[Congressional Record Volume 149, Number 161 (Friday, November 7, 2003)]
[Senate]
[Pages S14250-S14254]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     UNFUNDED MANDATES AND THE INTERNET TAX NONDISCRIMINATION BILL

  Mr. ALEXANDER. Mr. President, Mr. Carper, the Senator from Delaware, 
is on the floor. He may want to speak in a few minutes. I have a few 
comments I would like to make about the debate we are having about 
unfunded mandates and Internet access taxes.
  First, I thank Senator McCain, the chairman of the Commerce 
Committee, who has been working very hard to help bridge what is a 
fairly big philosophical difference of opinion some of us have, and I 
express my appreciation to the leader, Bill Frist, because he created 
some time today and last night for us to debate and talk about the 
issues. I think we have made some progress.
  But here is where we are. As with most of our debates in the Senate, 
we have two valid principles in which most of us believe: First is, no 
taxation of Internet access. I have yet to run into a Senator who 
really wants to tax Internet access. Virtually all of us are willing to 
keep State and local governments from taxing Internet access.
  I am a little bit of a purist on unfunded Federal mandates, with 
Washington politics telling State and local officials what to do, but 
the amendment which I have offered, and which Senator Carper and others 
have joined in, would ban State and local government taxation of 
Internet access.
  That is the first principle. We want the Internet to grow. We don't 
want local taxation. We don't want taxation that discriminates.
  The second principle is, we don't want unfunded Federal mandates. 
That may be a little bit of a Washington word, but most people know 
what it means. It means Senators and Congressmen who come to Washington 
and pass laws and claim credit and send the bill to the school boards 
and Governors and mayors. Nothing makes local officials madder. This 
Congress, to its great credit, since 1995, has been very resolved 
against unfunded Federal mandates. So we don't want to tax Internet 
access and we don't want unfunded Federal mandates.
  We haven't found out how to put the two together. We have offered a 
solution. There are really two basic ones out there. Ours would be to 
just take the current law, the current ban on taxing Internet access or 
allowing State and local governments to make that decision, and extend 
it for 2 years, and then to make a change to minimize discrimination 
between providers, providers being phone companies and the cable 
companies. That is our proposal.
  The proposal on the other side was to create a much broader 
definition of what we mean by Internet access which would create a huge 
unfunded Federal mandate and take away, we believe, billions of dollars 
from State and local government tax bases, cause them to cut services 
or raise taxes on many other things, and make it permanent. That is the 
proposal.
  Our argument is that our 2-year extension of the current law, with 
one adjustment to level the playing field between telephone companies 
and cable companies, is better for the country than a permanent 
installation of a very broad definition. So the issues are duration and 
definition.
  The reasons for our amendment are these. One, we want to preserve the 
original intent of the Congress. The 1998 law was to keep the basic 
Internet access tax free. By that we mean, when you hook up your 
computer to AOL, the intention is that that is tax free. In our 
amendment, even as the telecommunications industry moves more on to the 
Internet, that would continue to be tax free. It is really a 
significant infringement on State and local prerogatives to decide what 
taxes to raise

[[Page S14251]]

on their own. We want to make sure no one will be able to tax e-mail or 
surfing the Web. We want to make sure that States don't lose the bulk 
of their telecommunications revenues. Those were our major goals.
  The opponents have raised many objections to these ideas. They say 
the Internet is so valuable that it should not be taxed. Well, we don't 
tax it any more than it is now. We don't allow taxing any more than it 
is now. And it makes me wonder. I agree the Internet is valuable. I 
supported the first moratorium. But it is a grown-up business now. It 
is no baby in a crib. We had 3 years and then 2 years. Now we are 
talking about another 2 years.
  The telephone is valuable. Television is valuable. Airplanes are 
valuable. The automobile was a great invention. We don't tell State and 
local governments what to do about their tax policy for those 
businesses. The Internet is not a baby in a crib anymore. It can at 
least afford to hire some of the most expensive lobbyists; we know 
that.
  Then they talk about interstate commerce, that we are messing around 
with interstate commerce when we talk about telling States what to do 
about taxing Internet access. I read the Constitution again to make 
sure I was right. Article I, section 8, says Congress has the power to 
regulate commerce among the States, but it doesn't say exactly what to 
do about it. It means Congress can impose limits. They can do some 
things.

