[Congressional Record Volume 144, Number 133 (Tuesday, September 29, 1998)]
[Senate]
[Pages S11085-S11087]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              INTERNET TAX FREEDOM ACT--MOTION TO PROCEED


                             Cloture Motion

  The PRESIDING OFFICER. Under the previous order, pursuant to rule 
XXII, the Chair lays before the Senate the pending cloture motion, 
which the clerk will state.
  The bill 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 Bond, Wayne Allard, Paul Coverdell, 
           Tim Hutchinson, Jim Inhofe, Mike DeWine, Dirk 
           Kempthorne, Strom Thurmond, Jeff Sessions, Conrad 
           Burns, and Robert F. Bennett.


                            Call of the Roll

  The PRESIDING OFFICER. By unanimous consent, the mandatory quorum 
call is waived.


                                  Vote

  The PRESIDING OFFICER. The question is, Is it the sense of the Senate 
that debate on the motion to proceed to S. 422, the internet tax 
freedom bill, shall be brought to a close? The yeas and nays are 
required under the rule. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Nebraska (Mr. Hagel), 
and the Senator from Alabama (Mr. Sessions) are necessarily absent.
  Mr. FORD. I announce that the Senator from California (Mrs. Boxer), 
the Senator from South Carolina (Mr. Hollings), and the Senator from 
Illinois (Ms. Moseley-Braun) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 89, nays 6, as follows:

                      [Rollcall Vote No. 292 Leg.]

                                YEAS--89

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Biden
     Bingaman
     Bond
     Breaux
     Brownback
     Bryan
     Burns
     Byrd
     Campbell
     Chafee
     Coats
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     D'Amato
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Faircloth
     Feingold
     Feinstein
     Ford
     Frist
     Glenn
     Gramm
     Grams
     Grassley
     Gregg
     Harkin
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kempthorne
     Kennedy
     Kerrey
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Mikulski
     Moynihan
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wellstone
     Wyden

                                NAYS--6

     Bennett
     Bumpers
     Cleland
     Enzi
     Gorton
     Graham

                             NOT VOTING--5

     Boxer
     Hagel
     Hollings
     Moseley-Braun
     Sessions
  The PRESIDING OFFICER. On this vote, the yeas are 87, the nays are 6. 
Three-fifths of the Senators duly chosen and sworn having voted in the 
affirmative, the motion is agreed to.
  Mr. McCAIN. Mr. President, I ask unanimous consent when the Senate 
begins consideration of S. 442, the Internet tax bill, the Commerce 
Committee amendment be agreed to; and immediately following that 
action, the Finance Committee substitute be agreed to and considered 
original text for the purpose of further amendments. I also ask that 
during the Senate's consideration of S. 442 or the House companion 
bill, that only relevant amendments be in order.
  I now ask that the motion to proceed be adopted and the Senate 
proceed to the bill following the period of morning business at 3:15 
p.m. today.
  Mr. GRAHAM. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. McCAIN. Mr. President, again, the Senator from Florida has chosen 
to object. We just had a vote, 89-6, which probably would have been 94-
6. This is not the way the Senate should function, Mr. President--1, or 
2, or 3, or 4, or 5, or 6 Senators should block this important 
legislation. We are going to have a motion or a vote on the motion to 
proceed, and we are going to file cloture and we will begin the 30 
hours that will bring us to final conclusion on this vote.
  If the Senator from Florida wants an amendment, we will debate it. If 
the Senator from Florida wants to change the bill, we will discuss it. 
But for the Senator from Florida, with one more week to go before we 
leave, to continue to block consideration of this legislation, I think 
is clearly thwarting not only the majority of the Senate, but the 
majority of the American people. His own President was out in the 
Silicon Valley at a soft money fundraiser bragging about the fact that 
the Congress will pass the Internet Tax Freedom Act, as he raised 
$25,000 a plate in a soft money fundraiser. And he took credit for H-
1B, which Senator Abraham was primarily responsible for.
  We are growing weary of this. It is time we move forward with this 
legislation. It is time we save this critical technology, which is 
absolutely vital to the future of this Nation.
  Mr. President, I want to state my intentions again, after 
consultation with the majority leader. That is, on Thursday morning, 
there will be a vote on the motion to proceed. It will be another 89-6 
or 94-6 vote. We intend to file cloture at that time, and then we will 
have cloture on the bill, which will then allow us 30 hours of debate. 
I might point out that, in this present scenario, 1 hour of debate 
post-cloture on the motion to proceed is allowed per Senator. We will 
finish this legislation and go to conference in the House and make sure 
that we don't choke this baby in the cradle--which is called the 
Internet--which is vital to the future of the economy of this Nation 
and the world.

