[Congressional Record (Bound Edition), Volume 146 (2000), Part 6]
[House]
[Pages 7485-7521]
[From the U.S. Government Publishing Office, www.gpo.gov]



                 INTERNET NONDISCRIMINATION ACT OF 2000

  The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution 
496 and rule XVIII, the Chair declares the House in the Committee of 
the Whole House on the State of the Union for the consideration of the 
bill, H.R. 3709.


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 3709) to make permanent the moratorium enacted by the Internet 
Tax Freedom Act as it applies to new, multiple, and discriminatory 
taxes on the Internet, with Mr. Sununu in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Illinois (Mr. Hyde) and the 
gentleman from Michigan (Mr. Conyers) each will control 30 minutes.
  The Chair recognizes the gentleman from Illinois (Mr. Hyde).
  Mr. GEKAS. Mr. Chairman, I ask unanimous consent that I may claim the 
time designated to the gentleman from Illinois (Mr. Hyde) as the 
proponent of the bill.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Pennsylvania?
  There was no objection.
  Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, in the 105th Congress, we passed a piece of legislation 
that led to this day. The purport of that Internet Tax Freedom 
legislation of that Congress denoted that a study would have to be 
performed in order to determine the future of our new world of 
Internet.
  One of the strongest recommendations made by the commission, the 
report to Congress being embodied in this beautiful blue book which I 
now place before the Chair, one of the strongest commendations there 
and recommendations was for the extension of the moratorium that the 
first bill, the one to which I just alluded, included and which does 
not expire now until October 1, 2001.
  The extension of the moratorium then is the core of the bill that is 
before us. It calls for a 5-year extension of the current moratorium. 
Why? Because that is what the commission recommended. Why did they 
recommend it? Because they were split on what different facets of the 
Internet world are going to carry with respect to access charges and 
all the other complexities having to do with Internet interstate 
commerce.
  So the best of all worlds is to give the Congress and industry and 
business and telecommunications, to give them all time to sort this 
out.
  Mr. Chairman, one thing that should be said to clear up things in 
anticipation of the debate that is to follow, this does not impact 
sales taxes as they now exist across the Nation. What we are talking 
about is a moratorium on Internet access charges, more than any other 
single facet of what is happening in the Internet world.
  What might happen to sales taxes and other problems that are fomented 
at the outer edges of the Internet world will be topics of hearings 
that we will be conducting in the Committee on the Judiciary in the 
weeks to follow, even in this session.
  So we are going to cover all the complexities that exist in this 
whole new world of exchange. But in the meantime, we are pressing for 
the main stem of this bill, which is a moratorium to extend 5 years 
beyond the current one.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, this measure, the Internet Nondiscrimination Act, is 
not really what it seems, because it merely addresses the most trivial 
of the Internet tax issues, the extension of the tax moratorium, and 
kicks the can down the road, so to speak, on the real issues, State 
simplification and the defining of what activity creates the necessary 
nexus for sales tax under the Supreme Court decision in Quill rendered 
in 1992.
  By extending the current moratorium for 6 years, more than two 
presidential elections from today, there is far less of an incentive 
for the States and Congress to deal with these far more important 
simplification issues. Indeed, there is a real risk that by 2006, many 
interests will become so dependent on the current system that it will

[[Page 7486]]

become impossible to ever revisit the issue of State tax 
simplification.
  There can be no doubt that the present State system, which this 
legislation totally ignores, is a serious problem. First, the 
complexity of the system is daunting. There are over 6,500 taxing 
jurisdictions in this country. The jurisdictions generally require 
separate collection, have developed overlapping definitions of goods 
and services subject to tax, specifying different sets of exemptions 
and audit systems.
  Any retailer with a physical nexus to a State is subject to a myriad 
of confusing and complex State and local taxes.
  The second point that needs to be made is that the legal uncertainty 
of the present system can be quite harmful, even for remote sellers 
because of the many questions left unresolved in the Quill decision. 
For example, would the mere presence of a computer server in a 
particular State constitute a substantial physical presence for State 
tax purposes? I do not know. How are purely electronic sales of books, 
movies, and sound recordings to be treated? We are not sure. Would the 
existence of a kiosk to place sales ordered through the Internet or a 
physical return facility constitute the type of physical nexus needed 
to establish sales tax collection authority? Who knows?
  All of these issues can and should be addressed as a part of a 
comprehensive tax simplification effort, yet this will be far less 
likely to occur if we extend the present system to 2006.
  I would also note that the process by which the bill has been 
considered is neither serious nor credible. There have been no 
Committee on the Judiciary hearings to obtain input from the interested 
or affected parties. Instead, our markup was scheduled on one day's 
notice, the bear minimum required under the House and committee rules.
  This bill has been rushed to the floor waiving House rules specifying 
a 3-day layover requirement and against unfunded intergovernmental 
mandates.
  So in my view, the entire process appears to have been more the 
result of partisan political considerations than sound policy, because 
why else would the Majority Leader announce the legislation is slated 
for floor consideration before the committee had heard from a single 
witness, or even scheduled a subcommittee full markup?
  The majority appears to be using this legislation in a desperate 
effort to create the appearance of a serious high-tech agenda, even 
while they postpone and defer considerations of the larger issues.
  It is ironic that the majority could claim to be a champion of the 
tax-free Internet at the same time that the chairman of the Committee 
on Ways and Means is proposing a new 30 percent Federal tax on sales 
transactions, including all electronic sales consummated over the 
Internet.
  Later today, I will plan to support the Delahunt-Thune amendment, 
which extends the moratorium until the year 2003. Now, this approach 
will keep pressure on the Congress to deal with the more pressing 
problems of E-commerce and ensure that taxing authorities are not 
creating too many unwise toll booths on the Internet highway.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Florida (Mr. Foley).
  Mr. FOLEY. Mr. Chairman, sometimes I am not certain around here 
whether we are making progress or not, but we certainly are working on 
a very, very important issue. The other side, the minority, at times 
criticizes us for not working enough. Yet, today we are being accused 
of rushing legislation to the floor. I disagree with that viewpoint.
  I think we are all aware of the Internet and its importance to the 
country. I think if we look at the record, Republicans have, in fact, 
been stalwart leaders in trying to bring the Nation as a whole into the 
Internet economy.
  Mr. Chairman, I rise in support of H.R. 3709, the Internet 
Nondiscrimination Act. The Internet is the engine that has fueled this 
massive expansion in our Nation's economy. This is the ``Internet Age'' 
and America is leading the way in innovation and development of this 
vital sector of our economy.
  This bill is important because it tells the government: ``Keep your 
hands off the Internet.'' All too often we have seen the Federal 
Government stifle innovation and new technologies through heavy 
taxation and overburdensome regulation. We could cite the Justice 
Department's heavy hand in the Microsoft case, which is obviously 
causing serious tremors on Wall Street and is causing millions of 
Americans to lose a substantial part of their retirement savings 
because the equity values have been driven down because of the fear 
that innovation and technology improvements to society will be 
challenged by this Justice Department.
  This bill will prevent States and localities from imposing access 
charges to the Internet. Many in this Chamber have received calls and 
letters from our constituents urging us not to tax the access to the 
Internet. This is in response to those thousands of e-mails and letters 
we have received from our constituents.
  Allowing every taxing authority across the country to tax access to 
the Internet is the quickest way to destroy it, and certainly that is 
something that no one here wants.
  I am concerned, however, about the effects this bill will have on the 
ability of States to collect sales tax revenue. My State of Florida is 
heavily dependent on sales tax receipts, as it does not have a State 
income tax. And I congratulate our State for not having an income tax.
  Mr. Chairman, please understand, I do not favor taxes, sales or 
otherwise, that discriminate against the Internet. I supported the 1998 
Internet Tax Freedom Act because I felt it was important at the time to 
give the Internet some room to grow absent the heavy hand of 
government. However, today we are facing a situation where businesses 
in my district and all across America are being discriminated against. 
If a person can evade sales taxes by making a purchase on-line, the 
small business on the street corner that sells that same product will, 
in fact, suffer.
  The Internet is now thriving, and it is unfair to continue an unlevel 
playing field which gives Internet companies an advantage over the 
``brick-and-mortar'' corner stores all across America. It is my hope 
that we can reach a compromise on this particular issue; however, I 
support the main intent of this bill, which is preventing the taxation 
of Internet access.
  Mr. Chairman, I congratulate the gentleman from Pennsylvania 
(Chairman Gekas) for his leadership.

