[Congressional Record Volume 157, Number 165 (Tuesday, November 1, 2011)]
[House]
[Pages H7175-H7178]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WIRELESS TAX FAIRNESS ACT OF 2011
Mr. FRANKS of Arizona. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 1002) to restrict any State or local jurisdiction
from imposing a new discriminatory tax on cell phone services,
providers, or property, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1002
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Wireless Tax Fairness Act of
2011''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) It is appropriate to exercise congressional enforcement
authority under section 5 of the 14th Amendment to the
Constitution of the United States and Congress' plenary power
under article I, section 8, clause 3 of the Constitution of
the United States (commonly known as the ``commerce clause'')
in order to ensure that States and political subdivisions
thereof do not discriminate against providers and consumers
of mobile services by imposing new selective and excessive
taxes and other burdens on such providers and consumers.
(2) In light of the history and pattern of discriminatory
taxation faced by providers and consumers of mobile services,
the prohibitions against and remedies to correct
discriminatory State and local taxation in section 306 of the
Railroad Revitalization and Regulatory Reform Act of 1976 (49
U.S.C. 11501) provide an appropriate analogy for
congressional action, and similar Federal legislative
measures are warranted that will prohibit imposing new
discriminatory taxes on providers and consumers of mobile
services and that will assure an effective, uniform remedy.
SEC. 3. MORATORIUM.
(a) In General.--No State or local jurisdiction shall
impose a new discriminatory tax on or with respect to mobile
services, mobile service providers, or mobile service
property, during the 5-year period beginning on the date of
enactment of this Act.
(b) Definitions.--In this Act:
(1) Mobile service.--The term ``mobile service'' means
commercial mobile radio service, as such term is defined in
section 20.3 of title 47, Code of Federal Regulations, as in
effect on the date of enactment of this Act, or any other
service that is primarily intended for receipt on,
transmission from, or use with a mobile telephone or other
mobile device, including but not limited to the receipt of a
digital good.
(2) Mobile service property.--The term ``mobile service
property'' means all property used by a mobile service
provider in connection with its business of providing mobile
services, whether real, personal, tangible, or intangible
(including goodwill, licenses, customer lists, and other
similar intangible property associated with such business).
(3) Mobile service provider.--The term ``mobile service
provider'' means any entity that sells or provides mobile
services, but only to the extent that such entity sells or
provides mobile services.
(4) New discriminatory tax.--The term ``new discriminatory
tax'' means a tax imposed by a State or local jurisdiction
that is imposed on or with respect to, or is measured by, the
charges, receipts, or revenues from or value of--
(A) a mobile service and is not generally imposed, or is
generally imposed at a lower rate, on or with respect to, or
measured by, the charges, receipts, or revenues from other
services or transactions involving tangible personal
property;
(B) a mobile service provider and is not generally imposed,
or is generally imposed at a lower rate, on other persons
that are engaged in businesses other than the provision of
mobile services; or
(C) a mobile service property and is not generally imposed,
or is generally imposed at a lower rate, on or with respect
to, or measured by the value of, other property that is
devoted to a commercial or industrial use and subject to a
property tax levy, except public utility property owned by a
public utility subject to rate of return regulation by a
State or Federal regulatory authority;
unless such tax was imposed and actually enforced on mobile
services, mobile service providers, or mobile service
property prior to the date of enactment of this Act.
(5) State or local jurisdiction.--The term ``State or local
jurisdiction'' means any of the several States, the District
of Columbia, any territory or possession of the United
States, a political subdivision of any State, territory, or
possession, or any governmental entity or person acting on
behalf of such State, territory, possession, or subdivision
that has the authority to assess, impose, levy, or collect
taxes or fees.
(6) Tax.--
(A) In general.--The term ``tax'' means a charge imposed by
a governmental entity for the purpose of generating revenues
for governmental purposes, and excludes a fee imposed on a
particular entity or class of entities for a specific
privilege, service, or benefit conferred exclusively on such
entity or class of entities.