[[Page S11086]]

  I yield the floor.
  Mr. GRAHAM. Mr. President, we voted a few minutes ago to invoke 
cloture on the motion to proceed to the Internet Tax Freedom Act. I 
opposed that motion to proceed, as did the Senator from Wyoming, 
Senator Enzi, and a few others. I think it is incumbent upon us to 
state why we opposed it and why we did not oppose it.
  None of us who opposed the motion to proceed did so because we are 
antagonistic to high technology. None of us did it because we failed to 
appreciate the importance of the Internet system and the enormous 
contribution that it has made in disseminating information to peoples 
around the world. No one opposed it because we failed to understand the 
economic importance of this both in terms of the industry itself and 
how this information industry makes the rest of our economy more 
efficient and productive. And none of us did it because we are mired in 
the past, because we have some childhood addiction to the way things 
have always been. We understand that the world is moving at an 
increasingly rapid pace and that these technologies are an important 
engine of that progress.
  But why I believe we did oppose this motion to proceed was to slow 
down the consideration of a body whose whole purpose for being is to be 
a deliberative body on issues that are of importance to this Nation and 
its citizens.
  I believe there has been an effort maybe to minimalize the importance 
of this legislation, the Internet Freedom Tax Act, and to focus on it 
almost as a cliche: if you are for high technology you are for this 
bill. If you are opposed to high technology, you are opposed to this 
bill. That simplicity hides the real importance of this issue.
  To me, that importance can be described under two labels. The first 
label, Mr. President, is fundamental fairness. If I were to use an 
example that I suggested to the Senator from Wyoming, Senator Enzi, 
earlier today: if Main Street was divided and all the stores on the 
left side of Main Street were under a requirement to collect sales tax 
on each of their sales and all the stores on the right side of Main 
Street were exempt from that obligation to collect tax on exactly the 
same sales, we would say that is unfair.
  Why should the hardware store on the left side be required to collect 
sales tax and therefore increase the ultimate cost to its customers of 
the hammers and saws and nails that were purchased, but the hardware 
store on the right side be exempt and therefore have that competitive 
advantage? Everyone would immediately say, ``That's unfair. How could 
you tolerate such a situation?''
  Well, we have essentially that situation today, Mr. President, as it 
relates to the sales that are made on both sides of Main Street where 
the sellers are required to collect State and local sales taxes, and 
remote sellers where you can pick up a catalog and order those same 
hammers and saws and nails and have them shipped to you by mail where 
there is no requirement of the seller to collect that sales tax. That 
creates a discriminatory situation in the marketplace.
  This bill has as a principal objective to avoid discrimination 
against Internet sales. Now the question is going to be, Discrimination 
relative to what? To whom? Is it discrimination relative to the Main 
Street hardware store or is it discrimination relative to the catalog 
sale hardware store?
  If it is the latter, then the Internet industry would be able to 
argue, ``We shouldn't have to pay any taxes either. We shouldn't have 
to collect taxes because the sales are made over the Internet any more 
than our catalog brethren are not required to collect taxes for sales 
made through the post office or through telephones.''
  If, on the other hand, the question is discrimination against that 
Main Street hardware store, then the answer is the other way, that 
``Yes, just as Main Street has to collect, you should have to 
collect.''
  That issue of fairness then gets to the second issue of its effect on 
State and local governments. We in this Congress have had as one of our 
principal objectives to decentralize responsibility, to send more 
authority from Washington to the communities of America and support 
that principle. I am a Jeffersonian, and I believe the best government 