  There is also another provision called the 10th amendment which 
reserves all the powers to the States unless they are specifically 
delegated to the Congress. That is where the whole prohibition against 
unfunded Federal mandates came from. That is why, in 1995, this 
Congress passed as its first bill S. 1 of the new Republican Congress, 
to stop unfunded Federal mandates--Congress telling Governors and 
mayors and school boards what services to provide and how to spend 
their money.
  As long as we are allowing States to make decisions about taxation on 
telephones and telegraphs and bus tickets and airline tickets and 
severance taxes, all of which are interstate commerce, I don't know why 
we worry so much about that.
  There is the assertion that we might be taxing broadband. That is 
Internet service delivered by telephone and cable companies. We are 
really not taxing anything. We are trying to decide whether we should 
write some rules for what States should do. Broadband is a wonderful 
thing. It is always just around the bend. We want to it come. What we 
have said is that except for grandfathered States that now tax DSL 
Internet phone service, it can't be taxed in the next 2 years. We are 
just trying to level the playing field for 2 years, as we take the 
current law and extend it for that period of time.
  Multiple taxation would be banned under our amendment, just as it is 
today. Discriminatory taxation is banned under our amendment, just as 
it is today. Taxes on e-mail and basic Internet access, banned, just as 
they are now.
  So it seems to us our amendment is a good one. We are willing to 
continue to visit and talk with the Senator from Virginia and the 
Senator from Oregon, who have worked very hard and believe very 
strongly in this. But our arguments are, the Congress has promised not 
to pass any more unfunded mandates. We have made it a violation of the 
Budget Act to do so. We should respect that as much as we possibly can. 
No. 2, their proposal is potentially a huge unfunded Federal mandate 
which we have promised not to do.
  We believe our amendment is better at reconciling two valid 
principles: One, continuing the ban on basic Internet access and, two, 
making an adjustment to create a more level playing field between cable 
and telephone while making a minimum offense to the principle of 
unfunded Federal mandates.
  We also believe that a short term--a couple of years--allows us to 
craft wise decisions about what is happening in a rapidly changing 
technology, and theirs would impose an inordinately broad definition of 
what we mean by Internet access permanently or for an unreasonably long 
period of time.
  There was a letter sent around from the Republican Policy Committee 
which asserted that the objective of the unfunded mandate law was to 
stop the Federal Government from imposing affirmative duties or 
regulations on the States. It basically argues that the Allen-Wyden 
amendment is not an unfunded mandate. All I can think is that that memo 
didn't make it all the way through the vetting process. It argues that 
the unfunded mandate law Congress passed in 1995 doesn't apply to 
situations where the Congress might say, for example, States may not 
collect taxes on telephones and telegraphs. If we were to say that, 
that would mean State and local governments would be deprived of $20 
billion of their tax base next year, and they would have to raise taxes 
on food or medicine or income or property or something else, or cut 
services.
  By the very plain terms of the Unfunded Mandates Act of 1995, it 
includes both affirmative actions. For example, when we pass a bill 
that says Memphis shall do thus and so for disabled children but we 
only pay for half of the cost, that is one kind of unfunded mandate.
  But according to the Congressional Budget Office and the plain 
English in the 1995 law, it also includes the definition of direct cost 
of a mandate, ``the amounts State and local governments would be 
prohibited from raising in revenues to comply with the mandate.'' An 
unfunded Federal mandate also includes our telling the States you 
cannot raise revenues from these sources. If we think it is so 
important to do that, we are supposed to pay that.
  I am afraid in this case the Allen-Wyden amendment, while they have 
worked hard to try to narrow it, still raises the possibility many 
billions of dollars would be lost to State and local tax bases. In 
other words, we would be imposing a multibillion dollar unfunded 
Federal mandate on State and local governments.
  We believe there is a better way, that we can continue the ban on 
Internet access, but do it in a way that minimizes the unfunded Federal 
mandate. Because the leader asked us to, and we want to, we will be 
working over the weekend, and our staffs are meeting this afternoon. We 
will be working early next week, and we hope we can come to some 
agreement in a very short period of time.
  I am grateful to Senator Carper for his leadership in helping us come 
up with a sensible path in the future. I wanted to give that report on 
the status of where we are.
  Mr. CARPER. Will the Senator yield?
  Mr. ALEXANDER. Yes.
  Mr. CARPER. Let me just say if I have provided leadership, I know the 
Senator from Tennessee has. I have enjoyed the opportunity to work 
closely with the Senator from Tennessee, Senator Voinovich, Senator 
Graham of Florida, and others on this issue. I reflect on the role we 
as Senators are trying to play in this and the disadvantage some of us 
operate from. The Presiding Officer and I serve on the Banking 
Committee together. If the issue before us is like the Fair Credit 
Reporting Act, we have a fairly good idea, using our background and 
experience, as to what is fair and reasonable; what makes sense and 
what is good public policy. If the issue is energy policy, I think our 
background prepares us to make reasonably good judgments there.
  When we come to issues with respect to the Internet and the 
transmission of information over the Internet, for a lot of our 
colleagues--certainly this one--it doesn't take long to get in over our 
heads. If we are honest, I think most will say that. In order to help 
us through a difficult issue like the one we have now, whether there 
should be a continuation of a moratorium on Internet taxes and in what 
form, and should it be extended, we have bright people who work on our 
staffs, and we speak to people from the outside, whether they happen to 
be from the industry or State and local governments, to round out our 
knowledge. But it is still a different result.
  For this Senator--I suspect I speak for the other Senators here at 
this moment--what I think we can maybe best do is figure out the fair 
thing to do. I always like to talk about the Golden Rule, to treat 
others like I want to be treated. I try to apply that even in this 
instance. If you look back to the 1995 law Senator Alexander talked 
about, the genesis of that law was Governors like he and I used to be, 
and even mayors in places like Gillette, WY, who didn't want the 
Federal Government to tell them what to do and not give them