(B) Exclusion.--The term ``tax'' does not include any fee
or charge--
(i) used to preserve and advance Federal universal service
or similar State programs authorized by section 254 of the
Communications Act of 1934 (47 U.S.C. 254); or
(ii) specifically dedicated by a State or local
jurisdiction for the support of E-911 communications systems.
(c) Rules of Construction.--
(1) Determination.--For purposes of subsection (b)(4), all
taxes, tax rates, exemptions, deductions, credits,
incentives, exclusions, and other similar factors shall be
taken into account in determining whether a tax is a new
discriminatory tax.
(2) Application of principles.--Except as otherwise
provided in this Act, in determining whether a tax on mobile
service property is a new discriminatory tax for purposes of
subsection (b)(4)(C), principles similar to those set forth
in section 306 of the Railroad Revitalization and Regulatory
Reform Act of 1976 (49 U.S.C. 11501) shall apply.
(3) Exclusions.--Notwithstanding any other provision of
this Act--
(A) the term ``generally imposed'' as used in subsection
(b)(4) shall not apply to any tax imposed only on--
(i) specific services;
(ii) specific industries or business segments; or
(iii) specific types of property; and
(B) the term ``new discriminatory tax'' shall not include a
new tax or the modification of an existing tax that either--
(i)(I) replaces one or more taxes that had been imposed on
mobile services, mobile service providers, or mobile service
property; and
(II) is designed so that, based on information available at
the time of the enactment of such new tax or such
modification, the amount of tax revenues generated thereby
with respect to such mobile services, mobile service
providers, or mobile service property is reasonably expected
to not exceed the amount of tax revenues that would have been
generated by the respective replaced tax or taxes with
respect to such mobile services, mobile service providers, or
mobile service property; or
(ii) is a local jurisdiction tax that may not be imposed
without voter approval, provides for at least 90 days' prior
notice to mobile service providers, and is required by law to
be collected from mobile service customers.
SEC. 4. ENFORCEMENT.
Notwithstanding any provision of section 1341 of title 28,
United States Code, or the
[[Page H7176]]
constitution or laws of any State, the district courts of the
United States shall have jurisdiction, without regard to
amount in controversy or citizenship of the parties, to grant
such mandatory or prohibitive injunctive relief, interim
equitable relief, and declaratory judgments as may be
necessary to prevent, restrain, or terminate any acts in
violation of this Act.
(1) Jurisdiction.--Such jurisdiction shall not be exclusive
of the jurisdiction which any Federal or State court may have
in the absence of this section.
(2) Burden of proof.--The burden of proof in any proceeding
brought under this Act shall be upon the party seeking relief
and shall be by a preponderance of the evidence on all issues
of fact.
(3) Relief.--In granting relief against a tax which is
discriminatory or excessive under this Act with respect to
tax rate or amount only, the court shall prevent, restrain,
or terminate the imposition, levy, or collection of not more
than the discriminatory or excessive portion of the tax as
determined by the court.
SEC. 5. GAO STUDY.
(a) Study.--The Comptroller General of the United States
shall conduct a study, throughout the 5-year period beginning
on the date of the enactment of this Act, to determine--
(1) how, and the extent to which, taxes imposed by local
and State jurisdictions on mobile services, mobile service
providers, or mobile property, impact the costs consumers pay
for mobile services; and
(2) the extent to which the moratorium on discriminatory
mobile services taxes established in this Act has any impact
on the costs consumers pay for mobile services.
(b) Report.--Not later than 6 years after the date of the
enactment of this Act, the Comptroller General shall submit,
to the Committee on the Judiciary of the House of
Representatives and Committee on the Judiciary of the Senate,
a report containing the results of the study required
subsection (a) and shall include in such report
recommendations for any changes to laws and regulations
relating to such results.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Arizona (Mr. Franks) and the gentlewoman from California (Ms. Chu) each
will control 20 minutes.
The Chair recognizes the gentleman from Arizona.