in general is that government which is closest to the people affected 
by a government's actions. But I understand, as we send more 
responsibility--whether it is in education or in health care or 
environmental protection or economic development--to our communities, 
that they are going to need a revenue base in which to carry out those 
responsibilities that we have just sent them.
  This issue of discrimination of Internet sales has the potential of 
driving a major hole into the revenue sources upon which many States 
and local governments depend in order to provide those very services. 
The most at-risk service will clearly be education, since it is the 
largest responsibility of State and local government in terms of its 
importance to our future and in terms of its use of State and local 
resources.
  So in my judgment, the most important education bill that we will 
debate in 1998 will be the Internet Tax Fairness Act because it has the 
greatest potential of fundamentally affecting what kind of education 
our children will receive in this and future generations.
  So our reason for slowing this train down was to be able to elevate 
what I believe to be some very fundamental issues and provide us an 
opportunity to try to work through them so that we do not 
inadvertently, in the rush to show our support for high technology, 
have some very negative unintended consequences.
  The good news, Mr. President, is those efforts have been underway for 
some time and I believe are close to bearing positive results. In the 
next couple of days, I anticipate there will be a meeting of many of us 
who were interested in this issue, from all points of view, to try to 
close the increasingly narrow gap that is necessary to have legislation 
that will achieve the desires of the sponsor, which is to give a pause 
and time and structure for thoughtful consideration of how the Internet 
transactions should be taxed for purposes of State and local 
government, as well as international transactions, and to allow the 
industry this brief period of moratorium from State and local taxes 
while a comprehensive set of policies is being developed.
  What those of us who have been concerned about the rush to final 
judgment of this act have been seeking is to assure that that study 
will look at all of the means by which commerce is being conducted in 
America today so that we will receive from this moratorium and study a 
thoughtful set of policies that will not have the effect of eroding 
concepts of fairness in the marketplace and capacity of State and local 
governments to carry out their important responsibilities, particularly 
the education of our children.
  So, Mr. President, those remarks are intended to de-escalate the 
emotion of this issue, elevate the importance of this to our Nation's 
future, particularly our future ability to prepare generations of 
Americans through quality education. And I express my appreciation to 
Senator Wyden, to Senator Enzi, and to others who have been interested 
in this and have invested a considerable amount of their time, 
experience, understanding, and intellect in reaching a resolution that 
will be in America's interest. I believe we are close, and I look 
forward to reaching our destination.
  I thank the Chair.
  Mr. ENZI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming is recognized.
  Mr. ENZI. Mr. President, we just held a vote to proceed to debating 
the Internet tax bill. I did not vote to proceed to that bill, and I 
would like to take a minute to explain why I do not currently support 
the legislation that is before us. It doesn't have anything to do, as 
was said before, with whether we are high tech or not. I have been 
trying to get permission to bring a computer on the floor of the 
Senate. I work with the Internet. I understand how web sites work. I 
understand the advantages we could have with more utilization of 
computers. I understand how the Internet works, and I understand some 
of the spectacular advantages that we are already enjoying in this 
country, and some of the ones we could be enjoying to a greater level. 
I am not trying to keep that from happening.
  There was mention in the motion to proceed that there was very little 
opposition. That is because it is a motion to

