[Congressional Record Volume 147, Number 158 (Thursday, November 15, 2001)]
[Senate]
[Pages S11902-S11915]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INTERNET TAX NONDISCRIMINATION ACT
The PRESIDING OFFICER. The clerk will report the bill by title.
The legislative clerk read as follows:
A bill (H.R. 1552) to extend the moratorium enacted by the
Internet Tax Freedom Act through November 1, 2003, and for
other purposes.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
Mr. McCAIN. Since I see the Senator from North Dakota here, I suggest
that perhaps we could make our opening statements as part of the 60
minutes of debate on the Dorgan-Enzi amendment. If that is agreeable, I
would be glad to do that. I move to modify the agreement that we move
immediately to the Enzi-Dorgan amendment with the 60 minutes of debate
equally divided.
The PRESIDING OFFICER. Is there objection?
Mr. BAUCUS. Madam President, reserving the right to object----
Mr. McCAIN. I withdraw that. I will proceed with my statement. I was
trying to save the Senate some time. Obviously, we will take more time
in discussing whether I was saving the Senate time or not.
First, I ask unanimous consent to have printed in the Record a
Statement of Administration Policy concerning H.R. 1552, the Internet
Tax Nondiscrimination Act, from the President of the United States.
There being no objection, the material was ordered to be printed in
the Record, as follows:
H.R. 1552--Internet Tax Nondiscrimination Act
The Administration supports Senate passage of H.R. 1552.
The Administration believes that government should be
promoting Internet usage and availability, not discouraging
it with access taxes and discriminatory taxes.
As passed by the House, H.R. 1552 extends the Internet tax
moratorium enacted by the Internet Tax Freedom Act for two
years. While a five-year extension would be preferable, a
two-year extension will provide additional time to analyze
the impact of e-commerce on local and State tax receipts
while ensuring that the growth of the Internet is not slowed
by new taxes.
The moratorium expired on October 21, 2001. The
Administration supports rapidly reinstating the moratorium.
The Administration encourages the Senate to pass H.R. 1552,
without amendment, to enable its expeditious enactment into
law.
It basically says that the administration supports Senate passage of
H.R. 1552. He concludes by saying that the administration encourages
the Senate to pass H.R. 1552, without amendment, to enable its
expeditious enactment into law.
On Sunday, October 21, the Federal moratorium on Internet taxes
expired.
[[Page S11903]]
State and local taxing jurisdictions, reportedly over 7,000 of them,
are now free to tax Internet access, and to impose multiple and
discriminatory taxes on e-commerce.
I strongly support H.R. 1552, which would extend the moratorium by 2
years. This proposal for a simple, short-term extension of the
moratorium is supported by diverse interests, including, among many
others, the National Conference of State Legislatures, the United
States Conference of Mayors the Information Technology Association of
America, the American Electronics Association, and the National
Association of Manufacturers.
I urge my colleagues to support this measure that has already passed
the House of Representatives, and to oppose the Enzi/Dorgan amendment.
Let me explain why.
There is broad consensus that the moratorium on the imposition of
access taxes should be extended. This has not been done, however,
because of the separate issue of the collection of sales taxes on
remote transactions. A number of Senators believe that this separate
issue must be addressed if the moratorium is extended for more than a
few months.
State and municipal governments are concerned that they will lose
significant revenue as more and more consumers buy goods on-line. Most
of these consumers are required by state laws to pay taxes on these
transactions, but they seldom do. While the loss of tax revenue from
remote catalog sales has been of concern to states for many years, the
prospect of many more untaxed on-line transactions has worried main
street merchants and state and local governments that rely on sales tax
revenue to support critical functions including education and emergency
response. Their concerns are legitimate.
A group of Senators have tried, literally for years, to address these
concerns. Senators Dorgan, Enzi, Kerry, Voinovich, Hutchison, Wyden,
and Allen, among others, have held countless meetings to try to balance
concerns about loss of State and local revenue with concerns about
imposing unwarranted and perhaps unbearable burdens on remote
transactions. I have participated in many of these meetings at which
countless drafts of legislation have been circulated, and I have been
continually impressed at how committed, creative, and open to
compromise these Senators have been.
Unfortunately, however, there is not yet a consensus on if or how
Congress should permit states to require out-of-state retailers to
collect sales taxes on remote transactions. After the events of
September 11 refocused out efforts, it became clear that we would not
resolve this issue before the moratorium on Internet taxes expired.
While we are much closer to an agreement on legislation relating to
the collection of sales taxes we are not yet there. In the past,
Congress has held protracted debate on the question of Internet taxes.
Although the issue is extraordinarily controversial, we don't have time
to thoroughly consider the still-divergent proposals. This controversy,
however, should not prevent us from proceeding on the separate, and
non-controversial issue of extending the moratorium on Internet access
taxes.
Just as there is agreement that the moratorium on Internet access
taxes should be extended, there is also agreement that state sales
taxes must be radically reconciled and simplified to remove both
practical and legal barriers to remote collection and remission.
This simplification, however, has not yet occurred. And it is not the
Federal Government's responsibility to see that it does.
Recognizing the need for simplifications, thirty-two states last year
joined the Steamlined Sales Tax Project to develop a plan for
simplifying remote sales and use tax collection. The National
Conference of State Legislatures has since undertaken to develop model
legislation to create uniform definitions and remove the burden on
retailers of collecting and remitting sales taxes. Next month, the 20
states that have passed legislation this year indicating their intent
to proceed on sales tax simplification will meet in Salt Lake City to
do this.
Although these efforts are underway, the simplification is complex
and will not happen overnight. Reconciling definitions among states of
what is or is not taxable, and resolving the allocation of tax revenues
among localities within states will not happen in 8 months. Frankly, it
probably will not happen in 2 years. Nevertheless, I think that
substantial progress toward simplification can be made in 2 years, and
Congress will be in a much better position then to determine whether to
consent to allowing states to require out-of-state retailers to collect
and remit sales taxes on remote transactions.
In the meantime, I think it is imperative that we extend the
moratorium on the separate issue of Internet access taxes.
The recent economic success experienced by the United States, the
longest economic expansion in U.S. history was due, in part, to the
Internet. Now the sectors of the economy tied to this vehicle of growth
are experiencing troubled times and the nation is spiraling into
recession. During times of economic uncertainty, we must restrain
ourselves from further burdening an already ailing sector, particularly
one which provides the most promise for successful recovery and further
growth.
Prior to September 11, the high tech sector began to suffer dramatic
losses. Since the beginning of this year alone, revenue for U.S.
Technology sales, including computers, semiconductors, and
communications equipment, had fallen by 35 percent. Mass layoffs
plagued the sector with 479,199 high tech jobs eliminated since the
beginning of the year, 47,250 of which were eliminated in September
alone.
Industry leaders such as AOL, Sun Microsystems, and Intel have seen
both stock prices and profits plunge. According to the research firm of
Thomson Financial/First Call the high technology companies on the
Standard & Poor's 500 are expected to see fourth quarter profits fall
to 58 percent of last year's levels.
This grim picture is expected to decline further, with tech profits
expected to fall sharply in the first quarter of 2002, before
recovering by the end of next year. Allowing access and multiple and
discriminatory taxes on electronic commerce will inevitably lead to
harder times for an ailing industry.
We are now faced with the choice, will we allow the Internet tax
moratorium to remain expired, further hampering the recovery of the
high tech sector and the entire economy, or will we act now to extend
the moratorium and support the recovery of this economy.
Again, I reiterate my appreciation to the Senator from North Dakota,
Mr. Dorgan, who has, along with myself, the Senator from Oregon, the
Senator from Virginia, and others, had countless meetings. We have
tried to come to an agreement. I believe there will come a time when we
reach agreement. There will come a time when there are enough States
that have come together to come up with a simplified system of sales
taxes that can be fair to everybody. But we are not there yet.
Other colleagues of mine will make arguments on both sides of this
issue. I wish we could reach that stage because I am fully aware that
State and local revenues are being unfairly diverted, or not collected
because of the failure to have any taxes imposed on Internet
transactions. But we are not there yet. I believe, particularly at this
time when we are in an economic situation that is clearly unpleasant,
it would not be the time for us to impose taxes on the Internet which
is already in a state of fragility.
Madam President, I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator has used his time. Who yields
time?
Mr. BAUCUS. Madam President, who is controlling time?
Mr. McCAIN. May I ask the parliamentary situation?
The PRESIDING OFFICER. The Senator from Arizona has consumed his 5
minutes. There is 5 minutes to the chairman of the Commerce Committee
and 5 minutes each to the chairman and ranking member of the Finance
Committee.
Mr. McCAIN. In other words, there is no time available under the
unanimous consent agreement, so we would have to move to the amendment
in order for other Members to speak; is that correct?
The PRESIDING OFFICER. There is 1 hour available on the first-degree
amendment.
[[Page S11904]]
Mr. McCAIN. On the amendment. Madam President, parliamentary inquiry.
I suppose the next speaker will then be taking time on the amendment.
The PRESIDING OFFICER. If the amendment is called up, time will be
available on the amendment.
The Senator from Montana.
Mr. BAUCUS. Madam President, I understand I have 5 minutes.
The PRESIDING OFFICER. The Senator is correct.
Mr. BAUCUS. Madam President, I will try to make the best use of those
5 minutes.
Madam President, I rise in support of a simple 2 year extension of
the Internet Tax Freedom Act. In my judgment, a short-term extension
represents a reasonable, bipartisan compromise.
While I support a clean 2-year extension, we should be firm in our
resolve that this will not be the first of an endless line of
moratorium extensions.
I make a strong plea that this be the last time we impose a
moratorium without taking the meaningful steps needed to bring
interstate tax rules into the 21st century.
While progress has been made on the issue of sales tax
simplification, State and local governments will certainly need more
than 6, 12, or even 18 months to come up with a system that works.
Moreover, we do not need a quick fix; we need a real solution. Let us
continue to keep the parties at the table long enough to make a
meaningful change that works.