[[Page S14252]]

the money to do it. Similarly, whether you are a Governor or mayor, we 
didn't much appreciate the Federal Government coming in and saying we 
are going to take away your ability to raise revenues as you see fit 
and not make up for the shortfall.

  That sense of outrage sort of grew out of State and local officials, 
and eventually came here and compelled the Congress to take steps to 
enact the 1995 legislation, banning unfunded mandates both under 
spending and on the revenue side. Today you cannot do that. For the 
most part, Congress and the President since have done a good job 
adhering to that law.
  What is before us now is how do we be true to the spirit of the 
unfunded mandates law, not taking away the revenue base of the States 
and, at the same time, trying to be fair to consumers. People want to 
have access to the Internet, whether residential consumers or 
businesses, and how do we manage to be fair to the businesses that are 
providing these services? I am not going to suggest any of that either. 
If I could, we would have finished before this week and we would all be 
in Wyoming, Tennessee, or Delaware, doing other things. But we are not 
there yet.
  The hangup is, as the Senator suggested, the moratorium that has been 
in effect for the last 5 years says you cannot access the Internet and 
add a tax to somebody who has a monthly internet bill. It says if two 
States or more want to tax in that transaction, you cannot do that. 
Multiple taxes are something you cannot do. The same legislation has 
said if there is a discriminatory tax somebody wants to impose on 
Internet transactions, you cannot do it. For example, Delaware has no 
sales tax. To say for a person who goes to the local book store and 
buys a book in Delaware that you don't have a sales tax, but if you buy 
that same book over the Internet, you have a tax imposed, that is a 
discriminatory tax. The law in effect for 5 years said you cannot do 
that.
  What Senator Alexander, Senator Voinovich, Senator Graham, Senator 
Enzi, and a number of others are seeking to do is to simply say the law 
in effect for the last 5 years, which prohibits those kinds of 
activities, stays in effect. Because the world is changing in the way 
people access the Internet, through broadband and DSL, which a couple 
of months ago I could not even spell, today turned out to be a key 
component of this debate. But how do we change the old 5-year 
moratorium in a way that is fair, for instance, to the baby bells, to 
their business interests? What can we do that is fair and will enable 
them to be competitive, level the competitive playing field for them. 
They have suggested that whether you are getting your Internet service 
from a cable provider or a telephone company, State and local 
governments should not be allowed to tax that access to the Internet, 
at least for the end user.
  Here is where our divide is with our friends, Senator Allen of 
Virginia and Senator Wyden from Oregon. The question is: Where do we 
prohibit the imposition of the tax? At what point? Starting with the 
consumer in his or her home, the business in its operation, all the way 
back up to the ISP, through the infrastructure to the backbone--where 
does access to the Internet begin? We argue in our definition in our 
proposal the access begins between the provider, ISP, and the consumer, 
whether a business or an individual.
  Other colleagues, who have a different view, have a much broader 
vision of where the Internet access comes from--much more expansive, 
and by their expanded definition, they expand the prohibition 
dramatically on what State and local governments can tax to raise 