                              {time}  1130

  Mr. CONYERS. Mr. Chairman, I yield 4 minutes to the gentleman from 
New York (Mr. Nadler), who is the ranking member on the Committee on 
the Judiciary.
  Mr. NADLER. Mr. Chairman, today we consider a matter of vital 
importance to our Nation's future: how to nurture the development of 
the Internet commerce; how to provide a clear and predictable 
environment for e-commerce, free from multiple and discriminatory 
taxes, while at the same time protecting our local communities which 
need revenues to fund schools, to fund emergency services, such as fire 
and police, and hospitals, and so forth.
  I take that balance very seriously. In New York Silicon Alley, which 
I am proud to represent, emerging high-tech firms are on the cutting 
edge of the new economy. They provide a vital new engine for economic 
growth and innovation. We need to foster that innovation and ensure its 
future.
  For that reason, as the ranking member on the subcommittee, I took a 
leading role in seeking enactment 2 years ago of the Internet Tax 
Freedom Act, which provided for a moratorium on various taxes on the 
Internet and established a commission to recommend a rational, fair and 
predictable system of taxation that placed e-commerce on an equal 
footing with similar businesses.
  The purpose was to ensure that the new economy not be stifled by 
multiple or unfair or discriminatory taxes, and

[[Page 7487]]

that economic decisions in the private sector, insofar as possible, be 
made on economic, not tax avoidance grounds so as to maximize economic 
efficiency productivity, growth and fairness.
  Mr. Chairman, unfortunately, the commission dropped the ball and 
could not agree on any approach. Rather than taking the time to deal 
with this important responsibility ourselves, we are faced today with a 
rushed piece of legislation that extends the moratorium, but fails to 
address the important questions of fair, nondiscriminatory taxation 
that will protect the new economy for multiple taxes, discriminatory 
taxes and other unfair burdens that could undermine the ability of the 
Internet to grow, prosper and continue as an engine for economic 
growth.
  In fact, as was mentioned, the bill was rushed through the Committee 
on the Judiciary so quickly, on orders from the House Republican 
leadership, that we will not have time to hold any hearings until next 
week, after this vote is taken. First you vote on the bill, then you 
have hearings to find out what you are talking about. Is that any way 
to deal with something this important? Shoot first and ask questions 
later?
  Are we doing e-commerce or our communities any favors by acting so 
rash and irresponsible a manner? There are 16 months left in the 
current tax moratorium. I think we could have taken a day or two to 
hear from the industry and other interested parties and experts to 
craft more comprehensive legislation before voting.
  It did not have to be this way. Instead of pushing through a bill 
that will not provide predictability and long-term protection for e-
commerce that ducks the major issue, Congress today punts by simply 
extending the moratorium and dodging the important questions.
  These issues will not go away. State and local governments will need 
clear rules on what they can and cannot tax. E-commerce companies will 
need to know what their future situation will be. Main Street 
businesses need to know that they will not be placed at a competitive 
disadvantage. If we fail to address these issues, as this bill does, we 
may very well face years of complex and costly litigation before the 
courts straighten it out.
  But we are not doing that today, we are voting on a press release 
today instead of legislation that would take some responsibility for 
the future of the Internet.
  We need to deal with the sales tax issue, the nexus issue and the 
access issue once and for all. We do no one any favors by avoiding the 
hard questions as this bill does. That future is too important to play 
politics with. While I am disappointed with the incomplete legislation 
we have before us today, I am also determined to move the process 
forward in the hope when the time comes to vote on a conference report, 
the bill will address these important issues.
  Mr. Chairman, I will vote for this bill today, knowing it is a 
terribly flawed product, hoping that before we have a conference report 
it will deal with the issues we are dodging today. If the conference 
report does not, a lot of us will have a lot of difficulty supporting 
such a flawed product.
  Mr. GEKAS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Illinois (Mr. Weller).
  Mr. WELLER. Mr. Chairman, I rise in support of this important 
legislation. Let me share some interesting statistics with my friends 
and colleagues. One-third of all economic growth today results in the 
new economy based on technology. High-tech wages are 77 percent higher 
on average than the other private sector jobs; 37 million Americans 
access the Internet every day. Clearly, the new economy offers great 
opportunity for all Americans.
  Mr. Chairman, I am proud to say that Illinois is a high-tech State. 
Illinois ranks fourth today in technology employment. We rank third in 
technology exports. This issue is important to the people of Illinois, 
and it is a simple bill. We are just saying, no new taxes on e-
commerce. No new taxes; pretty simple message.
  The U.S. Department of Commerce estimates that the number of new 
websites and Internet users doubles every 100 days. This issue is 
whether or not we impose any new taxes on Internet and e-commerce 
sales.
  Let us remember traditionally that government has always been very 
creative in finding new ways to tax. We are just saying no new taxes.
  At a time when the new economy is growing so strongly, creating one-
third of all the new jobs, we want to keep it growing. I am proud that 
Illinois has been leading the way. I am proud that Illinois made the 
statement 2 years ago that it will not tax Internet access charges 
subjecting them to the State's sales tax, the telecommunications tax.
  Illinois has already led the way, and we are following the lead of 
States like Illinois, because Illinois wants a growing new economy. The 
new economy is growing today because we have a simple agenda here in 
this Congress. The majority wants a tax-free, regulation-free, trade 
barrier-free new economy and because of that, it is growing, creating 
new opportunity for millions of Americans.
  There is no excuse for delay. We are hearing lots of excuses because 
some people want to tax the Internet. No more excuses; no new taxes. No 
new taxes on the economy. Let us vote aye.
  Mr. CONYERS. Mr. Chairman, I yield 3 minutes to the distinguished 
gentleman from North Carolina (Mr. Watt), a member of the subcommittee.
  Mr. WATT of North Carolina. Mr. Chairman, I thank the ranking member 
of the Committee on the Judiciary for yielding me the time.
  Mr. Chairman, let me be clear that I originally supported the 
appointment of a commission and the original moratorium, because I 
thought the whole issue of how we tax Internet sales was a very, very 
complicated issue which had substantial implications for commerce, as 
well as substantial implications for local governments and their 
ability to support initiatives at the local level.
  I thought that we could not in the Committee on the Judiciary make a 
quick judgment about how to create a level playing field between brick 
and mortar stores and e-commerce sales.
  The Commission has failed in my estimation, and I think we do need 
some kind of extension of the moratorium. I do not think that 5 years 
is an appropriate extension. I think it is way too long to extend this 
moratorium, because what we have in addition, related to the moratorium 
itself, is a companion issue which deals with how we create a level 
playing field between retailers and other businesses that are operating 
in brick and mortar stores and people who are selling over the 
Internet.
  Right now, brick and mortar stores are at a competitive disadvantage 
because they have to collect local sales taxes. In many cases, e-
commerce is able to evade those local sales taxes, and that puts brick 
and mortar stores at a competitive disadvantage.
  So if we are going to create a level playing field for both e-
commerce and brick and mortar local retailers, we need to deal with how 
we do that at the same time we deal with the extension of the 
moratorium. To delay how we create that level playing field for 5 or 6 
more years, actually 6 more years, not just the 5-year extension, 
because this 5-year extension does not pick up until a year from now, 
we are talking about a 6-year extension of a moratorium that really 
puts in place an unlevel playing field for that 6-year period.
  I think that is terribly unfair to our existing brick and mortar 
stores in our communities. It is terribly unfair to local governments 
who rely on the ability to tax to support their activities.
  So I hope my colleagues will oppose this bill and support the 
Delahunt amendment.
  Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentleman from Ohio 
(Mr. Boehner).
  Mr. BOEHNER. Mr. Chairman, the beauty of the Internet economy is that 
there is almost no limit to what one can accomplish if one has access 
to it. E-commerce offers every citizen the chance to be an entrepreneur 
and to pursue the American dream. It puts

[[Page 7488]]

David on a level playing field with Goliath, giving the smallest mom 
and pop business the opportunity to reach the same customers as the 
industry giants.
  Our responsibility as elected leaders is to knock down any barrier 
that unfairly denies Americans the chance to participate in this new 
economy, whether it is access charges or double taxation of on-line 
purchases or the ancient sales and use tax laws that some want to 
resurrect for Internet sales.
  The measure before us would provide a 5-year extension of the 
moratorium on new taxation of the Internet. This moratorium is 
America's first line of defense against unnecessary government 
intrusion in the new economy. It is essential to preserving the 
evolution of the Internet and making it accessible to every citizen.
  Mr. Chairman, no one can say with certainty where the Internet will 
lead us or which opportunities it will yield. But we do know the 
Internet is working for America, and we know it is that freedom that is 
what is making the Internet work.
  I urge my colleagues to support this bipartisan bill.
  Mr. CONYERS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. Delahunt), a member of the Subcommittee on 
Commercial and Administrative Law. No one has worked harder on this 
than him.
  Mr. DELAHUNT. Mr. Chairman, last year, in 1999, State and local 
governments lost $525 million in anticipated sales tax revenues on e-
commerce or so-called Internet sales. Researchers from the University 
of Tennessee estimate that on-line sales will grow to $200 billion by 
2003. Unless there is a system that is in place that enables the States 
and local governments to require out of State merchants to collect 
taxes on their sales to in-State residents, they will lose more than 
$20 billion annually by 2003.
  This chart on my right lists all 50 States in their projected sales 
tax revenue losses for the single year of 2003. Some examples are 
instructive. Florida will lose $1.4 billion in sales tax revenue. Texas 
will lose more than $1.7 billion in revenue.
  It is important to note, by the way, that Florida relies upon the 
sales tax for 57 percent of its total revenue, and Texas relies upon 
the sales tax for 51 percent of its total revenue.
  It is easy to imagine how these kinds of losses affect a State or 
local government's ability to provide for basic services such as police 
and fire protection or a viable educational system. They will either be 
compelled to cut back these services or more likely raise income taxes 
and/or property taxes. No way will this underlying bill cut taxes. It 
is important to be clear about that. At best, it will only shift them.
  Now, how do we get to this point, where the States are forced to deal 
with ever-increasing shortfalls in anticipated sales tax income? Well, 
in 1992, the Supreme Court ruled that a State could not compel an out-
of-State business to collect the sales tax for a product or service 
sent into that State. This inability to collect from out-of-State 
merchants coupled with the dramatic but very recent explosive growth of 
e-commerce has created a serious fiscal problem for State and local 
governments.
  Furthermore, this issue is not just about declining sales tax 
revenues to State and local governments, it disadvantages small 
business as well. Those merchants in our neighborhoods and communities 
that make up our local Chamber of Commerces, how can they compete when 
there is no sales tax parity.