The debate and negotiations that occur from this point forward must
be about resolving issues regarding taxation of the Internet and not
about the length of any future extensions.
More importantly, the focus must be on how the traditional tax rules
should apply to ``new economy'' businesses. These are issues the
Finance Committee has been and will continue to examine.
The States have been working hard to create a model simplified sales
and use tax system. A limited extension of the moratorium for 2 years
is needed in order to provide an adequate time to assess their
progress.
More importantly, as chairman of the Finance Committee I represent
the State of Montana, which does not have a sales tax.
As a Senator from Montana, I will work to ensure that any
simplification plan will not place a undue burden on Montana
businesses. Sales tax simplification should also be truly simple, and
easy for businesses to comply with.
Hopefully, by making this a short 2-year extension, we can encourage
the States and the business community to move expeditiously to resolve
outstanding issues and design a truly simplified sales and use tax
system.
This debate is not only about the structure of State sales and use
taxes. There is also concern with how States assert a direct tax
liability on an out-of-State company.
States impose business activity taxes--corporate income and/or
franchise taxes--on corporations that have property or employees in the
State. The businesses that pay these taxes receive some governmental
benefits and protections afforded by that State.
A similar situation exists internationally, where foreign
jurisdictions impose a direct tax liability on businesses operating
within in the country.
Therefore, as the rules for sales and use taxes are simplified, it is
also important that we pay special attention to the rules regarding
business activity taxes.
What we used to think of when we heard ``property,'' ``goods,'' or
even ``employees,'' is now very different in a world of digital goods,
bits of electrons, and telecommuters.
I stress the need to sort through these issues because I am certain
that the rules we establish for ``interstate'' commerce will be the
model for ``international'' commerce.
We need to be very careful we do not set up a system that makes U.S.
companies a tax collector for every jurisdiction around the world.
On Internet access taxes, I believe we should look for ways to reduce
barriers to access, including taxes.
If our intention is to make Internet access tax-free, we must be
certain that an appropriate definition of access is developed.
Moreover, it is important to ensure that otherwise taxable product
provided over the Internet are not inappropriately shielded from tax.
I appreciate the hard work of my friends, Senators Enzi, Graham,
Dorgan. They have worked hard. They have a proposal which may have
merit.
But the devil is always in the details, and the details have not been
examined by the Finance Committee, or any committee for that matter.
In fact, there have been no hearings on the Dorgan-Enzi amendment to
give interested parties, academics, and Members of the Senate the
opportunity to discuss the consequences of this legislation and assess
the workability of this bill.
This amendment may be a reasonable starting point, but as with all
legislation of this magnitude, the Senate, through its committees,
should give it careful consideration.
Some people may say that we have talked too much already. They say
that the parties have already had three years to iron out their
differences.
That may be, but we must be very careful because this bill raises
more questions than it answers.
For example, how does this legislation make sure that the uniform
rates among states stay uniform over time?
Does the definition of ``Internet access'' allow nonincidental
content, such as music and movies, to be provided tax free if bundled
with Internet access?
Are business activity taxes adequately addressed?
These are difficult issues, and they deserve serious and deliberative
consideration.
It is for this reason, that I encourage my colleagues to support a
short, 2-year clean extension of the Internet Tax Freedom Act.
In my judgment, 2 years is adequate time to give the Finance
Committee an opportunity to address these important, but difficult, tax
issues.
I emphasize that the work remaining involves tax issues that must be
resolved by the Finance Committee. There is a long-term precedent of
the Senate Finance Committee having jurisdiction over issues involving
the taxation of the Internet.
A 2-year extension of the Internet Tax Freedom Act is a reasonable
compromise and deserves the support of the Senate.
Mr. LEAHY. Mr. President, I want to add my support to promoting
electronic commerce and keeping it free from discriminatory and
multiple State and local taxes.
I strongly support the Senate quickly passing H.R. 1552 to extend the
Internet tax moratorium for 2 years.
Last month, I was pleased to join the senior Senator from Oregon and
the senior Senator from Arizona as an original cosponsor of the
Internet Tax Moratorium Extension Act, the Senate counterpart to H.R.
1552. I commend Senator Wyden and Senator McCain for their continued
leadership on Internet tax policy.
Although electronic commerce is beginning to blossom, it is still in
its infancy. Stability is key to reaching its full potential, and
creating new tax categories for the Internet is exactly the wrong thing
to do.
E-commerce should not be subject to new taxes that do not apply to
other commerce.
Indeed, without the current moratorium, there are 30,000 different
jurisdictions around the country that could levy discriminatory or
multiple Internet taxes on e-commerce.
Let's not allow the future of electronic commerce, with its great
potential to expand the markets of Main Street businesses, to be
crushed by the weight of discriminatory taxation.
Many Vermont companies have contacted me in the last month and weeks
in support of extending the moratorium, including Green Mountain Coffee
Roasters, the Army & Navy Store in Barre, and the Vermont Teddy Bear
Company.
Cyberselling is working for Vermonters.
We also need a national policy to make sure that the traditional
State and local sales taxes on Internet sales are applied and collected
fairly and uniformly. This 2-year extension of the current moratorium
gives our Governors and State legislatures time to simplify their sales
tax rules and reach consensus on a workable national system for
collecting sales taxes on e-commerce.
Indeed, the National Conference of State Legislatures has endorsed
our legislation to extend the Internet tax
[[Page S11905]]
moratorium for two more years to give States time to complete work on
sales tax simplification.
I must also raise some serious questions about the approach of some
Senators to pass legislation to waive Congress's authority to carefully
review and approve interstate compacts. As chairman of the Senate
Judiciary Committee, which has jurisdiction over interstate compacts, I
cannot understand why we should recede congressional authority to
approve an interstate compact on sales tax issues if 20 States join any
compact.
Despite good intentions of its proponents, this approach is asking
the Senate to buy a pig in a poke.
I am a strong supporter of interstate compacts where appropriate,
such as the Northeast Dairy Compact, but the Senate should not approve
of any interstate compact without carefully reviewing its details
first. When the Northeast Dairy Compact was approved by the Congress,
every detail and every aspect of it was known far in advance.
It also raises constitutional questions for legislation to mandate
that Congress automatically approve an interstate compact on sales
taxes without reviewing its text since the Constitution explicitly
requires Congress to approve interstate compacts.
The Enzi amendment allows 11 jurisdictions to continue to tax
Internet access, but permanently bans Internet access taxes everywhere
else in the country. By permanently prohibiting taxation of Internet
access in some States, but approving of such taxation in other States,
the Enzi amendment may violate the ``uniformity clause'' in Article I,
8 of the United States Constitution.
The uniformity clause states that ``all Duties, Imposts and Excises
shall be uniform throughout the United States.''
The uniformity clause requires that Federal legislation levying taxes
follow a consistent plan and apply in all portions of the United States
where the subject of the tax is found.
In United States v. Ptasynski, the Supreme Court held that it will
subject geographic distinctions in Federal taxation to heightened
scrutiny. In a unanimous decision, the Court stated that ``Where
Congress does choose to frame a tax in geographic terms, we will
examine the classification closely to see if there is actual geographic
discrimination.''
The Enzi amendment proposal to lock in discrimination between States
in taxation of Internet access raises questions under the uniformity
clause that require careful consideration.
In the case of a temporary moratorium, such as the one in the House
bill, the grandfathering of Internet access taxes in a limited number
of States may be explained as freezing the status quo while Congress
comes up with a permanent solution to the Internet tax issue. Thus, it
is unlikely to raise the geographic discrimination problem the Supreme
Court discussed in Ptasynski, and would survive heightened scrutiny.
In contrast, the Enzi amendment's permanent discrimination on the
basis of where an Internet user lives is much harder to explain under
the heightened scrutiny required by the Supreme Court. If courts treat
the Federal Government's establishment of a discriminatory regime of
taxation by the States as raising the same uniformity clause issues as
the Federal Government's levying of discriminatory taxes, the Enzi
amendment's Internet access tax moratorium will be ruled
unconstitutional.
As a result, this amendment appears to raise serious constitutional
concerns.
E-Commerce is growing, our moratorium law is working, and we should
keep a good thing going. I am proud to cosponsor the Internet Tax
Moratorium Extension Act to encourage online commerce to continue to
grow with confidence and to continue to allow the States to move ahead
with sales tax simplification efforts.
I urge my colleagues to vote for a straight forward 2-year extension
of the internet tax moratorium.
Mr. BURNS. Madam President, multiple, confusing and inconsistent
State tax rules impose an incredible burden on interstate commerce and
the economy, and therefore it is imperative that the Senate move
quickly to extend the moratorium on Internet access taxes and to
continue protecting electronic commerce from multiple and
discriminatory taxation.
As a result of the U.S. Senate's failure to extend the moratorium
before it lapsed on October 21, 2001, it is now possible for the more
than 7,600 State and local taxing jurisdictions to impose multiple and
discriminatory taxes on electronic commerce and taxes on internet
access.
On October 16, the House adopted H.R. 1552 under expedited floor
procedures. This bipartisan legislation would extend the current
moratorium created by the Internet Tax Freedom Act for 2 years. H.R.
1552 is supported strongly by a wide range of groups, including the
entire high-tech business community, the National Conference of State
Legislatures, State and local municipal groups, the U.S. Chamber of
Commerce, the National Association of Manufacturers, and many other
business and retail groups that have put aside their differences in
support of a clean, 2-year extension of the moratorium.
Given recent events and the current economy, this is the wrong time
to saddle consumers with Internet access taxes or with multiple and
discriminatory State taxes on electronic commerce. Enacting H.R. 1552
now would provide us with additional time to continue to work together
to try to reach consensus on clear and simple tax rules for a
borderless marketplace.
