the result will not be a skewed study that 
will exclude some of the most important aspects of this and which, by 
saying that we are going to treat Internet commerce the same way as we 
do other remote commerce, answers the question before it is asked, 
because we know how other forms of remote commerce are dealt with; 
i.e., they are exempt from State sales taxes. If we say the Internet 
shall be treated in an equivalent manner, we have preordained how it is 
going to be treated; i.e., exempt from State sales taxes, and we have 
further preordained that the States' fiscal capacity to carry out their 
important functions, particularly education, will be eroded.
  Mr. President, that is why I have had this degree of disagreement 
with some

[[Page S10971]]

of my best friends and colleagues in this Chamber, the Senator from 
Oregon and the Senator from Arizona. I don't believe that we are that 
far apart in terms of finding the set of words and phrases that will 
carry out our joint intention, and I hope that between now and Tuesday 
we can achieve that goal and be able to have a consideration. I 
recognize that once this bill is up, there will be policy differences 
among the different parties. The National Governors' Association feels 
very strongly about this legislation as it impacts the ability of the 
States to meet their responsibilities, and those views deserve to get a 
proper airing.
  I also recognize that the House has already passed a companion bill 
to this but which is somewhat different from the bill that is before 
the Senate. So there will be a conference committee. There will be 
further reforms on this matter.
  My concerns are fairness in the marketplace and the ability of the 
States to be able to carry out their responsibilities, especially the 
responsibility which I think the American people feel is the principal 
national challenge today, which is to properly educate the next 
generation of Americans so that they will be able to compete in a world 
of electronic commerce.
  Mr. President, I appreciate the opportunity to have made those 
clarifying remarks and yield the floor.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.

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