revenues. I think there is an honest disagreement here. We believe we 
should focus on what I call the last mile. There are others who believe 
we should focus on the first mile, all the way through the last mile. 
When we do that, we take for the States potentially a fair amount of 
revenue generation capability off of the table at a time when obviously 
they are hurting and they need every dime they can raise.
  I don't know if we can resolve this difference. I think we had a good 
honest go of it today. Senator McCain is trying very hard to broker 
some kind of agreement. We may be successful or we may not. Ultimately, 
we may have to just vote.
  I say this to our friends who have a different view than Senator 
Alexander, Senator Voinovich, the Presiding Officer, and myself: We in 
Delaware have learned over the years to make our State a real 
attractive place to do business. If other States want to impose fees or 
taxes on services, and we are smart enough in my State to not do that 
and then go to the businesses that are maybe being mistreated by 
regulatory or tax policies in another State, and say, Come to Delaware; 
you won't have to put up with any of that frankly, it has a good 
argument.
  In a variety of ways, financial services and other sections of our 
economy are stronger today because we have chosen not to impose certain 
taxes or fees. We have gone to sections of the economy and said: Look 
what we have in our State.
  I say to those who have a different view than Senator Alexander, 
Senator Enzi, and myself: Don't discount the competitive nature of 
States and how some of us will elect not to impose a tax on any of this 
business in an effort to be far more attractive to those kinds of 
businesses as we go down the road.
  I thank my colleague for the good work he is doing and say to him how 
much I have enjoyed working with him on this issue, clean air issues, 
and others. I hope this is a harbinger of things to come.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I ask unanimous consent to speak as in 
morning business for 5 minutes.
  The PRESIDING OFFICER. The Senator is still under a unanimous consent 
agreement to yield as much time as the Senator wishes to the Senator 
from Delaware.
  Mr. ALEXANDER. Mr. President, as I was listening to Senator Carper, I 
was thinking about what he just said. I believe I am right about this, 
but Senator Carper can correct me: What we are saying in our amendment 
is if the Senator from Delaware or I hook up a computer to the 
Internet, our amendment would prohibit State and local governments from 
taxing that event; isn't that right?
  Mr. CARPER. I think the Senator has that right.
  Mr. ALEXANDER. That would be true even if Internet access moved over 
from the current way many people do it--and this is hard for people to 
understand many times--over to the cable or the phone company; is that 
right as well?
  Mr. CARPER. Five years ago when this legislation was written on the 
moratorium, I don't believe DSL existed. The idea of people accessing 
the Internet over broadband was not something people thought much of. 
The idea of accessing the Internet over wireless I don't think is 
something we thought we had the capability of doing. The world has 
changed.
  Mr. ALEXANDER. So from the point of view of the Federal Government 
interfering with local governments, we would be making a pretty 
significant interference there because we would be affording to the 
Internet access connection a protection that we didn't afford the 
telephone, that we didn't afford the telegraph, that we didn't afford 
the purchase of food, the purchase of medicine--anything. If you hook 
up your Internet, nobody can tax you. That would be our proposal.