We should not be focusing on how to make our tax codes less
cumbersome for the purposes of Interstate sales tax collection,
especially at this late hour. That is why I ask that my colleagues
table this amendment.
section 5(a)(8)
Mr. DURBIN. Madam President, I would like to have a discussion with
the managers that I hope will clarify the meaning of an important
element of this legislation. Section 5(a)(8) of the bill calls for
``State administration of all State and local sales and use taxes'' to
be part of the streamlining process that would allow States and
localities to be able to collect taxes due on remote sales. I believe
it is important to make clear--in the legislation itself--that the
requirement for ``State administration'' applies only to those taxes on
out-of-State remote sales. The fact that, in a particular State, a
single locality might on its own continue to collect local taxes on
other sales would not affect that State's eligibility to be part of the
streamline compact.
By way of example, the city of Chicago has a number of local use
taxes that are imposed on different types of transactions. The city
both imposes and collects those taxes from sellers wherever they are
located in the State of Illinois. While the city and the State might
agree to State administration of out of State remote sales, I would not
want to see this legislation mandate that only the State of Illinois
could collect these taxes on other sales.
I believe that this interpretation is intended by the legislation.
Section 5(a) call for States and localities to work together to develop
a streamlined tax system ``in the context of remote sales.'' However, I
am concerned that this intent is not clearly enough spelled out. When
the legislation returns from conference, I hope that this intent would
be made absolutely clear. This could be done by changing section
5(a)(8) to read ``State administration of all State and local sales and
use taxes on remote sales.'' It would also help to add a general use
clause that would state that ``nothing in this Act shall be construed
to divest the authority of local governments to collect taxes on sales
other than remote sales as defined in this Act.''
Would the managers agree to this interpretation and assure me that
the final legislation will make this interpretation absolutely clear?
Mr. DORGAN. I thank the Senator for his observations. I agree with
his interpretation that the requirement of State administration of
sales and use taxes applies only to remote sales. While I believe that
this is the intent of the current wording, I will work in conference to
assure that this point is absolutely clear.
Mr. ENZI. I am in agreement with both the Senator from Illinois and
the Senator from North Dakota. I also agree that the requirement for
State administration of sales and use taxes applies only to remote
sales, and that this is the intent of the current wording. However, I
will join with the Senator from North Dakota in working to
[[Page S11906]]
further clarify this language in conference.
The PRESIDING OFFICER. The Senator's time has expired. Who yields
time? The Senator from Wyoming.
Amendment No. 2155
(Purpose: To foster innovation and technological advancement in the
development of the Internet and electronic commerce, and to assist the
States in simplifying their sales and use taxes)
Mr. ENZI. Madam President, apparently under the unanimous consent
agreement, that brings us to the amendment itself. As such, I yield
myself 8 minutes, and I call up amendment No. 2155.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Wyoming [Mr. ENZI], for himself, Mr.
Dorgan, Mrs. Hutchison, Mr. Graham, Mr. Voinovich, Mr.
Breaux, Mr. Hutchinson, and Mr. Carper, proposes an amendment
numbered 2155.
Mr. ENZI. Madam President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Madam President, 2 years ago we passed a simple extension
of the moratorium. That is exactly what we did 2 years ago, and now we
are saying there have been no hearings held on it and there has been no
committee work on it.
There have been individuals working on this because 2 years ago there
were a number of us who were deeply concerned about what was going to
happen to revenues for cities, towns, counties, and States. We have
been working on it in the meantime. We have been working with people
from the committees. We have been having groups come in.
I particularly want to mention Senator Dorgan of North Dakota,
Senator Graham of Florida, Senator Wyden of Oregon, Senator Voinovich
of Ohio, Senator Allen of Virginia, and Senator Carper of Delaware. A
lot of us have been working and meeting with any group that would meet
with us to talk about how we could handle this sales tax loophole.
There is pain out there, there is agony out there, and through a
process--not a popular process because this amendment does not wind up
with what any one group wants. Usually the process around here is to
say: This group has enough votes to pass this, and I am going to join
that group and we will build in what we can for other people and expand
the vote. That is not what can happen because it does not put in any
degree of fairness for anybody who is involved in the system.
So what we tried to do with this bill was go into a leveling process,
one that would provide for sales tax collections so sales tax revenues
would not go down. It would take care of an extension of the access
tax, and it would provide some encouragement for the States to do
something to streamline and simplify their sales tax system.
A very important procedure in this provision is one that protects
start-up and small businesses, and that is an exclusion from having to
collect any tax, even should the Congress at a future date say that
needs to be done, on sales of less than $5 million. That is not a
start-up business. That is not a small business. So what this amendment
actually does is extend the access taxes, in a very conservative way,
so we would not overreach on access taxes, but so we would put a
prohibition on access taxes.
Then it gives some encouragement to the States to simplify their tax
systems. It does not agree it will be done. It does not put any tax
into effect. It gives them encouragement, and that is something
Congress has not been giving them for the last 2 years. We have not
been giving them encouragement, other than a few meetings we have had
with them to see what kind of work they can do, and they have been
meeting. They have been streamlining. They have been working to come up
with a system that will make it possible for people to collect the
sales tax in a way that will benefit the States and the marketers.
I hope my colleagues will take a look at the bill. I know this is
something that has been talked about, reviewed by a lot of people,
particularly since we turned in this last version of the bill, but
through all of the versions that we have worked on. I know the
guidelines have been seen that are outlined for the States. There is
some flexibility for the States yet, and that is a necessity while they
finish out their work, but this bill contains some guidelines for them.
Then it provides for us to vote on their provision when they get 20
States together, if they can get 20 States together. That is a pretty
large group of people to be able to get into a compact. The
encouragement for them to join the compact is, even if Congress
approves the compact, they cannot have remote sales tax collections
without joining the compact. So we have some requirements we have asked
for them for the simplification, and then we have put a provision in if
they can get 20 States together--and again, I want to mention how hard
that is--the Congress will vote on whether they have simplified or not,
whether they have met criteria that we have imposed either in the bill
or in our minds since that time. It will require a vote of Congress,
and that complies with Federal and Supreme Court direction we have had
before.
I have a bill. I am pleased with the support. I do want to mention it
has been a difficult process. We have worked with the National
Governors Association. We have worked with the National League of
Cities. We have worked with the International City-County Management
Association. We have worked with the National Association of Counties
and the Council of State Governments. All of those folks have endorsed
what we have done and asked for Congress to take this step of extending
the moratorium with encouragement.
In their letter they state, irrespective of previous letters on the
Internet tax moratorium and contrary to some dear colleague letters
circulating in the Senate, we do not support legislation to reinstate
the Internet tax moratorium for 2 additional years. The letter is from
those groups I mentioned.
Besides those groups, we have been working with retailers from
virtually every State. We have been working with direct marketers and
the Direct Marketing Association. We have been working with realtors.
They have a huge stake in this whole process as well.
I have to say there are not provisions in this bill that satisfy any
one of those groups, but they recognize the need to do this in order to
get the States in a position where they can provide for the kinds of
services they have to provide in their communities.
I reserve the remainder of my time, and I yield the floor.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. Madam President, as the original Senate sponsor of the
Internet Tax Freedom Act, I have spent 18 months trying to find common
ground on this issue. For hour after hour, we have gone at it, because
obviously the technology sector is being pounded and local governments
are understandably concerned about their revenues. Today, however, and
I want to emphasize this to the Senate, many in both camps are in
agreement on what the Senate should do. Groups as diverse as the
American Electronics Association and the National Conference of State
Legislatures are in agreement.
There ought to be a simple 2-year extension of the current Internet
Tax Freedom Act. It would be a mistake to support the substitute,
although well-intentioned, by the Senator from Wyoming. The current
Internet Tax Freedom Act makes it illegal to discriminate against
electronic commerce, and no jurisdiction in the country has been able
to show that they have been hurt by their inability to discriminate. I
want to emphasize to our colleagues tonight, a vote for the Enzi
substitute means millions of Americans could be hit with new taxes for
clicking on a Web page.
The substitute is bad news because it changes the definition of
Internet access so if Internet access includes receipt of content or
services then Internet access can be taxed. That would mean, for
millions of Americans, the first thing they would get when they get on
to the Web, news or weather or sports, that could be taxed. If this
were
[[Page S11907]]
not damaging enough, the substitute actually makes it possible to
inflict those taxes retroactively to 1998.
I am of the view most Senators believe there ought to be a permanent
ban on Internet access taxes, that Internet access taxes widen the
digital divide, and yet the substitute goes in the opposite direction.
Our first economic responsibility ought to be to do no harm, but the
substitute creates new opportunities for economic mischief.
For many Americans, basic Internet access is about plugging the
computer into a plain old phone line, dialing an Internet Service
Provider, such as Erol's or Earthlink, and logging on to the Internet.
Obviously, the blank screen does no one any good; most people when they
click on to the Net they get a Web page and start receiving information
and content on that Web page. For that, the substitute opens those
millions of people up to new taxes.
The second flaw with the substitute is it would not prevent every tax
jurisdiction from imposing new taxes on the Internet. Any of the 7,600
taxing jurisdictions in America could go out and concoct new taxes. For
the life of me, I cannot figure out why that would be good for the
economy right now.
The third flaw in the substitute is it allows discrimination against
remote and on-line sellers, forcing them to pay different tax rates
than in-State businesses. The substitute permits the remote seller to
be taxed differently than an in-State business and, as a result,
millions of small businesses will face significant large, new burdens
trying to navigate a system of multiple and varying tax rates.
For example, in one part of Colorado there are five distinct tax
rates within a single zip code. No software exists today that can help
the small businessperson navigate the sea of bureaucracy and redtape,
and I hope the Senate won't force that daunting task on unsuspecting
small businesses.
I will conclude with this comment. Tonight, the Senate is being
presented with two different views of Federal policy towards the
Internet. The first, which is contained in the underlying bill,
stipulates that there ought to be a short, clean extension of current
law barring discriminatory taxes on electronic commerce and nothing
else. The substitute--the Senate Finance chairman is absolutely right,
and I am grateful for his support on this--hasn't had a hearing. It
exposes millions of Americans to the prospects of new taxes, creates
the possibility of a crazy quilt of Internet regulation throughout the
country, and looks to the possibility that we would see scores of forms
and paperwork that would chew up a vast amount of time in compliance.