                              {time}  1145

  One can imagine deserted shopping malls and empty storefronts 
downtown. The digital divide should not be extended to American 
business or to those who patronize them. We will have two classes of 
American consumers and two classes of American business and no level 
playing field for either.
  The States understand these issues, and by their own initiative, have 
formed the so-called streamlined sales tax project. Let us leave it to 
the States.
  Mr. Chairman, later on, I will submit an amendment that will reduce 
the 5-year underlying proposal to 2 years.
  Mr. GEKAS. Mr. Chairman, I yield 4 minutes to the gentleman from 
Virginia (Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Chairman, I thank the gentleman for yielding me 
this time.
  Mr. Chairman, this sales tax debate is very interesting. In fact, we 
are going to continue that debate with hearings in the Committee on the 
Judiciary soon. But as far as this legislation today is concerned, it 
is nothing more than a red herring attempt to divert the attention of 
this Congress and the American people from the task we have at hand 
today, which is to protect folks like the young students that were at 
our E-contract 2000 press conference with the majority leader a little 
while ago, who themselves, 15-year-old kids, said do not put taxes on 
access to the Internet.
  That is what this bill is about, keeping some of the most unfair, 
most regressive taxes, taxes that hurt the lowest income Americans from 
being imposed on the Internet and denying those people the opportunity 
to participate in the information age, the educational opportunity, the 
opportunity to shop on-line. When we allow States or other entities to 
impose those taxes, they hurt the lowest income people the most, but 
they hurt the Internet, which is benefitting the United States as well.
  It is vitally important that we take a very, very cautious approach 
towards allowing taxes of any kind on the Internet, because the 
Internet is the engine causing our economy to grow. Nearly half of the 
growth in our economy is attributable to the high-tech industry, and 
the Internet is the engine that is driving that growth.
  We have, so far, been very successful in encouraging 135 nations 
around the world, members of the World Trade Organization, from 
restraining this impulse to put more and more taxes onto the Internet. 
And that is what we are trying to do today, is to set an example for 
the States, but, even more importantly, for the rest of the world; that 
as this economy grows, we not tax it to death.
  There is a saying here in Washington that when government sees 
something moving, they try to regulate it to death. If it keeps moving, 
they try to tax it to death. And then, of course, if it stops moving, 
well, then they subsidize it. That is not the model for the Internet. 
We have been able to keep it free of taxes, we need to continue in that 
direction.
  This is a great first step in that direction, and I urge my 
colleagues to reject amendments that would shorten this extension of 
the moratorium of 5 years and to reject amendments that would eliminate 
the provisions in this bill that take out the grandfathered States.
  Let us be fair to everybody and let us reject the idea that this has 
anything to do with the States collecting their sales taxes. It does 
not. It is simply a way for us to protect American citizens from unfair 
and discriminatory taxes on the Internet.
  I urge my colleagues to support this legislation and reject these 
amendments that are going to be offered.
  Mr. Chairman, I submit the following letter to the Speaker from the 
Governor of Virginia in the Record:

                                         Commonwealth of Virginia,


                                       Office of the Governor,

                                        Richmond, VA, May 9, 2000.
     Re: H.R. 3709

     Hon. J. Dennis Hastert, Speaker of the House of 
       Representatives, Office of the Speaker, House of 
       Representatives, Washington, DC.
       Dear Speaker Hastert: Thank you for your efforts in moving 
     H.R. 3709 to a floor vote tomorrow. You and Majority Leader 
     Armey are to be commended for the leadership you have 
     demonstrated in moving the Advisory Commission on Electronic 
     Commerce's recommendations from concept to swift legislative 
     action. The people of the United States can be proud of your 
     efforts on their behalf.
       Please extend to your colleagues in the House my 
     encouragement to vote for H.R. 3709 in its current form. 
     Congressman Cox and Congressman Goodlatte have crafted a bill 
     that will protect millions of women and men who use the 
     information from unfair and discriminatory tax burdens and 
     from taxes on their monthly Internet access charges.

[[Page 7489]]

       The extension of the moratorium against ``multiple and 
     discriminatory'' taxes targeted at the Internet is necessary 
     to protect the Internet from tax and regulatory burdens that 
     will inhibit full growth of the Internet. In the words of 
     President Reagan, ``The government's view of the economy 
     could be summed up in a few short phrases: If it moves, tax 
     it. If it keeps moving, regulate it. And if it stops moving, 
     subsidize it.'' What's moving in the Internet Economy are 
     bits and bytes and electrons of Internet through cables and 
     wireless satellite connections--and the moratorium presented 
     in H.R. 3709 is necessary to protect government's inherent 
     appetite for more revenues even during times, such as we 
     enjoy today, of economic plenty.
       The prohibition against taxes on monthly Internet access 
     fees is necessary to reduce the financial burden on working 
     men and women and families who want to log on the Internet. 
     This is crucial for several reasons. First, America's policy 
     should be to encourage all Americans to log on the Internet 
     and empower their lives with access to all of the social, 
     educational and economic opportunities located on the world 
     wide web. Second, a prohibition against taxes on Internet 
     access would reduce the price of Internet access and thereby 
     help close the ``digital divide.'' Third, Americans already 
     pay a tremendous tax load to log on the Internet because of 
     the taxes they pay on telephone and cable lines they use to 
     connect to the Internet.
       Moreover, these basic tax protections are necessary if the 
     people of the United States are to realize all of the social 
     and economic benefits promised by the Internet and if the 
     United States is to maintain its economic dominance in the 
     Information Economy.
       For all of these reasons, I encourage the House to pass 
     H.R. 3709 tomorrow.
           Very truly yours,
                                             James S. Gilmore III,
                                             Governor of Virginia.