General Leave
Mr. FRANKS of Arizona. Mr. Speaker, I ask unanimous consent that all
Members have 5 legislative days within which to revise and extend their
remarks and include extraneous material on H.R. 1002, as amended,
currently under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Arizona?
There was no objection.
Mr. FRANKS of Arizona. Mr. Speaker, I yield myself such time as I may
consume.
Congresswoman Lofgren and I introduced H.R. 1002 with the broad
bipartisan support of 144 original cosponsors. We now have 236
cosponsors, and I want to thank Ms. Lofgren for her hard work on this
issue.
Mr. Speaker, access to wireless networks represents a key component
of millions of Americans' livelihoods, providing the efficient
communication capabilities, whether by phone, broadband Internet or
otherwise, necessary to run a successful business.
The exorbitant discriminatory taxes on wireless customers are not
only unfair, they are counterintuitive, adding yet another costly
impediment to the success of so many American businesses who are
struggling in the midst of a prolonged recession and an already hefty
tax burden. Low-income and senior Americans who frequently rely on
wireless service as their sole means of telephone and Internet access
also bear the brunt of this discriminatory tax's impact.
H.R. 1002, the Wireless Tax Fairness Act, provides a balanced
approach that protects the revenue needs of States and localities,
while allowing for a 5-year hiatus on new discriminatory wireless
taxes, encouraging States and localities to develop a national tax
regime that maintains the affordability of a wireless service.
Mr. Speaker, I strongly encourage my colleagues to support this
constitutionally sound, pro-consumer bill.
I reserve the balance of my time.
Ms. CHU. Mr. Speaker, I yield myself such time as I may consume.
H.R. 1002, the Wireless Tax Fairness Act of 2011, will impose on
States a 5-year moratorium on any new tax on mobile services, mobile
service providers, and mobile service property. This will deny States
the flexibility to respond to economic downturns during the moratorium
and, therefore, undermine the ability of States to pay for essential
services such as public health and safety, education and maintenance of
State highways.
The legislation is based on faulty information and will benefit the
wireless services industry. Further, the legislation contains vague
language which will lead to increased litigation for both State and
local governments and the wireless industry. Because of these and other
concerns presented by the bill, many organizations are opposed,
including the League of Cities, National Governors Association, the
American Federation of State, County and Municipal Employees, the AFL-
CIO, AFT and NEA, amongst others.
Why are they opposed?
Because, first, this bill will force States to cut services and
increase taxes on nonwireless taxpayers.
{time} 1730
In order for States and local communities to continue to recover from
this recession, they need all tools at their disposal to balance their
budgets, to preserve and create jobs, and to provide essential services
like police, fire, and education.
In fact, demand for many of the essential services, such as
unemployment payments and other social programs, has increased during
the economic downturn. Yet this bill takes away one of the tools to tax
the wireless industry at the expense of other taxpayers and businesses.
The moratorium will exclude from possible State taxation millions, if
not billions of dollars, in future revenue from wireless service taxes.
Thus, to balance their budgets, States will be forced to cut even more
services and shift more of the tax burden on to other local taxpayers.
As a former member of the California Board of Equalization, the
Nation's duly elected statewide tax board, I understand the unique
fiscal challenges facing our Nation today and believe we should leave
local taxes in the hands of local officials and residents.
Finally, State legislators and local officials who are elected by
their constituents and accountable to them have decided to impose these
taxes. By passing this legislation, Congress impedes upon local
elections and is telling local governments how to run their budgets.
A second reason for opposition is that this bill is a special
interest bill for the wireless industry. It benefits the wireless
services industry at the expense of other industries. Despite industry
claims, this bill will not lead to more broadband development and
competitiveness. Current State and local taxes on wireless services and
providers have not diminished adoption rates, nor have they inhibited
broadband expansion.
In fact, the wireless industry has not yet presented any data
indicating that State and local wireless taxes have had adverse effect
on wireless subscribership, revenue, or investment. Instead, the
wireless industry continues to grow and profits remain high.