I hope my colleagues will support the underlying bill, will reject
the substitute, and join a diverse coalition that includes the American
Electronics Association and the National Conference of State
Legislatures, two groups that, on this issue, have in the past
disagreed again and again. Those two groups, the American Electronics
Association and the National Conference of State Legislatures, are
united saying the way for the Senate to proceed is to go for a clean 2-
year extension of this moratorium and reject the substitute.
I yield the floor.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Madam President, I request the Chair please notify me
when I have used 4 minutes.
Madam President, we need to decide what this debate is about and what
it is not about. This is not a debate about a new tax. It is not a
debate about a new tax. My colleague referred to that. That is not
accurate, and I would be happy to have a long and extended debate about
that. But let's understand what it is and is not.
I support the Enzi-Dorgan substitute. I think it is an important
piece of legislation. Let me describe what it does.
We have two problems. One of the problems is that more and more sales
in this country now are being conducted by remote sellers--Internet,
catalog, and so on. On Main Streets of our communities we have sales
being conducted by small business men and women. When they make those
sales, they collect the tax. They compete against a remote seller who
makes a sale but does not charge the tax, even though a tax is owed on
the transaction. The tax is owed on a transaction with the remote
seller, but it is never paid because it is a use tax and people don't
file millions and millions of use tax returns. The result is State and
local governments are losing a substantial amount of money--$13 billion
it is estimated this year; by the year 2006, $45 billion, most of which
goes to support local schools. So State and local governments are
rightly concerned about funding for their schools.
There is also the issue of fairness for Main Street. That is a
problem: Lack of funding for schools, a tax that is owed but not paid,
fairness for Main Street retailers.
The second problem is a problem for remote sellers. A remote seller
says: I don't want to have to collect a tax and submit it to 5,000 or
7,000 jurisdictions. That is a fair point. They should not have to do
that. That is burdensome and too complicated. So we say solve both
problems.
Require State and local governments to make dramatic simplifications
in their tax systems. When they do, through a compact, submit that
compact to the Congress for approval or disapproval. If the Congress
approves that, then allow them to require remote sellers to collect the
tax that is already owed on the transaction, solving both problems and
dramatically simplifying compliance for the remote sellers. And we will
not approve it if it does not do that.
Second, at the same time, collect a tax that is already owed and make
it much simpler for those who owe that tax to comply with current law.
We can do both of those. We can solve both of those by beginning with
this substitute. This substitute itself doesn't solve the problem, but
we have two choices. We can decide to ignore this problem and do
nothing. But you know and I know it will not go away. We will be back
here next year or the year after or 5 years from now. This problem is
going to grow, not recede. We can solve this problem now or we can just
do the moratorium, which, incidentally, I have supported and do
support, but I support it with a solution to the other problem.
We can do these in tandem by providing support for the Enzi
substitute, saying we want to do a number of things. We want to extend
this moratorium. We don't believe in punitive taxation. We don't
believe in taxing access. We want to do all the things Senator Wyden
talked about with respect to the moratorium, but we want to do more
than that. We want to solve another problem out, festering, and
growing. It is not a problem that deals with a new tax. Anybody who
talks about that is just dead wrong. It is a problem dealing with
school finance, with fairness on Main Street, a problem with ballooning
revenues that need to come to support our schools, revenues that are
now being lost because they are not being paid.
That is the choice, and I hope we make the right choice tonight.
Let me make one final point. When we pass the Enzi substitute, we
have not done anything except say to the States: You go ahead and
develop this process and submit it to us later, and we will then make a
judgment on whether we will allow you to impose this collection. But
our judgment will be based on whether you substantially have simplified
your tax laws.
That is what the Enzi substitute does, and that is why I support it.
I yield the floor.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. ALLEN. Madam President, I yield myself 8 minutes off the time of
the opponents of the amendment.
The PRESIDING OFFICER. The Senator is recognized for 8 minutes.
Mr. ALLEN. Madam President, the reality is, if we pass the Enzi-
Dorgan amendment, the substitute, what we are in effect doing is
imposing Internet access taxes and allowing discriminatory taxes on the
Internet. This is a measure on which I know Senator Enzi and Senator
Dorgan have worked hard. Nevertheless, it has been changing almost by
the day and certainly almost by the hour in recent weeks. There has not
been any scrutiny to it.
Let me associate myself, though, with the remarks and observations of
Senator Wyden of Oregon. This does complicate the Tax Code. It is a
very complex issue which actually makes it
[[Page S11908]]
worse. There are unfair taxes that could occur even within a State if
this were adopted and, indeed, it has added taxes.
If we allow this amendment to be put on, let's have no doubt about
it; the House is not going to conference. We will have this expired
moratorium continuing. There are already States that have access taxes
that are grandfathered. These are taxes, such as the Spanish-American
war tax that was put on for telephone service, a luxury. Once taxes are
put on by a State or locality, it is very hard to get them off.
There are two sides. There is a choice Senators are going to need to
make. The opponents are for a tax-free Internet. The other side is on
the pro-tax-collector side. The first decision we need to make is
whether we extend the Internet access tax moratorium or do we vote for
the Enzi-Dorgan amendment which would result in allowing Internet
access taxes and discriminatory Internet taxes.
The opponents of this amendment side with individuals. We side with
entrepreneurs rather than siding with the tax collectors.
We have heard that this is a loophole, the fact that someone who has
no physical presence in a State, gets no benefits from fire or police
services, that they do not have to collect and remit sales and use
taxes to 7,600 jurisdictions--that that is not a level playing field,
or it is a loophole.
I look at the Internet as an individualized enterprise zone where the
consumer, the individual, the human being is the one making the
decisions, not tax-collecting bureaucracies.
As far as this level playing field, let's assume you wanted to get
your son or daughter a Harry Potter CD. If you ordered it on line, it
would cost $16.26. That is including shipping and handling. That would
be getting it in 3 to 5 days in shipment. It would be 5 times more in
cost of shipping if you wanted it overnight. Off line, at a store, it
would be $14.62.
With the velour dress, here are cowboy boots and a computer. Let me
go through the specification on each of these to show how this playing
field is relatively level and, in fact, you actually save money by
going to a store, as well as convenience. Amazon.com on line, total
price, shipping and handling, is $16.26. If you go to Best Buy in
Springfield, VA, paying a sales tax, it is $14.62. Savings by going to
the store is $1.64. Again, we took the lowest shipping and handling.
Again, this is where we take the lowest shipping and handling.
Let's assume you wanted to buy yourself or your bride a dress. There
is a velour dress from Spiegel.com, on line, at $89. The price at the
store is actually a little more. At Tyson's Corner, at Macy's, it is
$95. But when you put in the tax versus shipping and handling, you save
money by going to the store.
Say you wanted to buy yourself some boots. This is what it would cost
on line--$120. It is $121 at the store in Springfield. But, again, the
savings is $3.50 if you go to the store over shipping and handling.
If you buy a Dell computer on line, the price is exactly the same
price as it is at Circuit City in Charlottesville, VA. But you would
save money in that the sales tax is $71. Shipping and handling is $95.
You would save approximately $24.
Put all of that into context. If you are buying a dress, or somebody
is buying boots, you may like to try them on. You may want to put them
on to see if they fit. That is the advantage those in the stores have
over somebody buying on line. You can touch it. You can feel it. You
can see how they fit. If there is a problem, you bring them right back
to that store. You don't have to pay handling and shipping and go
through all that annoyance and aggravation of handling and shipping.
Say you wanted to buy your son or daughter the Harry Potter
soundtrack but didn't want to wait 5 days. Maybe you wanted to get an
Allen Jackson soundtrack and listen to it driving home. You would want
to get it right away. Again, the convenience is there.
The point is there is competition. The idea that this is not a level
playing field is not just borne out by the facts. While this is all
very well intentioned, the solution is not burdening the free
enterprise system. The solution is not harming the Internet, and the
capabilities and potential and possibilities of the Internet for
education, communication, and commerce.
Indeed, what is being tried here with the Enzi-Dorgan amendment is to
abrogate and negate a settled constitutional law from Supreme Court
decisions, whether it was the Quill decision or whether it was the
Bella Hess decision, which say there cannot be taxation without
representation.
I would like to work with the proponents of this amendment to find a
system where the folks who care about their local schools, as Senator
Dorgan said, can pay those use taxes. But I am going to stand on the
side of freedom--freedom of the Internet, trusting individuals and
entrepreneurs--and not on the side of making this advancement in
technology easier to tax for the tax collectors.
I reserve whatever time I may have remaining.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. VOINOVICH. Madam President, I yield myself 4 minutes.
Madam President, I rise in support of the amendment offered by my
colleagues, Senators Enzi and Dorgan. Most experts agree that this
explosion in electronic commerce, made possible through the Internet,
helped fuel our most recent economic surge and contributed to the
greatest sustained period of growth in our nation's history. However,
most would agree that the current framework of thousands of state and
local tax jurisdictions is now well-built for this ``new economy.''
Technology has made it possible for commerce to transcend traditional
local, state and even national borders.
The issue here is how can we continue to grow the Internet while at
the same time preserving state's rights to collect revenues on sales
that traditionally would be generate sales taxes. Frankly, I believe
that no state is in favor of creating new taxes so as to cripple the
growth of the Internet. But I do feel that states and localities should
be able to collect taxes on legitimate transactions that have a
substantial nexus with their state so that they would be able to
collect sales taxes on those transactions if they were to physically
take place in their state.
And many other organizations agree.
This legislation is supported by the National Governors Association,
National Association of Counties, National League of Cities, Council of
State Governments, International City and County Management
Association, National Retail Federation, National Association of
Retailers, E-Fairness Coalition and companies such as Gateway, Compaq,
VerticalNet, Walmart, Target, HomeDepot, and Circuit City.
This issue is truly about federalism--the delineation of the role the
federal government plays relative to state and local governments and
the people.