  Mr. CONYERS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Oklahoma (Mr. Istook), a real States' Righter.
  Mr. ISTOOK. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  I have had a personal computer on my desktop for over 15 years, using 
it daily, watching it become an important part of work, of 
entertainment, of information gathering, of finding out the news, of 
doing research. I use it constantly. And I hear people say, well, do 
not tax the Internet. Okay, that is fine. I do not want to tax the 
Internet. But I do not hear those same people saying do not tax 
telecommunications, do not tax department stores, do not tax clothing 
stores. Where is the principle of fairness and consistency?
  If we tell businesses that by hooking up with the Internet they gain 
exemption from taxes, competitive pressure means all businesses will 
work through the Internet to exempt themselves from taxes. But we are 
not talking about Federal taxes that we are deciding. We are taking 
away the ability of our States and our communities to have the tax base 
that pays for schools, that pays for roads, that pays for police, that 
pays for fire protection.
  Do not tell me to not tax the Internet unless we want to also say we 
will not tax telecommunications. Get rid of all of them. My cable modem 
at home comes through our cable TV provider. There is a tax on it. Do 
we say we will grandfather that one in, but if California or somebody 
else wants to do the same thing, they cannot do it? There is no 
principle of fairness, no principle of equality.
  We have traditional businesses. They have been in our communities. 
They have sponsored little league teams, they have picked up trash by 
the side of the road. They have helped with the PTA and school plays. 
But we say we do not care about them because there is a new kid in town 
that looks mighty attractive to us and we only care about them.
  Now, I realize this bill purposefully evades the big issue, which is 
equal treatment of collecting sales taxes. And people say, oh, well, we 
will worry about that later. Yeah, after 5 more years, on top of 
another year and a half to go. Justice delayed is just denied. 
Decisions delayed are decisions denied.
  Mr. Chairman, we need the principle of fairness, and we should not 
take the easy decision. We are going to eat our dessert, but we are 
never going to deal with eating our vegetables. Let us put the 
decisions all in one, as we did in telecommunications reform, as we did 
in financial services reform. We should not put off the tough 
decisions.
  Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentleman from 
Oregon (Mr. Walden).
  Mr. WALDEN of Oregon. Mr. Chairman, I just want to say that I have 
gotten more mail on this issue than any other, other than satellite 
television, in the last 16 months, and this is a classic letter:
  ``Dear Mr. Walden, I am a registered Oregon voter who uses this 
service of long-distance e-mail often, and I do not think it is right 
for the U.S. Postal Service, telephone companies, or any other entity 
to tamper with a person's right to free Internet e-mail. I am posting 
my no vote with you, my State representative. Thank you, sincerely, 
Mrs. Marilyn D. Icenbice of Klamath Falls, Oregon.''
  She is right. We are going to stop that and prevent that from 
occurring.
  And let me talk a minute about temporary taxes. There is a temporary 
tax on our phone right now that was put in place to fund the Spanish-
American War. Like my colleague from Oklahoma just talked about some of 
these taxes, we are going to get rid of that one, later this month, 
hopefully.
  So a temporary tax never goes away. And if we allow the Internet to 
get caught up in that, we are in real trouble. Because the Internet and 
high-tech has been the economy that is fueling what is going on in 
terms of growth in America. Not in all sectors, but certainly an 
important sector. And we can do the best to expand the Internet into 
rural areas, like my district, by keeping it tax free.
  I urge my colleagues to support this moratorium.
  Mr. CONYERS. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Texas (Ms. Jackson-Lee), a member of the subcommittee.
  Ms. JACKSON-LEE of Texas. Mr. Chairman, I thank the gentleman for 
yielding me this time, and I thank those who have come to the floor to 
debate this issue because it requires debate.
  In fact, I would have wanted us to have deliberative hearings in the 
Committee on the Judiciary, as the Committee on Commerce has proceeded 
in hearings, to really answer the questions and concerns that are 
expressed about the Internet by the proponents of this legislation and 
to address the crucial issues as evidenced by those who oppose.
  I listened to a previous speaker who indicated that there are 37 
million individuals who access the Internet every day. Well, there are 
17 million citizens, approximately, in the State of Texas who are not 
able to speak for themselves when this legislation will cause them to 
lose $50 million a year in Internet access taxes, or almost 51 percent 
of their revenue with the loss of $1.7 billion.
  Mr. Chairman, I do not understand why we would move so precipitously 
to pass this legislation when there is still 18 months left on the 
present moratorium and to eliminate States, such as Montana and Ohio 
and Texas, those people who depend upon that revenue for education and 
health care services, that we would eliminate their opportunity to 
continue their structure of taxation.
  In fact, Texas has stopped, or at least Texas has exempted the first 
$25 per month in access fees from taxation. They have structured their 
own taxation structure. But yet we come, without any hearings, to 
eliminate the opportunity for those States to continue to assess those 
fees and to receive revenue.
  I would argue that we are way beyond where we should be. We realize 
that the Internet can be expected to generate $350 billion a year 
within the next 2 years for electronic sales. That is the reason why we 
must do a measured and decided study on what we do.
  I support the Delahunt amendment. I have an amendment to include the 
grandfathered States. This is a bad bill the way it is. We are moving 
too quickly and we are hurting a lot of people.
  Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentleman from Texas 
(Mr. Armey), the majority leader.
  Mr. ARMEY. Mr. Chairman, this is indeed a defining moment. We are 
really separating ourselves into two different camps here.

[[Page 7490]]

  On one hand, we see those who see a digital divide. On the other 
hand, we see those who see a world of digital opportunities. On one 
hand, we see people who think the world is all about a zero-sum game of 
stagnation and redistribution. On the other hand, we see people who 
understand the world is about growth, development, innovation, jobs, 
new products and new discoveries in our life.
  Mr. Chairman, the fact of the matter is every State, every 
municipality in America knows that high-tech America is a world of 
digital opportunity, where there is economic growth, there is a new 
firm every day, there is a new idea every day, there is a new product 
every day, and every one of these communities, all flush with cash, are 
offering digital America whatever tax concessions they can to come 
locate in their State, come locate in their city.
  They promise a tax break because they know what economic growth, 
increased jobs will do to improve their schools, to improve their 
community. Clean economic growth. High-tech members of the community. 
Good citizens all. Every one of our States wants them. But, as soon as 
the States then turn their attention to milking that cash cow that they 
worked so hard to bring, then they say, well, we really have a zero-sum 
game here. Now we need to have discriminatory taxation against this 
very same institution called high-tech America.
  This Congress says we are for growth. We are for development. We are 
for the increased job opportunities and the better community that every 
one of these communities seeks when they go to a high-tech firm and 
they say come locate here. And my colleagues all know we do it.
  Now, one final point. Mr. Chairman, I am from Texas, and Texas was 
grandfathered in for sales taxes. And I am in support of this bill, 
even with the removal of the grandfathering States. Why? Because Texas 
is better served by growth, economic development, expansion, invention, 
creativity, innovation, discovery and the wonder that comes with high-
tech America than they are served with the paltry little bit of sales 
tax increase they can get by applying discriminatory taxation to the 
driving engine of the American economy.

                              {time}  1200

  Mr. CONYERS. Mr. Chairman, I am pleased to yield 2\1/2\ minutes to 
the gentleman from Texas (Mr. Doggett.)
  Mr. DOGGETT. Mr. Chairman, I thank the gentleman for yielding me the 
time.
  Mr. Chairman, the economic dream of America is still alive and well 
in Central Texas. A business can begin in a dormitory room, as Dell 
Computer did, or in a garage, as hundreds of start-ups in our community 
have done, and can grow into a multi-million dollar publicly traded 
corporation.
  This is an old principle of America that has now been applied in what 
we call the ``new economy''. And if these start-ups, some of which are 
very small, struggling companies before they become big prosperous 
companies, are overburdened with having to file tax returns as thick as 
a telephone directory in some 30,000 jurisdictions across the country, 
we will stifle the growth of this new economy.
  That is why I was an early supporter of the Internet Tax Freedom Act 
and why I will vote for this Internet Nondiscrimination Act.
  I also believe that there is great merit in permanently banning all 
forms of taxation that could be imposed on use of the Internet itself, 
on getting on the Web. We have seen that the Europeans have slowed the 
growth of electronic commerce in their countries because it costs too 
much and they get taxed too much even to get access to the World Wide 
Web. Let's ``free the web'' of taxes throughout America.
  I believe that a tax-free zone on the Internet will encourage the 
growth and stimulation of this new economy and all the innovation, the 
associated creativity that holds so much promise for the future of 
America.
  But I also know that our new economy has boomed in Central Texas, 
largely because of entrepreneurial skill, an educated workforce, and a 
quality of life with some secure neighborhoods, and environmental 
awareness. If we do not have the local tax base to provide a police 
department, if we have to rely on a virtual fire department, if we 
cannot get the resources to upgrade our workforce and our public 
education system, then our new economy will suffer just as much as if 
we are overburdened with taxation.
  Texas has some of the highest access charges in the country. I do not 
know why some of our State Republican leaders, who have offered so much 
pro-technology rhetoric, have not worked to repeal those taxes, but 
they have not. And, so, we are doing that in this bill.
  The Internet Tax Freedom Commission failed in its responsibility to 
balance these conflicting concerns.
  In short, what I would say today is that a good concept is being 
applied in this bill in a bad way, it is being rushed through not to 
help the Internet but to help in the next election. The desire is to 
mislabel Democrats as being pro-tax and anti-tech. That is wrong.
  We should be coming together to resolve this issue, not having the 
kind of electoral grandstanding that is occurring here.
  Further, there is a danger that an extended moratorium will open the 
door to the 59.5 percent Federal sales tax that the gentleman from 
Georgia (Mr. Linder), who was just out here, and too many Republicans 
have been advocating.
  Republicans are advocating replacing the Income Tax Code with a 60 
percent tax on every Internet transaction. That would be a real 
setback.
  Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Pennsylvania (Mr. Peterson).
  Mr. PETERSON of Pennsylvania. Mr. Chairman, I thank the gentleman 
from Pennsylvania (Mr. Gekas) for giving me this opportunity and for 
his leadership on this issue.
  Mr. Chairman, we have just heard a lot of rhetoric. And that is what 
it is. It is rhetoric. It is not fact.
  E-commerce is a vital building block in America's future. We are 
being told that the changes in the next decade will quickly overshadow 
the changes of the 1990s. Think about that. We are going to overshadow 
this progress that we have made in the last decade in a couple years. 
And it has been hard for me to fathom the changes that we have seen in 
just the last few years.
  What should we do? My father was an 8th-grade-educated steelworker 
but wise beyond his formal education. When I got in government, he said 
to me, Son, when you get in government, first do no harm. Do not get in 
the way. Do not stop progress. Do not let government overregulate, 
control, or tax success that is the major force in growing our quickly 
changing economy in this society.
  If we want something to slow up, tax it. If we want something to stop 
growing, tax it some more. If we want something to go away, tax it 
again and regulate it.
  What should we do? Well, I was a bricks-and-mortar retailer for 26 
years. We heard their defense today. If I were a retailer today, I 
would be using e-commerce to expand my business, not for defense.
  By using the Internet, every American entrepreneur has the chance to 
go to a global marketplace without building further infrastructure. We 
must try to get everyone to understand the potential of the Internet, 
that is where we need to put our time, and teach them how it use it, 
promote access, and make sure they all have the fast pipeline, that 
they can use the Internet in the most efficient way.
  Let me tell my colleagues what we have not heard enough talk about is 
adjusting our educational system to the high-tech society of today. We 
are not preparing the workforce of today for the technology jobs of 
today. Hundreds of thousands, if not millions, of jobs are going 
begging in this country, good paying jobs, because we are not up to 
speed with the technology changes.
  So let us keep government out of the way, what we are doing with this 
legislation; let us not promote and allow further taxation to stop this 
growth; let us have incentives to educate the public so they understand 
how to use it

