[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Extensions of Remarks]
[Pages 18875-18876]
[From the U.S. Government Publishing Office, www.gpo.gov]



                         TAXPAYER'S DEFENSE ACT

                                 ______
                                 

                          HON. GEORGE W. GEKAS

                            of pennsylvania

                    in the house of representatives

                        Thursday, July 29, 1999

  Mr. GEKAS. Mr. Speaker, today I join with Mr. Hayworth to introduce 
the Taxpayer's Defense Act. This bill simply provides that no federal 
agency may establish or raise a tax without the approval of Congress.
  One of the principles on which the United States was founded was that 
there should be no taxation without representation.
  In The Second Treatise of Government, John Locke said, ``[I]f any one 
shall claim a power to lay and levy taxes on the people, * * * without 
* * * consent of the people, he thereby * * * subverts the end of 
government.'' Consent, according to Locke, could only be given by a 
majority of the people, ``either by themselves or their representatives 
chosen by them.'' The Boston Tea Party celebrated Americans' opposition 
to taxation without representation. And the Declaration of Independence 
listed, among the despotic acts of King George, his ``imposing Taxes on 
us without our Consent.'' First among the powers that the Constitution 
gave to the Congress, our new government's representative branch, was 
the power to levy taxes.
  The logic of having only Congress establish federal taxes is clear: 
only Congress considers and weighs every economic and social issue that 
rises to national importance. While any faction, agency, or sub-agency 
of the government may view its own priorities as paramount, only 
Congress can decide which goals are of the importance to merit spending 
taxpayer dollars. Only Congress can determine the level at which 
taxpayer dollars should be spent.
  The American ban on taxation without representation has not been 
seriously challenged during our nation's history. The modern era of 
restricted federal budgets, however, threatens to erode the essential 
principle of ``no taxation without representation.'' In ways that are 
often subtle or hidden, federal agencies are taking on--or receiving 
from Congress--the power to tax. Federal agency taxes pass the costs of 
government programs on to American consumers in the form of higher 
prices. These secret taxes tend to be deeply regressive and they create 
inefficiency in the economy. They take money from everyone without 
helping anyone.
  The worst example of administrative taxation is the Federal 
Communications Commission's Universal Service Tax. ``Universal 
service'' is the idea that everyone should have access to affordable 
telecommunications services. It originated at the beginning of the 
century when the nation was still being strung with telephone wires. 
The Telecommunications Act of 1996 included provisions that allowed the 
FCC to extend universal service, ensuring that telecommunications are 
available to all areas of the country and to institutions that benefit 
the community, like schools, libraries, and rural health care 
facilities.
  Most importantly, the Act gave the FCC the power to decide the level 
of ``contributions''--taxes--that telecommunications providers would 
have to pay to support universal service. The FCC now determines how 
much can be collected in taxes to subsidize a variety of `universal 
service' spending programs. It charges telecommunications providers, 
who pass the costs on to consumers in the form of higher telephone 
bills. The FCC recently nearly doubled the tax to $2.5 billion dollars 
per year, and Clinton Administration budgets have projected a rise to 
$10 billion per year. Mr. Speaker, this administrative tax is already 
out of control.
  The FCC's provisions for universal service have many flaws. Among 
them are three `administrative corporations' set up by the FCC. The 
General Accounting Office determined that the establishment of these 
corporations was illegal and the FCC has collapsed them into one, no 
less illegal corporation. The head of one of these corporations was 
originally paid $200,000 dollars per year--as much as the President of 
the United States. Reports have come out about sweetheart deals between 
government contractors and their State government friends, who have 
access to huge amounts of easy universal service money.
  This FCC prompted our inquiry into this issue. As our study 
continues, it reveals that a number of federal agencies have been 
given, or discovered on their own, the power to tax.
  Congress has given taxing authority to the Nuclear Regulatory 
Commission and the U.S. Department of Agriculture. Because these taxes 
are within statutory parameters, we have less concern with them than 
others, but they are still taxes and an important principle is at 
stake: no taxation without representation. The Constitution gives the 
taxing power only to Congress. In practice, we see a direct correlation 
between an agency having taxing authority and the agency overspending 
taxpayer dollars. Congress must retain the power of the purse.
  More egregious examples are those where agencies have spontaneously 
discovered the power to tax. We categorize the FCC's telecommunications 
tax as such, and note two taxes, past and proposed, on Internet domain 
name registration. Mr. Speaker, just when we thought we had protected 
the internet from taxation with Internet Tax Freedom Act, we discover 
new taxes right under our noses. The first, sponsored by the National 
Science Foundation, collected more than $60 million before a federal 
judge put a stop to it. The second, under the aegis of the Commerce 
Department, proposes to charge $1 per Internet domain name per year. I 
would like to know what Commerce Department official stands to be voted 
out of office if he or she sponsors an increase in this tax.
  Finally, we note with dismay that the Administration's electricity 
legislation proposes a tax as high as $3 billion to be imposed by the 
Secretary of Energy. Federal agency taxation appears to be a popular 
trend in some circles.

  Washington special interest groups seem to be able to unite around 
one thing: taking money from taxpayers. Mr. Speaker, special interests 
who feed at the federal trough are already geared up to accuse the 
Republican Congress of cutting funding for education and health care if 
any attempt is made to rein in the FCC. They will cynically frame the 
issue as a matter of federal entitlements for sympathetic causes and 
groups.
  But the most sympathetic group is the American taxpayer, whose money 
is being taken, laundered through the Washington bureaucracy, and 
returned (in dramatically reduced amounts) for purposes set by 
unelected Washington poohbahs. This is why we must require the FCC, and 
all agencies, to get the approval of Congress before setting future tax 
rates.
  Should tax dollars be used for federal programs? In what amounts? Or 
should Americans spend what they earn on their own, locally determined 
priorities? Requiring Congress to review any administrative taxes would 
answer this question.

[[Page 18876]]

  My bill would create a new subchapter within the Congressional Review 
Act for mandatory review of certain rules. The portion of any agency 
rule that establishes or raises a tax would have to be submitted to 
Congress and receive the approval of Congress before the agency could 
put it into effect. In essence, the Act would disable agencies from 
establishing or raising taxes, but allow them to formulate proposals 
for Congress to consider under existing rulemaking procedures. It is a 
version of a bill introduced and ably advocated for by Mr. Hayworth. He 
joins me today as a leading cosponsor of this bill.
  Once submitted to Congress, a bill noting the taxing portion of a 
regulation would be introduced (by request) in each House of Congress 
by the Majority Leader. The bill would then be subject to expedited 
procedures, allowing a prompt decision on whether or not the agency may 
put the rule into effect. The rule could take effect once a bill 
approving it was passed by both Houses of Congress and signed by the 
President. If the rule were approved, the agency would retain power to 
reverse the regulation, lower the amount of the tax, or take any 
otherwise legal actions with respect to the rule.
  Mr. Speaker, the cry of ``no taxation without representation'' has 
gone up in the land before, and today we are hearing it again. Congress 
must not allow a federal agency comprised of unelected bureaucrats to 
determine the amount of taxes hardworking Americans must pay. While 
preserving needed flexibility, the Taxpayer's Defense Act will allow 
Congress alone to determine the purposes to which precious tax dollars 
will be put.

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