[[Page S11087]]

proceed. There would be a much stronger opposition if the bill were to 
be voted on right now, without some of the requests that we have made 
for amendments--amendments that I think are simple enough that they 
could have been agreed to as part of a package.
  I want to say right up front that my vote was not a vote in favor of 
taxes. I want to reduce taxes. I want to stop new taxes--particularly 
at the Federal level. That is a goal we should all work toward. Federal 
income taxes, FICA taxes, unemployment taxes, and user taxes are always 
at the top of the list of burdens on working Americans and small 
businesses. I want to tell you that this bill doesn't reduce any of 
those taxes. This bill is an easy way for us to look good. We get to be 
the tax cutters by placing mandates on the other levels of government. 
We are tying the hands of local government to be able to finance 
itself, and we make ourselves out to be the good guys.
  I wish all the Members who voted for cloture today would get as 
serious about reducing Federal taxes as they seem to be about reducing 
local taxes. This bill will create an unfair playing field. Congress 
does have a constitutional responsibility to regulate interstate 
commerce, and I understand the desire of the bill's sponsors to protect 
and promote the growth of Internet commerce. But I am concerned that we 
are picking the tax winners and the tax losers. I want to tell you, the 
local Main Street retailers will be the losers, unless we have some 
corrections in this bill.
  There is also nothing in this bill to protect against fraud. The 
barriers to entry are so low in the Internet commerce and so hard to 
track that it is difficult to draw comparisons with catalog companies. 
Catalogs can be tracked. Those orders can be tracked. The Internet is a 
whole different problem.
  The fraud that can exist in it can go so far as to have a retailer in 
a town set up an Internet web site in a State that does not have sales 
taxes. And when you go to purchase in that store, you would purchase 
through their other corporation in that tax-free State and free 
yourself from paying any sales tax. That is nice if you do not have to 
pay sales tax, except most of the States in this Nation rely on some 
form of sales tax for education money. Some States, including mine, 
rely on sales tax. There is no income tax in Wyoming. There is no 
income tax in several other States. There are provisions in the bill 
for States that do not have income tax to be represented on the 
commission. I think it is imperative that there be a provision in this 
Internet bill that those States which do not have an income tax but do 
have a sales tax also have representation on that committee.
  There should also be a requirement for legislative suggestions from 
the commission. Right now the commission in this bill is required to 
give a report. A report on what? I think it ought to be much more 
specific than that and actually get into the instructions for 
legislation, the actual wording for the legislation that would ensure 
an end to the moratorium and be sure that we have something we can 
actually use. There should be a strong reporting requirement for the 
commission.
  I look forward to debating this bill in the coming days. I am not 
opposed to the idea, but I think we have to move closer to the House 
version of the bill. The House bill does empower the commission to look 
at the remote sales issue. It does require the commission to produce 
legislative recommendations. These are important components of the bill 
that are necessary to keep it fair for small retailers and small 
governments.
  I come from government that is closest to the people. I was a mayor 
for 8 years, and I served in the State legislature for 10. In Congress, 
we make decisions every day that affect the lives of millions of 
people, but they do not live at the Federal level. They live at the 
local level. In local government, you make decisions every day that 
affect the lives of your friends and neighbors, ones who know you and 
know what you are working on. There is a big difference.
  I am very concerned with any piece of legislation that mandates or 
restricts local government's ability to meet the needs of citizens, and 
this bill does exactly that. It may not seem like a big restriction, 
and it may not exceed the $50 million limit that Congress set in the 
Unfunded Mandates Reform Act, but it does establish a national policy 
against State and local government interference. It takes an 
affirmative step that ties the hands of local government.
  What am I asking here? I am asking that we actually talk about some 
of the amendments that we need to have that maintain the status quo for 
State funding--not increases the tax, not decreases the tax, maintains 
the status quo. There are States that rely on this tax at the present 
time, and I will do everything I can to make sure that we do not take 
away the possibility, or the right, for those States to continue to 
operate.
  We have to plug the loophole of the possibility for fraud, the 
possibility for fraud during the 2 years that there is a moratorium. If 
that gets established and allowed, we will have some of that happening 
for the rest of the time, and States again relying on the money will 
not have it.
  That is a brief explanation. I will have an opportunity, I am sure, 
to expand on those considerably, but we do have concerns. That is why 
we are trying to make sure that we have an opportunity to have those 
addressed and to make sure they are addressed up front.
  I thank the Chair and yield the floor.

                          ____________________