[[Page 7491]]

and benefit from it, incentives to expand the pipeline so everybody has 
the high-speed pipeline; and last, but not least, drastically look at 
our educational system and expand technology education in this country 
by big numbers, because the academic system we have is not training 
people for the high-tech jobs of today, and the companies that are 
growing and paying the taxes that will fund our governments need high-
tech workers that we need to make sure are available for their future.
  Mr. CONYERS. Mr. Chairman, I am pleased to yield 1 minute to the 
gentlewoman from Oregon (Ms. Hooley).
  Ms. HOOLEY of Oregon. Mr. Chairman, in October of 1998, we 
overwhelmingly passed the Internet Tax Freedom Act, a law to keep the 
heavy-handed government taxes off the Internet. We passed this law 
because we all know that if we overburden e-commerce by taxing it, it 
will never achieve its full economic potential.
  This 3-year moratorium has worked. Over the past years, the growth of 
Internet use has been tremendous. The number of Internet users doubles 
every 100 days according to the U.S. Department of Commerce and 
accounts for 15 percent of our total economic growth.
  Many of us are talking about closing the digital divide. What better 
way to make the Internet more affordable for everyone than by extending 
this tax moratorium.
  With the rapid growth of the Internet and the economic benefits that 
it brings, use of the Internet should not be restricted by multiple and 
discriminatory taxes. That is why this legislation to extend the 
Internet tax moratorium for 5 years is so important.
  I urge my colleagues to support this important legislation.
  Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Virginia (Mr. Davis).
  Mr. DAVIS of Virginia. Mr. Chairman, the Internet is the most 
empowering invention since the printing press. It allows individuals 
now when they go to buy things to have the buying power that was once 
reserved for retailers.
  Mere students at the elementary school level can now have access to 
information that was once reserved for educational elites and kings and 
princesses. This will empower people to make better decisions and help 
their own lives.
  Yet, we still have a digital divide in this country where too many 
people do not have access to the Internet, their kids do not have 
access. The challenge to us is that this gap between the rich and poor, 
which has been widening, will not widen further with the growth of 
technology.
  This moratorium is an effort to bridge this digital divide by saying 
we are not going to put taxes on this and people who cannot afford this 
today are not going to be priced out of the market by excessive 
governmental taxation. That is all this does. And for 5 years it gives 
us the opportunity for businesses to make their plans over that time.
  It does not address the sales tax issue. That is a constitutional 
issue. It was raised in Quill v. North Dakota. This Congress can 
address that any time it wants to come back, or it can be addressed 
through the courts. But it does say that we are not going to have over 
7,000 different local taxes and fees relating to the Internet all over 
this country, that we are not going to do the usual philosophy that if 
it moves, we tax it, if it keeps moving we regulate it, and when it 
stops moving we subsidize it.
  We are going to allow the entrepreneurs and the businesses that have 
built this Internet and that have programmed the software that has made 
this available to the average citizen's fingertips, we are going to 
allow them to keep on doing what they have been doing and grow the 
economy.
  There is no question we are due for a tax overhaul in this country. 
The information revolution changes the whole paradigm in terms of how 
people make wealth. At the local level, it is still measured in 
property taxes. I spent 15 years in local government. The property tax 
no longer gives us the financial ability in many jurisdictions to raise 
the money for education and public safety and the like.
  Wealth has moved into knowledge, and this is something for over the 
long term as we address our IRS Tax Code. That is why I move that we 
try to scrap the Tax Code and rethink how we tax people. But this is a 
signal to all of the entrepreneurs and businesses out there in making 
their plans that the Internet is off limits for State and local 
governments over the next 5 years.
  They are already getting increased receipts as a result of the 
development of the Internet. Every new phone line that comes in, there 
are access charges related to that. Phone bills that go in, those are 
Internet fees. They are paying that to State and local government. 
Sales of equipment. My colleagues do not think they have sales taxes on 
the sales of equipment and the like? Electric bills. The new employees 
that are created pay all different kinds of taxes.
  Revenues are up at the State and local level, and a lot of this is 
because of the Internet. If we put a tax on top of this, it not only 
hurts us domestically but it hurts us across the globe.
  America is 5 percent of the world's consumers. Ninety-five percent of 
the world's population lives outside the United States. If we start 
taxing it here, we start talking about destroying the goose that laid 
the golden egg. That is the end of American dominance of the world 
economy on the Internet.
  Mr. Chairman, I rise today as an original sponsor and enthusiastic 
supporter of H.R. 3709, the Internet Nondiscrimination Act. With 
Internet use and global electronic commerce growing at an astronomical 
pace, it is inarguable that the Internet is emerging as the most unique 
and the fastest-growing tool of communication known to mankind. The 
Internet facilitates not only economic growth but the easy 
dissemination of ideas and information from almost any spot in the 
world. We are at the tip of the iceberg in terms of the potential that 
the Internet can offer both cheaply and quickly.
  Yet an ever-present concern plagues many of us who understand the 
need to foster the Internet's continued growth: the government 
interference in the electronic marketplace--whether it be through 
regulation or tax policy--will create barriers that interfere with the 
transformation of the Internet into the repository of global 
communications and commerce for the 21st century.
  Two years ago, we recognized that state and local taxation in 
electronic commerce would require a thorough analysis before we could 
formulate a balanced and restrained federal policy on the taxation of 
goods and services sold over the Internet. While most of us agree that 
regulation of the Internet would hinder technological innovation and 
economic growth, we also understand the legitimate needs of state and 
local governments who use sales tax revenue to fund services for their 
citizens. We enacted a 3-year moratorium on Internet access taxes and 
multiple and discriminatory taxes on goods and services sold over the 
Internet. We also created the Advisory Commission on Electronic 
Commerce to begin that process and identify all of the integrated 
issues that arise in the context of taxation and the Internet Economy.
  As we all know, the Commission reported its findings and proposals 
last month. While the Commissioners could not agree on a way to resolve 
the thornier issues of sales and use taxes and Internet access charges, 
among others, they did provide a critical basis for us to continue 
discussing how we prevent Internet taxation from discouraging every 
American's access to the Internet and inhibiting electronic commerce. 
And among their recommendations was a proposal--supported by a 
majority, 11 out of the 19 Commissioners--to extend the current 
moratorium on those types of taxes for another 5 years.
  I understand that some of my colleagues believe the moratorium should 
not last as long as 5 years and others believe that we have to address 
this important issue in a comprehensive manner. To the latter concern, 
I wholeheartedly agree--this issue needs to be resolved in a methodical 
and holistic manner. But we need to implement a realistic time frame 
that will allow us to resolve each and every layer of the problems 
presented by taxation in a digital world.
  This problem cannot be about politics. It cannot be about one side 
fighting at all costs for victory over another. 56 percent of U.S. 
companies will sell their products online by 2000. The Internet Economy 
now accounts for 2.3 million jobs. Global Internet commerce has 
generated nearly $145 billion in revenue since

[[Page 7492]]

1998. The U.S. not only has the fastest-growing number of Internet 
users, but the largest proportion of e-commerce consumers.
  How we address Internet taxation without hindering Internet access 
and expansion is one of the most important long-term economic policy 
decisions that our nation will make. That is why a 5-year moratorium is 
critical. I want to congratulate my colleague, Congressman Cox for his 
steadfast and outstanding leadership on this issue. I urge all of my 
colleagues to support H.R. 3709 and oppose any amendments that weaken 
the extension of the Internet tax moratorium.
  Mr. Chairman, I urge adoption of this bill.
  Mr. CONYERS. Mr. Chairman, how much time remains on each side, 
please?
  The CHAIRMAN pro tempore (Mr. Nethercutt). The gentleman from 
Michigan (Mr. Conyers) has 7 minutes remaining. The gentleman from 
Pennsylvania (Mr. Gekas) has 10\1/2\ minutes remaining.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I include for the Record the following editorial from 
the Washington Post dated today, May 10, 2000:

                            A Demagogic Bill

       The House is scheduled to vote today on a five-year 
     extension of the current ``moratorium'' on Internet taxation. 
     The extension is deceptive legislation that in the short run 
     doesn't do what most people think and that in the long run 
     could do real harm. The measure does not ban state sales 
     taxes on e-commerce--transactions over the Internet. But it 
     sounds as if it does, which suits the sponsors just fine.
       They pose as champions not just of a tax haven but of a 
     technology in which America leads the world (and of an 
     industry that has become a major source of campaign 
     donations). Not to worry that the electronic commerce they 
     embrace poses a serious threat to the sales tax base of the 
     states whose interests they also profess to champion. That is 
     another day's problem.
       Not all members were prepared to join in the grandstanding. 
     ``When it's convenient, we all give lip service to the 10th 
     Amendment, pledging allegiance to local and state government 
     rather than federal control,'' Rep. Ernest Istook said in a 
     letter addressed mainly to his fellow Republicans. ``Yet this 
     week there is a rush to trample that 10th Amendment, hoping 
     to buy favor with a select few groups.'' ``Who will educate 
     the Internet entrepreneurs of tomorrow, if the state and 
     local tax base is destroyed,'' he asked. ``The Internet 
     should not be singled out to be taxed, nor to be freed from 
     tax.''
       What the bill actually imposes is a moratorium not on 
     electronic sales taxes but on taxation of access to the 
     Internet, the monthly changes from AOL and similar providers. 
     States remain free to levy taxes on Internet sales. Their 
     problem is that they often can't collect them. The Supreme 
     Court has ruled that they can't require out-of-state sellers 
     to do the collecting for them in the same way they do in-
     state merchants. The threat, as more and more commerce shifts 
     to the Internet, is not just that the states will lose 
     revenue but that traditional merchants will be placed at a 
     competitive disadvantage. The disadvantage could have the 
     effect of accelerating the shift to the Internet, in which 
     case the process will feed on itself.
       The answer is for the states to make their tax codes more 
     uniform--not the rates, but the definitions: what constitutes 
     food, for example, which is often exempt. Then Congress 
     should authorize an interstate compact, under which sales 
     taxes on e-commerce could easily be collected and remitted by 
     computer. The National Governors Association is working 
     toward such a result, which the Supreme Court would likely 
     countenance. Instead of a show vote such as this, implying 
     that it opposes such an outcome, the House should cast a vote 
     in favor of it. The harm in this legislation is not what it 
     actually does but in the commitment it implies--that the 
     Internet will be tax free. Mr. Istook asked the relevant 
     question. If his colleagues persist in undercutting the sales 
     tax, are they ``ready to replace it with some form of federal 
     revenue sharing for states and communities?'' No is the 
     answer. No should be the answer to this demagogic bill as 
     well.

  Mr. Chairman, I also include the following letters for the Record:
                                                   April 12, 2000.
     Hon. Trent Lott,
     Majority Leader, U.S. Senate, The Capitol, Washington, DC.
     Hon. Thomas A. Daschle,
     Minority Leader, U.S. Senate, The Capitol, Washington, DC.
     Hon. J. Dennis Hastert,
     Speaker, House of Representatives, The Capitol, Washington, 
         DC.
     Hon. Richard A. Gephardt,
     Minority Leader, House of Representatives, The Capitol, 
         Washington, DC.
       Dear Senator Lott, Senator Daschle, Speaker Hastert, and 
     Representative Gephardt: We are writing to urge support for a 
     fair and equitable system to ensure that all Main Street 
     retail stores and Internet commerce can compete on a level 
     playing field and to ensure that all Americans can join us in 
     supporting the Internet as part of our new economy. 
     Unfortunately, the Advisory Commission on Electronic Commerce 
     (ACEC) proposal that was included in the Internet Tax-Freedom 
     Act (ITFA) commission report, but failed to attain the two-
     thirds majority required by the Act, does the opposite. 
     Instead of addressing the requirements laid out in the law to 
     recommend a new state and local sales tax system to provide 
     for fairness and balance, the proposal chose to use this 
     opportunity to seek a host of new and expensive special tax 
     breaks. We urge you to reject the report.
       As stated in the duties section of the legislation the 
     commission was to ``conduct a thorough study of federal, 
     state, local, and international taxation and tariff treatment 
     of transactions using the Internet and Internet access and 
     other comparable intrastate, interstate, or international 
     sales activities.'' The commission proposal did not focus on 
     Internet transactions, but instead made a recommendation that 
     would reduce other existing state and local tax revenues by 
     over $25 billion per year.
       Not only would the proposal eliminate existing sales tax on 
     such items as books, movies, music, and magazines that are 
     sold in local ``bricks and mortar stores'' but also would 
     substantially reduce existing state corporate income and 
     property taxes. The proposal, with a revenue loss of that 
     magnitude, would disrupt the financing of state and local 
     services and likely devastate education funding, which 
     represents over 35 percent of the average state budget. 
     Furthermore, instead of creating a level playing field for 
     all sellers, it would put the federal government in the 
     position of both picking winners and losers and also making 
     the current digital divide more severe.
       The most important reason for us to oppose this proposal is 
     that it would substantially interfere with state sovereignty. 
     The U.S. Constitution was very clear in both ensuring state 
     sovereignty and creating a critical balance between federal 
     and state authority. For well over 200 years the federal 
     government has respected state sovereignty and has been 
     extremely careful not to interfere with the states' ability 
     to independently raise revenues. This proposal would 
     dramatically undercut this precedent.
       It is hard to think of any more fundamental responsibility 
     of governments and elected officials in our nation than that 
     of determining which taxes and fees are utilized to pay for 
     the services that our citizens want and need. State and local 
     governments rely on sales, property, and income taxes--no two 
     the same, reflecting the enormous diversity of our nation. 
     This proposal would intrude very deeply into the rights and 
     responsibilities of state and local governments.
           Sincerely,
         Michael O. Leavitt, Chairman, Utah; Parris N. Glendening, 
           Vice Chairman, Maryland; Thomas R. Carper, Delaware; 
           Christine Todd Whitman, New Jersey, Paul E. Patton, 
           Kentucky; James B. Hunt, Jr., North Carolina; Jim 
           Geringer, Wyoming; Bill Graves, Kansas; Don Sundquist, 
           Tennessee; Jane Dee Hull, Arizona; Mike Huckabee, 
           Arkansas; John Engler, Michigan; Tommy G. Thompson, 
           Wisconsin; Frank O'Bannon, Indiana; Kenny Guinn, 
           Nevada; Dirk Kempthorne, Idaho; John A. Kitzhaber, 
           M.D., Oregon; Carl T.C. Gutierrez, Guam; Cecil H. 
           Underwood, West Virginia; Mike Foster, Louisiana; 
           Benjamin J. Cayetano, Hawaii; Jesse Ventura, Minnesota; 
           George H. Ryan, Illinois; William J. Janklow, South 
           Dakota; Tom Vilsack, Iowa; Angus S. King, Jr., Maine; 
           Pedro Rossello, Puerto Rico; Gary Locke, Washington; 
           Lincoln Almond, Rhode Island; Bob Taft, Ohio; Ronnie 
           Musgrove, Mississippi; Mike Johanns, Nebraska; Marc 
           Racicot, Montana; Howard Dean, M.D., Vermont; Tom 
           Ridge, Pennsylvania; Tony Knowles, Alaska.
                                  ____

                                     Commonwealth of Pennsylvania,


                                       Office of the Governor,

                                   Harrisburg, PA, April 12, 2000.
     Hon. Trent Lott,
     Majority Leader, U.S. Senate, The Capitol, Washington, DC.
     Hon. J. Dennis Hastert,
     Speaker of the House, House of Representatives, The Capitol, 
         Washington, DC.
       Dear Senator Lott and Speaker Hastert: I understand that 
     Congress may soon consider proposals addressing the Internet 
     Tax Moratorium set to expire next year. Technology has been a 
     central focus of my administration since I took office 5 
     years ago. From education to public safety, our commitment to 
     information technology is helping Pennsylvania to remain 
     competitive in the global economy and preserve the high 
     quality of life in the Commonwealth. Internet based commerce 
     is changing the face of how we do business in Pennsylvania 
     and providing rapid access to a whole new world of 
     information.
       To foster the electronic boom I support an extension of the 
     current Moratorium on access, multiple, or discriminatory 
     taxes. The

[[Page 7493]]