  The other point the Senator from Delaware is making--Delaware in 
particular has done this--is, say, in the District of Columbia there 
was a big cable company or big phone company, and the District of 
Columbia said: We may not be able to tax the connection between Senator 
Alexander's computer, but we can sure tax the cable company, we can 
sure tax the telephone company that provides that connection, and they 
raise the taxes to a very high level for certain of these points along 
the Internet architecture. I assume it is entirely possible the 
Governor of Delaware may ride the train down to the District and say: 
The tax may be 20 percent, but come live with us in Delaware; come to 
our State; we don't have a right-to-work law; other States do; we don't 
have an income tax; other States do. We may have a higher corporate tax 
than other States. States have these differences all the time, and if 
one State gets out of line, people leave, businesses leave, elections 
are held and people are

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thrown out of office. That is the way we have operated the government 
for a long time.
  This is a nation that from its beginning operated community by 
community and State by State and has had a great aversion to central 
direction of too many of these decisions.
  Mr. CARPER. Mr. President, I say in response, that is the way States 
and competition--friendly competition--have worked over the years, and 
if it worked in the last century, it is going to work out that way in 
this century as well.
  Mr. ALEXANDER. Mr. President, I ask unanimous consent to print in the 
Record two editorials from Tennessee newspapers: One from the 
Tennessean and one from the Chattanooga Times Free Press. They just 
came today.
  The last sentence in the Chattanooga Times Free Press article says:

       If the federal tax ban becomes permanent, state and local 
     governments may have to come up with great amounts of tax 
     money in other burdensome and permanent ways that taxpayers 
     will not like.

  The Tennessean says:

       Sen. Lamar Alexander is not voting to raise taxes. He is 
     not trying to increase the cost of Internet access, nor is he 
     advocating a new tax on e-mail.
       Instead, Alexander is trying to protect states from 
     excessive control by the federal government. Yet the 
     conservative states-rights position the senator has taken on 
     Internet access has been turned on its ear by some of his 
     critics. . . .

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  [From the Tennessean, Nov. 7, 2003]

             Alexander's Principled Stand for State Control

       Senator Lamar Alexander is not voting to raise taxes. He is 
     not trying to increase the cost of Internet access, nor is he 
     advocating a new tax on e-mail.
       Instead, Alexander is trying to protect States from 
     excessive control by the federal government. Yet the 
     conservative, States-rights position the senator has taken on 
     Internet access taxes has been turned on its ear by his 
     critics, many of whom are Republicans.
       Congress placed a moratorium on Internet access taxes in 
     1998. The few states, including Tennessee, that had taxed 
     Internet access before the moratorium were allowed to keep 
     their tax. The moratorium officially ended last week.
       Now the House has passed legislation co-sponsored by 
     Representative Marsha Blackburn that would make the 
     moratorium permanent and would eliminate all exemptions. In 
     the Senate, Alexander opposes a permanent moratorium. He 
     points out that Congress shouldn't micromanage the financial 
     affairs of cities and States. And he points out that the few 
     States that are exempt from the moratorium would lose between 
     $80 million and $120 million in revenue if their exemptions 
     end. That loss of revenue would force the States to increase 
     taxes elsewhere.
       Up until last week, Alexander was one of several senators 
     who had placed a hold on the moratorium legislation, but he 
     agreed to lift his hold on the bill last week in exchange for 
     a Senate debate on the issue this week.
       No one wants to pay more taxes. No doubt, Tennesseans, who 
     are already paying tax on Internet access, would love to pay 
     less for Internet connections.
       But the question in the Senate isn't whether the Internet 
     taxes should go up or down, or whether they should exist at 
     all. The question is whether the Federal government should 
     tell States what they can and cannot tax. Alexander says it 
     should not, and he is right. Tennesseans who want to 
     eliminate Internet access taxes should contact Governor Phil 
     Bredesen and members of the General Assembly.
       Tennesseans elected Lamar Alexander to the Senate because 
     they believed he would exercise his own good judgment and act 
     in the best interest of Tennessee. On this bill, he is.
                                  ____