With regard to sales taxes, there are currently 45 states that rely
on some form of sales tax. These states receive, on average, almost 33
percent of their annual operating budgets from sales taxes. In my state
of Ohio, it's 31.4 percent.
Our States are in a very serious situation. A recent study prepared
by the University of Tennessee shows that states could lose nearly $440
billion in sales tax revenue over the next decade in Internet tax
revenues if Congress does not empower our states to collect revenues
from remote sales.
These are revenues that would not be available to build schools, pave
roads, pay for emergency services or meet other fundamental
responsibilities.
In my home state of Ohio, our state government will lose more than
$475 million in fiscal year 2002 and Ohio is projected to lose $596
million in fiscal year 2003 in revenue forgone from their ability to
raise funds from Internet sales.
And as our economy moves more and more towards E-commerce, the fiscal
impact on Ohio and other states will continue to damage the abilities
of our states to fund their own services. This lost revenue merely
exacerbates the difficult fiscal challenges Ohio and other states face
as they suffer revenues losses from the current economic downturn.
For the federal government to shield Internet sellers from state tax
collection responsibilities would usurp the autonomy of the states and
force them to cut services and/or raise revenue elsewhere through
additional taxes or fees.
[[Page S11909]]
In my view, preempting the states in such a critical area as e-
commerce without addressing the state and local revenue needs suggests
that Congress is not as committed to the principles of federalism.
And it could force the states to come to Washington in order to make
up the funds we have taken away from them. For those concerned about
the growth of the federal government, as I am, it will be very
difficult to say ``no'' when states argue for more money if Congress by
inaction has taken away a revenue source.
That is why this amendment by Senators Enzi and Dorgan is so
important.
It provides a permanent extension of the moratorium on Internet
access taxes, and extends the moratorium on multiple and discriminatory
taxes for five years.
In addition, this amendment encourages states to develop a
streamlined system of sales and use taxes that provides: a centralized
multi-state registration system for sellers; uniform rules for
attributing transactions to particular taxing jurisdictions; uniform
procedures for exempt purchases; uniform software certification
procedures; uniform tax return and remittance forms; consistent
electronic filing and remittance methods; and protections for consumer
privacy.
This amendment will also allow Congress to remain involved before any
state moves to tax any Internet transactions. Once 20 states have
developed and adopted an Interstate Simplified Sales and Use Tax
Compact, the states will submit the Compact to Congress.
Our State and local governments are not interested in putting a
damper on the expansion of the Internet; they want it to prosper like
all of us.
The real question before us is: how can we ensure that our businesses
and our nation are able to compete in this new, technology driven
economy without sacrificing the principles of federalism which have
served us well for over 200 years? State economies benefit from the
healthy and unfettered growth of electronic sales. All they and
traditional retailers ask is fair treatment.
Federalism can adapt and even flourish when we remember to work as
partners with our state and local governments. That is why I urge my
colleagues to support the Enzi-Dorgan amendment.
I yield the floor.
The PRESIDING OFFICER. The Senator from California.
Mrs. BOXER. Madam President, I yield myself 5 minutes in opposition
to the Enzi amendment.
The PRESIDING OFFICER. The Senator may proceed.
Mrs. BOXER. Thank you very much, Madam President.
I rise in strong opposition to the Enzi amendment, and I hope we will
defeat it by a very strong bipartisan vote.
I have read this amendment over and over. It has changed mightily
during the last month or so. But it is very clear to me that if this
amendment were to become law--by the way, the House would never allow
it to become law. But let's say it could become law. I think it would
wreak havoc on Internet commerce. Let me tell you why.
Look at page 3 of the amendment. Look at section 3, and look at
paragraph A. There is a 1, which clearly states that Internet service
providers could be forced to go back retroactively to 1998 and remit
Internet access taxes to the States.
Can you imagine the burden that would put on this country at a time
in our history when we are in a major recession?
Second, Senator Enzi's amendment would not prohibit new taxes on
Internet access and, although it would keep the moratorium on
``discriminatory and multiple'' taxes, it may not prevent ``new'' taxes
on electronic commerce.
Finally, I want to state that these are statements made by my friend
and colleague from Oregon, Ron Wyden, in a far more articulate way than
I. I am trying to underscore what he said.
If you look at page 4, you see that the Enzi proposal would allow
taxes on Internet content. It is very clear that the moratorium on
Internet access taxes would no longer apply to Internet content.
Can you imagine people connecting to the Internet and suddenly being
charged every time perhaps they connected to the Web?
In my view, this is a very dangerous kind of amendment because if it
does become law it will wreak havoc on business on the Internet, and
not only business, but just the right to get on the Web and read
content and to be able to do that without extra charges. This is not
the time for that.
Madam President, this was updated as of October 5, 2001. The Wall
Street Journal has printed 30 pages of companies that have gone out of
business. I will give you some of them. AdMart: announced plans to shut
down, lay off 334 employees. Advertising.com: announced plans to lay
off 72 employees, or 25 percent of its staff. And it goes on and on and
on.
You will remember some of these companies. We remember the Webvan
that went out of business. But it just goes on and on. You would
recognize some of these companies.
Is this a time, I would ask my colleagues, to go after this industry?
It is the wrong time. It is the wrong time, and it is a dangerous time.
I will give you some more examples.
Barnes & Noble.com said in February 2001 it will cut 350 jobs, or 60
percent of its workforce.
Beautyjungle.com, a cosmetics seller, laid off 60 percent of their
workforce and then shut down.
I will go on. eToys: In January 2001, it said it would lay off 700
people, or 70 percent of its workforce. In February 2001, it said it
would let go the remaining 293 employees by April. Later in February,
it said it would file for bankruptcy protection.
Here is the Webvan Group story. Cut staff in April 2001 by 30 percent
or 885 employees. They also closed operations in Sacramento, CA, and in
Atlanta, the latest in a series of shutdowns. In July 2001, they
announced plans to close all remaining operations and terminate 2,000
employees.
The general economy is in trouble. We have seen more layoffs in 1
month than we have in 21 years.
The PRESIDING OFFICER. The Senator's time has expired.
Mrs. BOXER. Madam President, I ask unanimous consent for 30 seconds
to conclude my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. BOXER. So, in closing, this amendment is flawed. It will allow
new Internet access taxes. It will force the collection of Internet
access taxes going back to 1998. It will allow taxing on content. And
it comes at a time when the economy is tanking.
For goodness sakes, we cannot even get an economic stimulus package
passed, and the first thing we do, late on a Thursday night, is look at
ways to get more people laid off.
I hope we will vote, in a bipartisan way, against the Enzi amendment.
I yield back my time.
The PRESIDING OFFICER. Who yields time?
The Senator from Florida.
Mr. GRAHAM. I yield myself 5 minutes off the proponents' time.
The PRESIDING OFFICER. The Senator may proceed.
Mr. GRAHAM. Madam President, this is the most important vote that we
are going to take in this Congress, first or second session, on
education, on public services, and on fundamental fairness in America's
marketplace.
Why do I make that statement? I make that statement because, first,
State and local governments are very dependent on the sales tax in
order to fund their basic public service responsibilities, specifically
education, police, and fire.
Let me just give you some examples. The city of Boston: 10 percent of
its revenue comes from its local sales tax. That represents
approximately half of its annual cost of its police and fire services.
The city of Detroit: 10 percent of its total revenue comes from its
local sales tax. That represents two-thirds of the cost of its police
and fire services.
In Milwaukee, 23 percent of the local revenue comes from its sales
tax which represents almost 100 percent of the cost of its police and
fire.
At a State level, to use my State of Florida as an example, 73
percent of our general revenue comes from the sales tax, and 70 percent
of that general revenue is used to finance education and the public
emergency services, such as State police and our judicial system.
[[Page S11910]]
If there were to be a significant erosion of our sales tax, in these
cities in my State, and the other 45 States which are very dependent on
the sales tax, there would be an immediate impact on their primary
responsibilities of education and public services.
Second, State governments and local governments are facing a
hemorrhaging of the sales tax. To use my State again as an example, the
State of Florida collects approximately $30 billion a year in sales
tax. The General Accounting Office has estimated that by the year 2003,
there will be a 4-percent erosion of that sales tax revenue by virtue
of sales tax that will not be required to be collected because the sale
will be made by a distant seller.
Then, according to a study made by the University of Tennessee, 3
years later, in the year 2006, that will go up from 4 percent to almost
8 percent of our State's sales tax revenue.
That is what I call a hemorrhaging of the ability of a major State--
illustrative of the other 45 sales tax States--to be able to finance
basic public services.
Third, there is no rationale for this discrimination in favor of one
group of retailers over another group of retailers. This is not a new
tax. This is a responsibility to collect a tax which is paid by the
ultimate consumer and which has been in place in most States, including
mine, for over a half a century. This is not a new tax. It is a
responsibility for equality of treatment in the collection of an
existing tax.
This will do serious harm. It will do more harm to our traditional
Main Street retailers. Why should we say to a local bookstore that they
have to collect the sales tax on the Harry Potter book, but that if you
buy it from a distant store, they do not have to collect the sales tax?
There is no rationale to that policy.
There have been, in the past, times in which there has been a public
policy that said, we will provide a lessened sales tax or some other
preferential benefit in order to stimulate the sale of a product that
we consider to be in the public interest.
In my State, we did it, for instance, for solar energy. But we are
not talking about new products here; we are talking about books, we are
talking about clothes, we are talking about electronic items. It is not
the product; it is the method of sale of the product that is getting
the discriminatory beneficial treatment.
Finally, there have been statements made about all of the horrors
that are going to happen if we pass this amendment. People forget, this
amendment had no life, had no vitality until this Congress, by a
separate independent affirmative act, at some point in the future,
voted to institute this authority of the States to collect the sales
tax through distant sellers.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. GRAHAM. Madam President, this is an extremely important issue for
the most important services rendered by our State and local
governments. I urge a vote against the motion to table.
The PRESIDING OFFICER. The Senator from New Hampshire.