     Internet has been growing at a record pace and I believe the 
     moratorium has facilitated that process by assuring that 
     commerce over the Internet is not singled out and taxed in 
     new and creative ways. That is why I proposed and the 
     Legislature approved a repeal of Pennsylvania sales taxes on 
     computer services as well as a tax prohibition on Internet 
     access charges. More recently, in my 2001 budget, I have 
     proposed a Sales Tax Holiday for Commonwealth residents who 
     buy personal computers.
       Pennsylvania is rather unique because we continue to 
     manufacture goods. Thus, technological advances are often 
     applied to many of those goods produced in Pennsylvania. 
     Decisions on the taxation on Internet commerce therefore, are 
     very complex and must balance the needs of both Internet and 
     Main Street based businesses.
       The report submitted by the ACEC Business Caucus to the 
     Advisory Commission on Electronic Commerce acknowledged that 
     ``In addressing whether and how the Internet should be 
     subject to taxation, a major priority should be reducing or 
     removing access barriers to perhaps the most advanced and 
     useful medium of communication and commerce yet devised''. I 
     concur.
       I also agree with the Caucus position that the system 
     taxation of remote sales should be simplicity, efficiency and 
     fairness--and that ``(o)ur system of federalism mandates that 
     the burden to produce such a system falls on the states''.
       My concerns with the report include their preemption of the 
     state role, albeit for allegedly a period of five years, 
     during which time the Caucus recommends that Congress pass 
     laws preempting state sovereignty. We, state and local 
     elected officials, are best suited to reach a consensus on 
     what changes need to be made to our sales and property taxes 
     without creating a competitive disadvantage for any of our 
     businesses. The magnitude of the undertaking is only equaled 
     by its importance. States must work with local governments 
     and its stakeholders--consumers, telecommunication and other 
     remote businesses as well as our Main Street business to 
     address these challenges.
       As Congress considers legislation on Internet taxation, I 
     hope that a guiding principle will be fair competition 
     between Main Street businesses and Internet businesses. An 
     extension of the Moratorium will provide us more time to 
     assess the situation and ensure that we do no harm to either 
     side. I strongly urge that when considering the impact of 
     electronic commerce on our economy, any changes to the state 
     tax structure should be done gradually and with consultation 
     of all stakeholders.
           Sincerely,
                                                        Tom Ridge,
     Governor.
                                  ____

                                            State of North Dakota,


                                       Office of the Governor,

                                      Bismarck, ND, April 7, 2000.
     Hon. J. Dennis Hastert,
     Speaker of the House, Rayburn House Office Building, 
         Washington, DC.
       Dear Speaker Hastert: I am concerned about the current 
     dialogue on taxation of e- commerce and the recent report of 
     the Advisory Commission on Electronic Commerce.
       I do not know of a single Republican governor who wants to 
     raise taxes. At the same time, I agree with Governor Leavitt 
     and others who oppose any of the commission's findings that 
     would allow Congress to infringe on a state's sovereignty or 
     mandate tax exemptions for certain goods.
       Yet, I am equally concerned about the need for a simplified 
     and equitable tax structure. It is complex, I know: We should 
     avoid doing anything to stifle the growth of the Internet and 
     the new economy, and yet I refuse to put my Main Street 
     businesses at a competitive disadvantage.
       States and Congress will doubtlessly need to work together 
     to address these issues, which is why the Commission was 
     established. It is clear to me that these issues have not 
     been resolved, and Congress should not consider a piecemeal 
     approach at the expense of states' autonomy.
       I look forward to working with you as we make our way 
     through this complicated and important issue.
           Sincerely,
                                                Edward T. Schafer,
     Governor.
                                  ____



                                       Office of the Governor,

                                     Santa Fe, NM, April 12, 2000.
     Hon. Trent Lott,
     Majority Leader, U.S. Senate, The Capitol, Washington, DC.
     Hon. Thomas A. Daschle,
     Minority Leader, U.S. Senate, The Capitol, Washington, DC.
     Hon. J. Dennis Hastert,
     Speaker, House of Representatives, The Capitol, Washington, 
         DC.
     Hon. Richard A. Gephardt,
     Minority Leader, House of Representatives, The Capitol, 
         Washington, DC.
       Dear Senator Lott, Senator Daschle, Speaker Hastert and 
     Representative Gephardt: I are writing to urge support for a 
     fair and equitable system to ensure that all Main Street 
     retail stores and Internet commerce can compete on a level 
     playing field and to ensure that all Americans can join us in 
     supporting the Internet as part of our new economy, and to 
     urge you to reject the Advisory Commission on Electronic 
     Commerce (ACEC) report. Instead of proposing a means 
     addressing the requirements laid out in the law to recommend 
     a new state and local sales tax system to ensure a level 
     playing field and to protect the sovereignty of states, the 
     report proposes unprecedented interference into the rights 
     and responsibilities of the citizens of New Mexico and their 
     ability to determine how they want to finance vital public 
     services and infrastructure.
       The new economy offers incredible opportunities. It imposes 
     a great responsibility on all of us to enhance electronic 
     commerce, but not at the expense of our small, Main Street 
     businesses. In a world like this, if remote sales over the 
     Internet are taxed differently than intra state sales, we 
     will have a system based upon a tangle of legal maneuvering 
     that will create separations between local merchant and their 
     Internet counterparts, and a playing field that will be 
     viewed as inherently unfair. Such unfairness, if left to 
     fester, will bring contempt and non-compliance. It is hard to 
     argue with the need for an enormous simplification of state 
     and local sales taxes that can pave the way toward a level 
     playing field that does not discriminate between methods of 
     access. Congress needs to ensure we in New Mexico can move 
     toward a level playing field. It needs to make sure the 
     federal government does not act in a way that permanently 
     discriminates against our small businesses and retailers.
       The most important reason I oppose this proposal is that it 
     would substantially interfere with state sovereignty. The 
     U.S. Constitution was very clear in both ensuring state 
     sovereignty and creating a critical balance between federal 
     and state authority. For well over 200 years the federal 
     government has respected state sovereignty and has been 
     extremely careful not to interfere with the states' ability 
     to independently raise revenues. This proposal would 
     dramatically undercut this precedent.
       It is hard to think of any more fundamental responsibility 
     of governments and elected officials in our nation than that 
     of determining which taxes and fees are utilized to pay for 
     the services that our citizens want and need. It is my 
     responsibility, working with our state legislature, to 
     determine what taxes to cut in New Mexico--not anyone else's. 
     Our state relies primarily on sales, property, and income 
     taxes--all areas proposed for mandated federal cuts by the 
     report. Such a proposal would intrude very deeply into the 
     rights and responsibilities of our state and local 
     governments.
           Sincerely,
                                                  Gary E. Johnson,
     Governor.
                                  ____

                                                 State of Alabama,


                                     Office of the Government,

                                   Montgomery, AL, April 11, 2000.
     Hon. Trent Lott,
     Majority Leader, U.S. Senate, The Capitol, Washington, DC.
     Hon. J. Dennis Hastert,
     Speaker of the House, House of Representatives, The Capitol, 
         Washington, DC.
       Dear Senator Lott and Speaker Hastert, I am writing to 
     express my grave concerns regarding the Advisory Commission 
     on Electronic Commerce (ACEC) proposal that was included in 
     the Internet Tax Freedom Act (ITFA). I believe the proposal 
     represents an attempt by the federal government to take 
     control of fiscal policy away from the states, and I strongly 
     urge you to reject the report.
       As Governor, I have pursued responsible, conservative 
     fiscal policies. In some instances, targeted tax cuts are an 
     important part of this State's over financial plan. However, 
     these are decisions that must rest with the State, and not 
     with Congress. As you may know, any such measure would 
     potentially infringe on this State's ability to support 
     public schools. Therefore, I am unequivocally opposed to any 
     attempt by the Federal government to interfere with the 
     states' rights to collect sales taxes.
       In addition, while I appreciate the policy challenges posed 
     by the new global economy, I have concerns with Congress 
     establishing a series of tax breaks for a few special 
     interests. This is particularly true when doing so would 
     undermine a more-than 200-year tradition old of respecting 
     states' sovereignty. Again, I ask you not to advance any 
     effort to take control from the states and send it to 
     Washington.
           Sincerely,
                                                    Don Siegelman,
     Governor.
                                  ____



                                       State Capitol Building,

                                Oklahoma City, OK, April 10, 2000.
     Hon. Dennis Hastert,
     Speaker of the House, House of Representatives, Washington, 
         DC.
       Dear Speaker Hastert: As you prepare to consider 
     legislation concerning taxation of sales made on the 
     Internet, I ask that you consider these important factors:
       First, I believe it is important to extend the existing 
     moratorium on taxation of Internet transactions to allow more 
     debate and discussion of this vital issue. We are dealing 
     with new technologies and new forms of commerce which are 
     still being developed

[[Page 7494]]

     and refined. The taxation moratorium has helped stimulate 
     that early growth, and premature action by the federal 
     government could represent a stifling influence.
       Second, Congress should not pre-empt the states on this 
     issue. Each state has its own unique tax structure. It would 
     be a mistake to impose a ``one size fits all'' standard on 50 
     separate states and the District of Columbia. We currently do 
     not have a national sales tax; sales taxes have traditionally 
     been the province of state and local governments, and each 
     has chosen its own path in this regard. To suddenly impose a 
     new national standard would contradict our party's 
     traditional adherence to the principle of federalism.
       Third, no matter what form legislation ultimately takes, it 
     must have as a central goal the creation and preservation of 
     a level playing field. It would simply be unfair to establish 
     a system where one state or one region or one industry has a 
     special advantage.
       Fourth, as you will recall from our visits during my 
     chairmanship of the Republican Governors' Association last 
     year, GOP governors (and some Democrats) have been most 
     active in reducing state tax burdens and in reforming and 
     restructuring state tax systems. In Oklahoma, for example, we 
     have won the first reduction in personal income tax rates in 
     50 years and capped property taxes. State-level tax reform is 
     a work in progress; we are planning further income tax 
     reductions and cuts in the cost of vehicle license tags, and 
     I know other governors are doing the same. In many cases, 
     state and local sales taxes remain a central component of the 
     respective budgets of those jurisdictions. It is essential 
     that the states retain the freedom to set tax rates and 
     policies concerning those revenue sources that fund state and 
     local government.
       I appreciate the leadership you have shown on this issue 
     and ask that your future actions and deliberations be fully 
     informed by the needs of the states and the requirement of 
     fairness to all.
           Sincerely,
                                                    Frank Keating,
                                                         Governor.