         [From the Chattanooga Times Free Press, Nov. 7, 2003]

                        It's About Taxes--Yours

       It's not the kind of issue that generates lots of public 
     attention or quick understanding. But when Senator Lamar 
     Alexander, R-Tenn., took the Senate floor this week to 
     discuss it, he wanted to make sure everyone understood that 
     the proposed Internet Tax Nondiscrimination Act involves ``an 
     unfunded Federal mandate''--which could result in State and 
     local tax losses of $80 million to $120 million a year, that 
     local taxpayers might have to make up.
       Some time ago, to promote development of the Internet and 
     other electronic communications, Congress banned taxes on 
     Internet access until November 1, 2003, with some exceptions 
     to expire October 1, 2006. The bill now before Congress would 
     make those taxing bans permanent. Since most people don't 
     like any kind of taxes, why shouldn't the ban be permanent?
       Senator Alexander explained: ``We are not talking about the 
     issue of whether to authorize States to require out-of-State 
     companies, such as L.L. Bean, that sell by catalog or 
     Internet, to collect the same Tennessee sales tax'' that 
     local stores must collect. . . . ``That is an entirely 
     different piece of legislation.'' (We believe such 
     legislation should be passed to provide more State revenue 
     and thus avoid the necessity of imposing other taxes on 
     Tennesseans.) Senator Alexander continued: ``What we're 
     talking about is whether Tennessee and other States can 
     collect a sales tax from an Internet service provider when it 
     connects my computer to the Internet, just as it collects a 
     sales tax from the telephone company when it connects my 
     telephone or from the cable TV company when it connects my 
     cable.''
       He said some senator seemed surprised when he suggested the 
     proposed permanent ban on State and local taxation is ``an 
     unfunded Federal mandate.'' But, Senator Alexander insisted, 
     it ``is an unfunded mandate, plainly in violation of the 
     Unfunded Mandates Reform Act of 1995 . . .''
       Senator Alexander said the Tennessee Department of Revenue 
     estimates that making the tax ban permanent would cost 
     Tennessee many millions of dollars a year. With Tennessee 
     finances already pinched, how would that amount be made up 
     without new State taxes?
       So, said Senator Alexander, ``I am filing tonight an 
     amendment I call the Unfunded Federal Mandate Reimbursement 
     Act. If a majority of the Senate should decide that banning 
     State and local taxation of the Internet is important enough 
     to create an unfunded Federal mandate--that is, claim the 
     credit up here (in Washington), but make it be done down 
     there (in Tennessee and other States)--then my amendment 
     would provide a way for Congress to pay the bill for that by 
     authorizing our Department of the Treasury to reimburse 
     Tennessee and Minnesota and other State and local governments 
     each year for the cost of this new mandate.''
       Don't expect Congress to rush to embrace Senator 
     Alexander's amendment. But he has made a point that deserves 
     serious consideration.
       If the Federal tax ban becomes permanent, State and local 
     governments may have to come up with great amounts of tax 
     money in other burdensome and permanent ways that taxpayers 
     will not like.