If this bill becomes law, it would set up a dual tax system on
telephone services by giving preferential treatment to cell phone
customers but continue to allow taxes on traditional wire-line phones.
This will put a higher burden on those without cell phones.
Finally, vague definitions within this bill will lead to increased
litigation. H.R. 1002 will increase litigation costs for wireless
service providers and State and local governments. Courts will have to
interpret the many vague terms that are contained within the bill.
I reserve the balance of my time.
Mr. FRANKS of Arizona. Mr. Speaker, I yield 3 minutes to the
distinguished gentleman from North Carolina, the chairman of the
Courts, Commercial and Administrative Law Subcommittee, Mr. Coble.
Mr. COBLE. I thank the gentleman from Arizona for yielding.
Mr. Speaker, wireless communications have become a mainstay of modern
day Americana. There are now over 290 million wireless subscribers in
the United States. As mobile phones become more common and available,
they have also become more critical to their users. You don't have to
look far in Washington to find someone talking or texting on a mobile
device, or, for that matter, in my home in Greensboro, North Carolina.
They're everywhere. They are ubiquitous. While
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most of this is the result of sheer demand, the Federal Government has
taken important steps to ensure that we have quality mobile service
that is accessible to everyone.
Unfortunately, some State and local taxing authorities have begun to
impose higher taxes on wireless services than on other goods and
services. Often times, these taxes are arbitrary and go unnoticed
because they're passed on to consumers as another line item at the
bottom of their monthly wireless phone bill.
Although States and local governments should not be prohibited from
taxing wireless services, they also should not use wireless as a
revenue cow. The Wireless Tax Fairness Act would impose a 5-year
moratorium on any new discriminatory wireless taxes. Current wireless
tax rates, even if higher than taxes on other services, would not be
changed or affected by this bill. Thus, State and local revenue
projections from wireless taxes will not be affected.
This bill would give States breathing room to reform their wireless
tax policies at the State and local level, which they have admitted
they need to do.
I'm pleased to support this legislation and again thank the gentleman
from Arizona for having yielded.
Ms. CHU. I yield such time as she may consume to the gentlewoman from
California (Ms. Zoe Lofgren).
Ms. ZOE LOFGREN of California. I thank the gentlelady for yielding
and thank the gentleman from Arizona for his kind comments.
Mr. Speaker, I have introduced the Wireless Tax Fairness Act for
three successive Congresses, and I am gratified that it is being
considered by the full House here today.
Nearly everyone agrees that expanding broadband Internet access and
adoption is critical to the economic future of our country. As the FCC
put it in the National Broadband Plan, the U.S. must lead the world in
broadband innovation and investment and take all appropriate steps to
ensure that Americans have access to modern high-performance broadband
and the benefits it enables.
I introduced the Wireless Tax Fairness Act because discriminatory
taxes on wireless services are not consistent with this top national
priority. Cell phone bills are on average taxed at a far higher rate
than other goods and services. In many jurisdictions, the taxation of
wireless approaches or even exceeds the rates of so-called sin taxes on
goods like alcohol and tobacco. These disproportionate taxes discourage
investment and adoption of wireless services, including advanced
wireless broadband.
Before he was the President's chief economist, Austan Goolsbee,
published a peer-reviewed study finding deadweight losses to society of
up to $5 for every $1 in taxes on broadband service, including
wireless.
Now, these taxes fall particularly hard on working-class and lower-
income Americans who are most likely to rely on their cell phone for
all of their communications, including access to the Internet. And in
fact, the Pew study and the CDC have indicated that usage of cell
phones for Internet access among Latinos and African Americans in the
United States was far higher than that among other Americans. And so,
this regressive tax burden troubles me, especially in these economic
times.
Now, for 14 years before I was a Member of Congress, I served on the
board of supervisors of Santa Clara County. So I really do understand
the need of local governments to balance their budgets every year and
to get revenue. But this bill would not affect any existing revenues.