Mr. GREGG. Madam President, I rise in opposition to the amendment and
yield myself 5 minutes.
The PRESIDING OFFICER. The Senator may proceed.
Mr. GREGG. Madam President, there are a number of issues that are
raised by this amendment which are very significant. It comes to us
tonight without having any hearings, without having any airing in the
public sector of any significance. Yet it addresses some of the most
fundamental issues of constitutional law, and the relationship between
States and between the Federal Government and States, that we could
confront as a Congress. It is simply precipitous to pass this amendment
in this rushed format.
The amendment would go right at the heart of what has been a long
history of case law settled by the Supreme Court and reverse it. It
would reverse the Bella Hess case and the Quill case which,
essentially, are cases which said that there must be a nexus between
the seller of the goods and the State in which the goods are sold
before a tax can be assessed against the seller of the goods.
This amendment would reverse that. That is the purpose of this
amendment. It does not affect just Internet transactions.
There is an equally large effort here to reverse the issue as it has
been dealt with in catalog sales. Yet the proposal is going to be dealt
with in 2 hours in the Senate Chamber. Clearly, it is precipitous
because the implications are huge.
The second major constitutional problem with the amendment is that it
creates this brandnew regime where 20 States can bind the other 30
States. This is truly an excess of the minority over the majority. It
reverses the concept of federalism and turns it on its head and says if
20 States reach agreement, then the rest of the 30 States have to
follow that agreement. If you are going to change constitutional law,
you have to have a three-fifths vote. There is no way you can do it
with 20 States. And yet that is the attempt here.
This is a roundabout way of trying to amend what is essentially a
constitutional procedure without using the appropriate constitutional
procedures. If it were passed, it would truly set up a precedent which
would fundamentally harm the concept of federalism. If it is used here,
I can see this concept of 20 States getting together and ganging up on
the rest of the States being used fairly regularly.
The amendment itself on the issue of substance is wrong and
inappropriately presented. It certainly is wrong on the issue of the
manner in which it has been brought forward in that it should have
gotten more hearings. If this idea makes sense, it should go through a
proper hearing process before it comes to the floor. It would create an
atmosphere where 7,000 different jurisdictions across the States could
end up taxing the Internet. That would be chaos and would fundamentally
undermine this engine of prosperity and economic growth which we had
and which we continue to have and which we continue to lead the world
in, which is the Internet.
Those are the substantive reasons why this is a bad idea at this
time. There is probably an equally, if not more important procedural
reason. If this amendment passes, it is a poison pill. It will kill the
Internet tax moratorium. It will mean that there will be no moratorium
for the next 2 years.
The House has said it is not going to take this language. It is not
going to conference this language. So as a practical matter, the
Internet tax moratorium is dead. The underlying bill here would cause a
2-year tax moratorium. And if the language of this amendment makes
sense, that will give us more than ample time to proceed in the proper
course through the proper hearing procedure to listen to the arguments
for this proposal. It can be passed any time during this next 2 years.
What can't be done during the next 2 years, if we don't have an
Internet tax moratorium, is put back together Humpty Dumpty because we
will literally have thousands of jurisdictions which will put in place
taxes against the Internet as soon as they have that opportunity, as
soon as it is clear that there is going to be no moratorium. We will
have chaos which we will never be able to sort out.
The amendment, although obviously sincerely principled and
aggressively pursued, has serious substantive problems. I hope we will
not pass this amendment because it will represent a poison pill and it
will end up killing the Internet tax moratorium.
The PRESIDING OFFICER (Mr. Miller). Who yields time?
The Senator from Delaware.
Mr. CARPER. Mr. President, I rise in support of the amendment and
yield myself 4 minutes.
The PRESIDING OFFICER. The Senator may speak.
Mr. CARPER. Mr. President, Delaware is one of five States that has no
sales tax. One might think as a result we have no dog in this fight. We
do. I think we all do, whether we happen to be from a sales tax State
or not.
My colleague who spoke immediately before me said we haven't had
hearings on this proposal. We have had discussion in this Chamber, in
the House, in State houses across the country, certainly in Governors'
meetings for the last 3 years. We don't need a hearing to know that
States are under duress. Their economies are struggling. Their revenue
growth is down and in some cases negative. Spending is up. Unemployment
is up. Out-of-pocket costs for
[[Page S11911]]
health care for Medicaid are up, and they are in between a rock and a
hard place.
We have been debating this week how can we help those States in their
time of need. Some have said: Let's increase the Federal share for
Medicaid. Others have said: Let's provide an extension of unemployment
insurance and pay for it with Federal dollars. Others have said: Let's
pass a stimulus package. Maybe we should provide a sales tax holiday
and let the Federal Government pay for that--something I don't think is
a good idea, but that has been put forward.
A much better idea is the Enzi-Dorgan amendment that lies before us
today, the product of many years work between the States, between
Governors, mayors, county executives, legislators here, and previous
administrations as well as the current administration. What does it do?
Anybody listening to this debate has to be confused.
This amendment provides for extensions of bans on multiple and
discriminatory taxes for 5 years, and it extends the ban on access
taxes permanently. That is what it does. What it also does is it
empowers the States to work among themselves to see if 20 of them can
agree on a simplified approach toward collecting taxes from remote
sellers. If they can come to an agreement and provide that kind of a
simplified approach, then that plan would come to us and we would have
the opportunity to vote yes or no as to whether or not States can
actually proceed. If we vote no, they can't proceed.
Our voting for this amendment today, even if it ended up in the final
bill signed by the President, would not authorize the collection of a
sales tax by remote vendors. It simply sets in motion a process which
could lead to another vote by us somewhere down the line.
My last point: If you happen to be a brick and mortar vendor in a
State and you have a sales tax and you are required to collect a sales
tax and are selling a piece of luggage or a shirt or wallet, a CD
player, and you have to collect sales taxes on those items and charge
more for those items and there is somebody who is buying it remotely
from another State, where are people going to shop? More and more they
are shopping on the Internet. They are not going to the local vendor.
It is not fair to the local vendor who is collecting the taxes that pay
for the schools and public safety and transportation and other things.
It is just not fair.
One aspect of this amendment I am not comfortable with deals with
Amazon.com and the eBay issue which I have discussed with Senators Enzi
and Dorgan. I hope when we get to conference, we will have an
opportunity to address those issues.
I yield to Mr. Enzi for whatever time he consumes.
Mr. ENZI. I thank the Senator from Delaware, particularly since he is
from a non-sales-tax State, for supporting this issue and realizing how
important it is to other States. I will definitely work to get that
done. What we are trying to do is have an even playing field here. I
will work to get that as part of the definition and clarification.
Mr. CARPER. I thank the Senator for his assurances.
The PRESIDING OFFICER. The Senator from New Hampshire.
Mr. SMITH of New Hampshire. Mr. President, I rise as an opponent to
the amendment and yield myself 3 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SMITH of New Hampshire. Mr. President, I rise in opposition to
this amendment because e-commerce is at the very heart of our economy.
It brings billions of dollars in revenues, provides huge surpluses to
local, State, and Federal coffers throughout the country. Why,
particularly in an economic slowdown, would we want to saddle an
industry with huge new tax increases and heavy bureaucratic and
regulatory burdens? It does not make sense.
The National Bureau of Economic Research concludes that imposing
these multibillion dollar tax increases and government burdens would
result in a 30 percent reduction in purchases over the Internet. Think
of what that would do to the economy. It would have a devastating
effect.
For the first time in history, government bureaucrats in one State
will have the power to tax the people in another State. That is not
right. The hours and capital required to comply with the Tax Code from
the IRS and State and local taxing agencies are going to be
overwhelming under this amendment. Not only would businessowners be
under the glass with the usual suspects, but now they are going to be
open to thousands of bureaucratic agencies looking into their business
to get a cut.
I can assure you if a State or local official spends money to come
across the country to audit you, he is going back with some money. In
New Hampshire, we don't have a sales tax, and I believe it is a
regressive tax that disproportionately affects the poor and working
class. It is a State's decision as to whether they want to impose the
tax. Under this legislation, New Hampshire residents would be forced to
pay these taxes to businesses all across the country. Due to the
increased costs of paying these out-of-State taxes, and the flood of
audits, our residents would pay substantially higher prices for goods
and services.
So allowing State and local governments the power to target taxpayers
outside their own State, where those people have nothing to say at the
ballot box, would set a horrible precedent. Frankly, I believe it is
unconstitutional.
States would then be able to use this new sword to target businesses
and States that were competing with their own. Of course, with local
businesses and consumers in an uproar, States would have to retaliate.
Then we come to lawsuits. At some point, the Federal Government is
going to step in and be called to set regulations and taxing levels,
and here we go on down the road where the Government sets the sales tax
rate. They would then have the venue they needed to have a national
sales tax.
Some have argued for a national sales tax, but this would be on top
of the income tax. If you don't like the income tax, you are not going
to be too happy about having a sales tax on top of it.
This is a multibillion-dollar increase, a regulatory monster, and it
must be stopped. I urge my colleagues to vote against the Enzi
amendment and support Main Street and freedom.
The PRESIDING OFFICER. Who yields time?
Mr. WYDEN. Mr. President, we are moving to wrap this up. I want to
come back to a couple points because I think there is confusion, for
example, on the Internet access charge issue. There is a sense among
some Senators that this is something that would have to be approved by
this body. That is not correct. This amendment--the substitute--changes
the definition of Internet access, and it can be applied to millions of
Americans without any further action by the Senate.
In particular, what the amendment says is that it would be possible
to ``tax content or services.'' That is virtually everything. Nobody
wants a blank screen on their computer. Of course, they are going to
have a Web page with news, weather, and basic information. The fact is
that the substitute means that millions of Americans could be hit with
new taxes just for clicking on a Web page, and this could be done
without any further action by the Senate.
I think most Senators believe there ought to be a permanent ban on
Internet access taxes, that Internet access taxes widen the digital
divide. Yet the substitute on the Internet access tax issue goes in
just the opposite direction. A lot of Americans think Internet access
is plugging the computer into a phone line, dialing up the Internet
provider, and logging onto the net. Then you would get a blank screen.