  Mr. ALEXANDER. Mr. President, I believe the more Senator Carper, 
Senator Voinovich, Senator Enzi, Senator Graham, and I talk about this 
issue, the more people are coming our way. I look forward to continuing 
to work with other Senators who have different views, and I hope we can 
come up with a good conclusion to this that respects both principles: 
banning taxation of Internet access and not imposing large unfunded 
Federal mandates on State and local governments.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROCKEFELLER. Mr. President, I rise today to support the amendment 
to be offered by my friends and fellow former Governors, Senators 
Graham, Alexander, Carper, and Voinovich.
  The amendment is a very simple one. Every Senator who is aware of the 
fiscal crisis faced by States across the Nation, which I think at this 
point is virtually all States, ought to support this amendment, in my 
judgment.
  The amendment simply says we ought to continue the current moratorium 
on Internet taxes for another 2 years, giving the industry additional 
time to reach out to new customers and ensuring that we do not undercut 
States' long-term ability to balance their budgets, because there is an 
enormous relationship between Internet taxes and State budgets. In 
fact, this amendment improves on the previous moratorium by ensuring 
that consumers' access to the Internet is tax-free. Regardless of the 
technology they prefer, be that DSL, cable modem, wireless phone, 
traditional dial-up access, they would all be treated the same under 
this amendment.
  I know many of my colleagues are interested in providing a permanent 
moratorium on the taxation of Internet access, but I ask them to take a 
moment to consider the potential harm of the bill we are debating 
today.
  Governors, State legislators, and mayors from across this country 
have called my office, and I would think the offices of most Senators, 
to implore us not to pass the legislation. I understand the moratorium 
envisioned in this other amendment applies only to taxes imposed on 
access to the Internet. However, our good intentions are

[[Page S14254]]

not enough to ensure that this legislation is properly applied and that 
the States are able to collect taxes on other telecommunications 
services.
  Technology, as you well know, is still developing. In the near 
future, the providers of Internet services may offer telecommunications 
services as part of a premium package of technology products. Digital 
content presents additional challenges. I believe somebody purchasing a 
new movie should be taxed on that, whether they download the movie from 
the Internet provider or they purchase it from Amazon.com or they walk 
over to Blockbuster and buy it off the shelf. As technology develops 
and more and more options are available to consumers, Congress will 
obviously need to revisit this issue of what exactly falls within this 
moratorium since the technology changes so often.
  This amendment would protect States' rights to impose fair and 
equitable taxes on products other than Internet access. As a former 
Governor, I remember very well the difficulty of financing critical 
State services. I was Governor some 20 years ago, but we were having 
those troubles then. They are much worse now.
  I worked hard with the State legislature to achieve the right balance 
of taxes and spending. That was hard. I needed the maximum flexibility. 
It has been some time now, as I indicated, since I was Governor, but 
over the last few years we have witnessed again how States often 
struggle to balance their budgets and how, in fact, virtually every 
single State is going through that process.
  It seems somewhat arrogant and unfair for us as Federal legislators 
to permanently limit the options available to States. I feel very 
strongly about that. I in no way want to disadvantage development of 
the Internet, but I want to respect the rights of other elected 
officials in West Virginia and in other States, and I believe in that 
strongly.

  I believe a 2-year extension of the moratorium is the best of all 
solutions. It protects Internet access from State and local taxes for a 
while longer, as more Americans get access to the benefits of the 
Internet. It preserves for the future the flexibility that State and 
local governments need as they try to balance their budgets while 
providing for good education, improved infrastructure, adequate police 
and firefighting forces--all these things in this new age of terrorism. 
And it gives Congress the responsibility and the opportunity to revisit 
the issue, which is absolutely key, in 2 years, as the technology 
evolves.
  Let me be clear. I strongly supported the previous moratorium on 
Internet access taxes because I recognized the value of expanding 
Internet use to more Americans. I believe Congress ought to do what it 
can to ensure the Internet becomes like the radio and the telephone and 
the television before it--technology that connects with all Americans 
and connects all Americans to each other.
  In my home State of West Virginia, we are still working hard to 
ensure that all our citizens will have access to the latest broadband 
technology, so I am eager to support efforts that can make the Internet 
more affordable and more available, including extending the current 
moratorium for 2 years. However, I cannot ignore my concerns with the 
permanent moratorium we are asked to consider today.
  I urge my colleagues to join me in supporting this amendment which a 
number of other former Governors and I have put forward.
  I yield the floor. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President. I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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