In fact, it wouldn't prevent raising taxes on all goods. If you're
going to have a half-cent sales tax on everything, include wireless.
What this would do is prevent you from singling out wireless services
for disproportionate taxation.
Ultimately, the moratorium for 5 years should yield to modernization
of State and local telecommunication taxes. Separate higher taxes on
wireless services are an outdated legacy of the days when telephone
service was a regulated monopoly. A timeout from discriminatory tax
increases will encourage States and localities to focus on enacting
reforms that work for all stakeholders.
In general, I do believe that State and local governments should have
the autonomy to set tax rates as they see fit. And, in fact, during the
committee markup we added an amendment that allows voter-approved
discriminatory taxes if that's what the voters of a jurisdiction wish
to do.
But beyond that there are exceptions when Congress recognizes the
need to protect in advance a national imperative. And that's one of
these instances. As the national broadband plan said, wireless
broadband is poised to become a key platform for innovation in the
United States over the next decade.
We should not let discriminatory taxes on wireless service disrupt
this potential. Several years ago, we adopted a prohibition on
discriminatory taxes on Internet access. At the time, I don't think we
fully realized that wireless was going to be the onramp for so many of
our citizens to the Internet. And so we did not include it at that
time. This is to correct that omission.
I thank the gentleman from Arizona for working with me and all of the
236 cosponsors who are part of this effort.
Mr. FRANKS of Arizona. Mr. Speaker, I have no further requests for
time, and I reserve the balance of my time.
Ms. CHU. In conclusion, H.R. 1002 is irresponsible legislation that
will restrict State flexibility to raise much-needed revenues, which
will force State governments to eliminate essential government programs
and services and shift burdens to other taxpayers.
For all of these reasons, I oppose this legislation and urge my
colleagues to vote ``no.''
I yield back the balance of my time.
{time} 1740
Mr. FRANKS of Arizona. Mr. Speaker, many points have been made about
discriminatory taxes and their impact on businesses and individuals.
For all the reasons that were so eloquently put forth by the gentlelady
from California, we would urge the support of this legislation, and I
would again thank the gentlelady for her tremendous effort in this area
and on this bill.
I yield back the balance of my time.
Mr. CONYERS. Mr. Speaker, H.R. 1002, the Wireless Tax Fairness Act,
which aims to help consumers and cell phone companies, unfortunately
ignores the interests of state and local governments. The bill prevents
states from determining what and how much to tax certain activities
within their borders.
True, increased taxes and fees on wireless services ultimately hurt
consumers. Every penny matters and every tax increase can impact
consumers' pocketbooks and their choices to spend on other goods and
services.
Rather than taking up this bill, we should consider ways how Congress
can help our state and local governments, many of which are barely
staying afloat financially during the current economic climate.
These states and municipalities must balance their budgets while
still providing essential police and fire services, assisting those in
need, maintaining our roads and bridges, and ensuring an education for
our children. Because of severely reduced revenues, many of our states
are cutting their budgets and reducing funding for such essential
services as law enforcement and education.
This bill will only reduce more future state and local government
revenues. For that reason, state and local governments and employee
unions oppose this legislation.
Instead, Congress can and should help our state and local
governments. We could pass H.R. 2701, the ``Main Street Fairness Act,''
which I introduced earlier this Congress or similar legislation.
H.R. 2701 would ensure fairness in the marketplace between remote
retailers and their brick and mortar counterparts. It would level the
playing field for retailers by requiring remote sellers to collect the
same sales tax that local retailers have to collect. Thus, mom-and-pop
retailers would no longer be at a competitive disadvantage against
online retailers. And, it would support our states by providing them
the authority to collect very much needed sales taxes which they have
not been able to collect from remote sellers.
I cannot support H.R. 1002 because it will prevent states from
exercising their authority within their own borders.
Instead, we should support more balanced measures, such as the Main
Street Fairness Act.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Arizona (Mr. Franks) that the House suspend the rules
and pass the bill, H.R. 1002, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
[[Page H7178]]
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