Of course, you want information and content. People need to know, as
they move to this vote, that they could be taxed for getting those
kinds of services that many of them believe are essential, such as the
weather.
At the end of the day, I pledge to continue to work with the Senator
from Wyoming. He has been extremely sincere and extremely dedicated.
However this vote comes out, I want to make it clear that I will work
closely with him, Senator Dorgan, and all the Senators who see this
differently than I, Senator Baucus, Senator McCain, and others. We are
going to have to stay at it.
[[Page S11912]]
When you vote tonight, you are talking about two very differing
approaches with respect to Internet policy. One approach that we
advocate tonight is backed by the American Electronics Association and
the National Conference of State Legislatures. The other is opposed by
virtually all of the technology groups in the country.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Mr. President, I yield myself 3 minutes.
I thank all of those people who have been dedicated in their work on
this issue. There have been innumerable meetings, and Senator McCain,
Senator Dorgan, Senator Kerry, Senator Wyden, and I have been the
primary people. We have met with these different groups to see what
parts of the Internet were their interests.
This bill is as close as we can come to pulling everybody to the
center. No, it doesn't please everybody. Does it please most of the
people? I certainly hope so, and we will have a vote to determine
whether it does or not. But this does make permanent the Internet
access tax prohibition. Now that is something that Gateway,
VerticalNet, Compaq, and other high-tech folks have wanted and do want.
This bill does not have new taxes in it. This bill has a provision so
that States will be encouraged to simplify their taxes and, at some
future time, in order to comply with the Supreme Court decisions
mentioned here, there will be a vote to see if Congress approves of
their simplification. Unless the vast majority of the States are
involved in that, I am sure they won't get approval.
We passed a moratorium 2 years ago, and we promised all of these
governmental agencies and all of the other people with an interest in
sales tax that we would put a bill together, solve their problem, bring
them a solution. Have there been hearings? Everybody says there have
not been hearings. There have been a lot of meetings. There has not
been a bill produced other than what we have here.
This is a promise we made to local and State governments 2 years ago.
This is some action we can take on it. It doesn't make anything final,
but it provides incentive to get people together to work on a problem
that is necessary. Cities, towns, and counties, not to mention States,
have been put under some unusual circumstances just since September 11.
We need to have a mechanism for them to be able to fund them. We have
not promised funding for everything. We have made them do a lot. This
gives them an opportunity to work out a system whereby they can
continue to operate, continue to have revenues that are on a declining
basis at the moment, and this is something so that we can have a vote.
This just provides for a vote of Congress at a future date when there
has been streamlining.
The extension of the current moratorium of the Internet Tax Freedom
Act of 1998 expired this past Sunday on October 21, 2001. I believe
this amendment would thoroughly address this issue as well as the
simplification of State and local use tax systems.
We had to take a look at the Internet sales tax issue for people who
might be using legislative vehicles to develop huge loopholes in our
current system. We need to preserve the system for those cities, towns,
counties, and states that rely on the ability to collect the sales tax
they are currently getting. I believe that the moratorium on Internet
access taxes and multiple and discriminatory taxes on the Internet
should not be extended without addressing the larger issue of sales and
use tax collection on electronic commerce.
Certainly, no Senator wants to take steps that will unreasonably
burden the development and growth of the Internet. At the same time, we
must also be sensitive to issues of basic competitive fairness and the
negative effect our action or inaction can have on brick-and-mortar
retailers, a critical economic sector and employment force in all
American society. In addition, we must consider the legitimate need of
State and local governments to have the flexibility they need to
generate resources to adequately fund their programs and operations.
As the only accountant in the Senate, I have a unique perspective on
the dozens of tax proposals that are introduced in Congress each year.
In addition, my service on the state and local levels and my
experiences as a small business owner enable me to consider these bills
from more than one viewpoint.
I understand the importance of protecting and promoting the growth of
Internet commerce because of its potential economic benefits. It is a
valuable resource because it provides access on demand. Therefore, I do
not support a tax on the use of Internet itself.
I do, however, have concerns about using the Internet as a sales tax
loophole. Sales taxes go directly to state and local governments and I
am very leery of any Federal legislation that bypasses their
traditional ability to raise revenue to perform needed services such as
school funding, road repair and law enforcement. I will not force
states into a huge new exemption.
While those who advocate a permanent loophole on the collection of a
sales tax over the Internet claim to represent the principles of tax
reduction, they are actually advocating a tax increase. Simply put, if
Congress continues to allow sales over the Internet to go untaxed and
electronic commerce continues to grow as predicted, revenues to state
and local governments will fall and property taxes will have to be
increased to offset lost revenue or States who do not have or believe
in state income taxes will be forced to start one.
Furthermore, State and local revenues and budgets are especially
critical now as these governments are responding to protect the
security of all of our citizens and businesses. Any action to extend
the current moratorium without creating a level playing field would
perpetuate a fundamental inequity and ignore a growing problem that
will gravely affect the readiness of the nation.
After months of hard work, negotiations, and compromise, this
amendment has been filed. I would like to commend several of my
colleagues for their commitment to finding a solution. I know this
amendment is the solution. The amendment makes permanent the existing
moratorium on Internet access taxes, but extends the current moratorium
on multiple and discriminatory taxes for an additional four years
through December 31, 2005.
Throughout the past several years, we have heard that catalog and
Internet companies say they are willing to allow and collect sales tax
on interstate sales, regardless of traditional or Internet sales, if
states will simplify collections to one rate per state sent to one
location in that state. I think that is a reasonable request. I have
heard the argument that computers make it possible to handle several
thousands tax entities, but from an auditing standpoint as well as
simplicity for small business, I support one rate per State.
I think the States should have some responsibility for redistribution
not a business forced to do work for government. Therefore, the
amendment would put Congress on record as urging states and localities
to develop a streamlined sales and use tax system, which would include
a single, blended tax rate with which all remote sellers can comply.
You need to be aware that states are prohibited from gaining benefit
from the authority extended in the bill to require sellers to collect
and remit sales and use taxes on remote sales if the states have not
adopted the simplified sales and use tax system.
Further, the amendment would authorize states to enter into an
Interstate Sales and Use Tax Compact through which members would adopt
the streamlined sales and use tax system. Congressional authority and
consent to enter into such a compact would expire if it has not
occurred by January 1, 2006. The amendment also authorizes states to
require all other sellers to collect and remit sales and use taxes on
remote sales once Congress has acted to approve the compact by law
within a period of 120 days after the Congress receives it.
The amendment also calls for a sense of the Congress that before the
end of the 107th Congress, legislation should be enacted to determine
the appropriate factors to be considered in establishing whether nexus
exists for State business activity tax purposes.
[[Page S11913]]
I strongly support this amendment because I do not think there is
adequate protection now. It is very important we do not build
electronic loopholes on the Internet, an every-changing Internet, one
that is growing by leaps and bounds, one that is finding new technology
virtually every day.
Mr. President, I recognize this body has a constitutional
responsibility to regulate interstate commerce. Furthermore, I
understand the desire of several senators to protect and promote the
growth of Internet commerce.
I am very concerned, however, with any piece of legislation that
mandates or restrict State and local governments' ability to meet the
needs of its citizens. This has the potential to provide electronic
loopholes that will take away all of their revenue. This amendment
would designate a level playing field for all involved--business,
government, and the consumer.
The States, and not the Federal Government, should have the right to
impose, or not to impose, consumption taxes as they see fit. The
reality is that emergency response personnel, law enforcement
officials, and other essential services are funded largely by states
and local governments, especially through sales taxes. Passing an
extension of the current moratorium without taking steps toward a
comprehensive solution would leave many states and local communities
unable to fund their services. I urge my colleagues to vote for this
amendment.
In the current definition in Sec. 1104(5) of the ITFA:
The term ``Internet access'' means a service that enables
users to access content, information, electronic mail, or
other services offered over the Internet, and may also
include access to proprietary content, information, and other
services as part of a package of services offered to users.
Such term does not include telecommunications services.
I do want to address one very important issue that has not been
addressed in this amendment. One of the most important aspects of this
legislation deals with State and local taxation of Internet access
services. There is general agreement in this body that there should be
no new State and local taxes on basic Internet access as a way to
assist every American to be able to take advantage of the Internet and
its resources. That is a goal I obviously support, and my amendment
will do that.
As you know, however, I have serious concerns with the current
definition of Internet access. I am concerned that without further
work, it will subvert our intent, discriminate against some Internet
Service providers, and impact state and local governments. Thus, I want
to continue to work with my colleagues at a later date to refine that
definition so that we accomplish our aim without doing harm.
The problem is that the current definition is so broad, and
technology is changing so fast that the current definition could
unfairly discriminate against many businesses that provide similar
content or services over the counter, over a cable wire, or via any
other means. The discrimination could affect a variety of products and
services that I don't think any of us envisioned as part of access to
the Internet. In a nutshell, the current definition essentially
includes anything and everything, except telecommunications that could
be offered as a part of a package of Internet access services,
including television programs, radio broadcasts, games, books, music,
motion pictures and other such products and services.
Following mergers of Internet service providers and media and
entertainment companies, it is not hard to envision an ISP that
provides these services and includes all of the items in one bill to a
customer. For example, an ISP could provide downloadable movies to
customers--allowing a customer to download a set number of movies each
month includable in their monthly fee for Internet access, while paying
extra for any movies beyond the included amount. This sets up some
perverse and discriminatory situations. First, for example, someone who
pays $9.95 for basic Internet service that doesn't include movies would
have to rent movies separately and pay tax on those rentals, while
customers of an ISP that include movies in its $21.95 service would not
pay tax on those movies. Second, the tax-exempt benefit of purchasing
more expensive Internet access services doesn't stop at just movies.
Providers could also include music, publications--and someday soon,
downloadable nightly cable broadcasts--and under the current definition
these would also be exempt from tax. I don't think any of us ever
envisioned when we first debated and enacted a temporary moratorium
that the scope of services provided over the Internet was intended to
cover anything beyond basic access.
I believe that the current definition of Internet access needs to be
examined closely by the Congress so that we don't do damage where we
intend to do good. I have tried a number of different approaches to
defining it, and each of them has issues and problems. I am not ready
to give up, however.
Furthermore, there are also some that believe the current definition
of Internet access needs to be changed because it unfairly
discriminates among providers of Internet access and gives some
providers advantages over others. The current definition favors large
companies over small. It also excludes telecommunications services from
the definition of access. In doing so, the language could be
interpreted to exclude Wireless Web Access because all services
provided by wireless companies are considered ``telecommunications.''
Thus, Internet access purchased from one company might be exempt, but
it could be taxable if purchased from a wireless provider. I know our
intent is not to discriminate among Internet access providers, but that
is the effect of current law.
If we don't continue to work on this definition, we will go contrary
to the findings in the legislation we are considering. If we allow the
current definition of Internet access to remain unchanged, we will be
authorizing the disparate treatment of the sales of identical products
depending on whether the sale occurs online or not. In simplest terms,
the current definition of Internet access would exempt the sales of
many products and services that would be taxed if sold in any other
way. Besides the fiscal problem this would cause for states, this is
also fundamentally unfair, and should be prevented. I think formulating
a good definition of Internet access presents a host of opportunities
that we should not let pass by. It gives us an opportunity to define a
critical component of the infrastructure of our new economy--and, in
doing so, provide a definition that allows all new economy companies,
both large and small, to operate on a level playing field. It provides
us with an opportunity to provide a clear definition that reduces the
probability of litigation over the exact meaning of the statute. And,
it provides us with an opportunity to insure that we do no harm to the
fiscal stability of many levels of government--while providing a
positive environment in which business can survive.
I hope to continue to work with my colleagues at a later date to
develop a definition of Internet access that preserves the tax-
exemption for access to the basic services and resources of the
Internet.
The Internet is such a powerful tool of education and commerce that
we should do everything we can to make sure that each American can take
advantage of it. At the same time, we need to insure that our goal
assisting in the provision of basic access is not subverted by an
overly broad definition of access that allows a host of digital goods
and services to be bundled together and sold tax exempt. Such
subversion would only serve to weaken state and local governments at
this important time in our nation's history.
I ask unanimous consent that a letter from the National Governors
Association, National League of Cities, International City/County
Management Association, National Association of Counties, and Council
of State Governments be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
National Governors Association, National League of
Cities, International City/County Management
Association, National Association of Counties, Council
of State Governments,
November 6, 2001.
Hon. Thomas A. Daschle,
Majority Leader, U.S. Senate, The Capitol,
Washington, DC.
Hon. Trent Lott,
Minority Leader, U.S. Senate, The Capitol,
Washington, DC.
Dear Senator Daschle and Senator Lott: Irrespective of
previous letters on the
[[Page S11914]]
Internet tax moratorium and contrary to some ``Dear
Colleague'' letters circulating in the Senate, we do not
support legislation to reinstate the Internet tax moratorium
for two additional years. Four organizations listed below
support legislation by Senator Enzi (S. 1567) that would
create a level playing field so that remote and Main Street
sellers receive equal treatment. The National League of
Cities is working closely with Senator Enzi and believes that
S. 1567 represents a promising opportunity to resolve this
critical issue.
Sincerely,
Raymong C. Scheppach,
Executive Director,
National Governors Association.
Donald J. Bount,
Executive Director,
National League of Cities.
William H. Hansell,
Executive Director, International
City/County Management Association.
Larry Maake,
Executive Director,
National Association of Counties.
Daniel My. Sprague,
Executive Director
Council of State Governments.
The PRESIDING OFFICER. The Senator has consumed his 3 minutes. Does
the Senator yield back his time?
Mr. ENZI. I reserve the remainder of my time. The other side has used
their time?
The PRESIDING OFFICER. The opponents have used all of their time. The
proponents have 2 minutes.
Mr. ENZI. I yield back the remainder of my time.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, on behalf of myself and Senator Wyden, I
move to table the Dorgan-Enzi amendment and I ask for the yeas and
nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The question is on agreeing to the motion.
The clerk will call the roll.
The legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 57, nays 43, as follows:
[Rollcall Vote No. 341 Leg.]
YEAS--57
Allard
Allen
Baucus
Bennett
Biden
Bond
Boxer
Brownback
Bunning
Burns
Byrd
Campbell
Cantwell
Cochran
Corzine
Craig
Crapo
Dodd
Domenici
Edwards
Ensign
Feinstein
Frist
Gramm
Gregg
Hagel
Hatch
Inhofe
Inouye
Kennedy
Kohl
Kyl
Landrieu
Leahy
Lieberman
Lott
Lugar
McCain
McConnell
Miller
Murkowski
Murray
Nelson (FL)
Nickles
Reid
Roberts
Schumer
Sessions
Smith (NH)
Smith (OR)
Snowe
Stevens
Thompson
Thurmond
Torricelli
Warner
Wyden
NAYS--43
Akaka
Bayh
Bingaman
Breaux
Carnahan
Carper
Chafee
Cleland
Clinton
Collins
Conrad
Daschle
Dayton
DeWine
Dorgan
Durbin
Enzi
Feingold
Fitzgerald
Graham
Grassley
Harkin
Helms
Hollings
Hutchinson
Hutchison
Jeffords
Johnson
Kerry
Levin
Lincoln
Mikulski
Nelson (NE)
Reed
Rockefeller
Santorum
Sarbanes
Shelby
Specter
Stabenow
Thomas
Voinovich
Wellstone
The motion was agreed to.
Mr. McCAIN. Mr. President, I move to reconsider the vote.
Mrs. BOXER. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. McCAIN. Mr. President, I think we are in agreement the major
aspects of this legislation have been decided. So I do not think,
unless someone desires it, that we need another recorded vote.
The PRESIDING OFFICER. If there be no amendment to be offered, the
question is on the third reading of the bill.
The bill (H.R. 1552) was ordered to a third reading and was read the
third time.
The PRESIDING OFFICER. The bill having been read the third time, the
question is on the passage of the bill.
The bill (H.R. 1552) was passed.
Mr. McCAIN. Mr. President, I move to reconsider the vote, and I move
to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I appreciate the debate. I appreciate the
efforts made on both sides of this very difficult issue. The closeness
of it really dictates that we do sit down and work something out on
this issue with Senator Dorgan, Senator Kerry, Senator Allen--all of
those with whom we have met in numerous, countless hours on this issue.
It is very clear we need to come to some kind of agreement rather than
go through moratorium after moratorium.
Mrs. BOXER. Mr. President, the Senate is not in order.
The PRESIDING OFFICER. The Senate will come to order.
The Senator from Arizona.
Mr. McCAIN. Mr. President, I conclude by saying I think we should
begin meetings as soon as possible so we can resolve this issue so
there is a reasonable resolution. I know the proponents of this
amendment which was just defeated spent great labor and effort on it. I
congratulate them for their arguments. I look forward to working with
them. This is an issue that needs to be resolved.
I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, I say to the distinguished Senator from
Arizona, we spent a lot of hours working through this with Senator
Enzi, Senator Dorgan, Senator McCain, myself, and many others. This was
a very difficult vote for many of us. We do not support any tax on the
Internet itself. We don't support access taxes. We don't support
content taxes. We don't support discriminatory taxes. Many of us would
like to see a permanent moratorium on all of those kinds of taxes.
At the same time, a lot of us were caught in a place where we thought
it important to send the message that we have to get back to the table
in order to come to a consensus as to how we equalize the economic
playing field in the United States in a way that is fair.
I hope the Senator from Arizona will follow up with us, so we can
come back to that table to do what is sensible and fair. I look forward
to the chance to do that.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. Mr. President, before the Senator from Massachusetts
leaves, I want him to know, as the original Senate sponsor, I want to
redouble my efforts to work with him and Senator Enzi and all of our
colleagues. We may be able to see that there is a technological fix
here that is going to make it possible to collect taxes owed.
There is a lot of good will on both sides. This is by no means the
end of the issue. I am very pleased the Senator from Massachusetts is
ending this discussion in a conciliatory way because we are going to
have to stay at it. He has my pledge as the original sponsor of this
effort to do it.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, as an original author and cosponsor of the
moratorium, which I believe in, I appreciate the comments. I had hoped,
and in many ways thought this was not ripe for this vote, but I think
it was important for us to have gone through the process. I look
forward to seeing if we can come up with a sensible resolution.
I thank the Chair.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. I thank my colleagues, who have just spoken, for their
comments, for the effort they put forth. I thank all the people for
allowing the debate that happened. That had to be done by unanimous
consent.
Now we know our work is cut out for us. Two years ago we passed a
moratorium. Tonight we passed a moratorium. Hopefully before 2 years is
up we will have done something that will solve the problem. I
appreciate the commitment of the chairman of the Commerce Committee to
make that happen. I am sure all the people who are involved in this
issue will be extremely happy that some work will be done on it. The
hearings will be held. The consensus will be arrived at because it is
necessary for our cities, towns, counties, and States.
I yield the floor.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I have been involved in a number of issues
in
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my time here. I know of no two people who have worked harder on an
issue than the Senator from Wyoming and the Senator from North Dakota.
That renews my commitment to try as hard as I can to come to an
agreement because they deserve an all-out effort on an issue on which
we are fundamentally in agreement.
I thank the Chair. I thank my colleagues.
I yield the floor.
Mr. STEVENS. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DASCHLE. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DASCHLE. Mr. President, I thank all of those Senators who were
involved in the array of legislative items that we have taken up today.
This has been quite a busy day, with a lot of coordination and a
tremendous amount of work. I think we have accomplished a good deal
today.
I also report that the Commerce Committee has completed its work. I
compliment the chair and ranking member of the Commerce Committee for
their work on the aviation security bill. We will be addressing that
bill a little later.
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