  Mr. Chairman, we have here a very important consideration: Are we 
doing too little too soon? And I think the answer is that we are.
  It is important to focus, as we have not done in the Committee on the 
Judiciary, on how this bill affects the States that have Internet 
access taxes, such as Texas.
  I find it interesting in Texas that, under Governor George W. Bush, 
there exists the largest Internet access tax in the country, estimated 
to raise $200 million per year. This tax is supported by Governor Bush, 
who has not raised a finger yet to repeal it. And yet, today the 
majority would substitute their judgment in place of their own nominee 
by repealing the Texas tax on the Internet access.
  So I am very deeply concerned that we have brought a bill to the 
floor that violates the unfunded mandate rule that was put in place by 
the very majority that brings this bill to the floor.
  We do not know what the cost is going to be. We have a pledge that we 
will hold hearings to find out the answer to this very perplexing 
question sometime in the future. But today we have a bill before us 
that is premature, a bill that does not consider fully the questions 
that it needs to consider, and a bill that is, therefore, ahead of its 
time.
  Now, if we extend this moratorium through the year 2000, there is a 
risk that we may never get to the more important issues of State tax 
simplification. This undermines the principal purpose of the 1998 
Internet tax legislation, which gave an advisory commission on 
electronic commerce the ability to consider how best to develop a more 
simple and rational system than exists at the present.

                              {time}  1215

  The commission threw up its hands, unable to reach consensus on this 
or any other related important issue. Although we do not support 
multiple discriminatory State taxes on the Internet, we are concerned 
that extending the present moratorium for 6, and if you count it 
completely, 7 years, would only serve to indefinitely delay the work on 
the real problem, an overly complex system of more than 6,500 local and 
State tax jurisdictions, and the potential of current law under the 
Quill decision to subject similarly-situated sellers to different tax 
collection regimes.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GEKAS. Mr. Chairman, I yield 5 minutes to the gentleman from 
California (Mr. Cox).
  Mr. COX. Mr. Chairman, I thank the gentleman from Pennsylvania (Mr. 
Gekas) not just for yielding me this time, but also for the splendid 
work that he has done in bringing the legislation in timely fashion to 
the floor. As the author with Senator Wyden of the original Internet 
Tax Freedom Act and also of this Internet Nondiscrimination Act, I am 
very pleased at the bipartisanship in this effort.
  Senator Wyden of course, our former colleague here in the House of 
Representatives, is a Democrat from Oregon. I am a Republican from 
California. President Clinton signed this legislation. We have been, 
Republicans and Democrats, working on this for a very long time with 
very good results. What we now find, having enacted a moratorium a few 
years ago, a time-out, as it were, on new taxes on the Internet, 
discriminatory taxes on the Internet or multiple taxation on Internet 
commerce, that we have nothing to fear from good policy.
  Originally when Senator Wyden and I introduced our bill, it was a 
permanent ban on taxes that would discriminate against the Internet, 
treat the Internet less favorably than Main Street, treat the Internet 
less favorably than brick-and-mortar enterprises. But in order to make 
sure that we were not shortchanging State and local governments, we 
worked with them and fashioned a moratorium for a short while so that 
we could see with empirical, real-world results whether this good 
policy, what we knew in the abstract was good policy, worked in the 
real world. Now the results are in.
  In my home State of California, for the most recent month, sales 
taxes are up some 20 percent. As a matter of fact, brick-and-mortar 
sales at the shopping malls of America were up 8 percent. That is a 
much bigger base, by the way. There is a lot more retail through brick 
and mortar than there is over the Internet. In fact, there is a lot 
more catalog sales over the telephone than there are Internet sales 
these days.
  But brick-and-mortar sales are way up in this new economy. Sales 
taxes are up in this new economy at all levels of government, not just 
in California, but across the Nation. The Federal Government, which 
does not impose any sales taxes on these transactions, is benefitting 
hugely from the growth in this new economy through an increase in 
income taxes and other kinds of revenue flows that are the natural 
result. When more people are working, people are more productive. That 
is what is going on in America right now.
  So by adopting a policy of not killing the goose that is laying the 
golden eggs, adopting a policy of moderation in taxation, we have had 
some great successes. Remember why we did this in the first place. Not 
because we wanted in any way to crimp the ability of a State or a local 
government or even the Federal Government to collect taxes, but rather 
because there was a risk that the number of taxing jurisdictions in 
America, the sheer number of them, some 30,000, could, if they all laid 
claim to their modest piece of the Internet, drown the whole thing in a 
sea of red tape, paper compliance and, not least of all, revenue 
exactions.
  And so we said no, this is not something that we want to see fall 
victim to the tyranny of the parochial. The new economy is something 
that we cherish, something that gives America a competitive advantage 
in the world, that is creating jobs as we have never seen them created 
before. So let us ensure that from a policy standpoint, we look at the 
Internet as what it is, not just State commerce, not just local 
commerce, but interstate commerce subject to the jurisdiction of the 
Congress under Article I, section 8 of our Constitution and, indeed, 
global commerce.
  What we are doing now today is falling short of perfection, which 
would be to make permanent the ban on multiple taxes on the Internet or 
make permanent the ban on discriminatory taxes on the Internet, but we 
are doing the next best thing. Because this is a legislature and we 
have to compromise, we are extending this moratorium for 5 years. That 
is at least a minimum

[[Page 7495]]

amount of time to give people some certainty of how to plan. People can 
wake up tomorrow morning and know that there is not a government effort 
to shake down the Net.
  It is important, I think, for us to recognize specifically how brick-
and-mortar people are benefiting from this new Internet economy. First 
of all, many of them are starting out with their own e-commerce windows 
on the world, so a little company locked away in some rural area that 
could only serve a tiny community in a tiny market of customers a few 
years back now through the Internet has the world's cheapest ever means 
of reaching customers throughout their State, throughout the country 
and around the world, and we are seeing a great deal of that. As a 
result, as I said, taxes collected by government which depends on 
growth of this economy are up.
  Mr. Chairman, I want to emphasize for my colleagues what has been 
pointed out in this debate before. The sales tax debate is a very 
important one, but it is not this bill. This bill keeps discriminatory 
and multiple taxes off the Internet. There is no justification for 
doing otherwise. Please vote yes on the legislation.
  Mr. CONYERS. Mr. Chairman, I am pleased to yield the balance of my 
time to the gentleman from Massachusetts (Mr. Delahunt).
  Mr. DELAHUNT. Mr. Chairman, let me be very clear. I, too, support the 
moratorium. In fact, I was one of the early cosponsors of the Cox-Wyden 
legislation, because it seemed to me essential that Congress provide 
sufficient breathing room to develop a more uniform, fair, efficient 
neutral system of taxation of transactions, whether it be on the 
Internet or whether it be out of a brick-and-mortar enterprise. And 
over the past 2 years, the States have made considerable headway in 
this effort. I see no reason why it should take them 5 more years to 
complete it. In fact, a 5-year extension will eliminate a major 
incentive for them to get the job done.
  That is why the 5-year extension is opposed by the National Governors 
Association, the National Conference of State Legislatures, the Council 
on State Governments, the U.S. Conference of Mayors, the National 
League of Cities, the National Association of Counties, the E-fairness 
Coalition, and scores of other business organizations.
  The gentleman from California referred to the bipartisan nature of 
the original moratorium bill. What I would suggest, too, is that there 
is a bipartisan concern about what we are about to do here today with a 
5-year extension. It is clear that a 5-year extension is opposed by 36 
governors, Republicans and Democrats alike, including Governor Leavitt 
of Utah, Governor Sundquist of Tennessee, Governor Thompson of 
Wisconsin, Governor Ryan of Illinois, Governor Engler of Michigan, 
Governor Ridge of Pennsylvania and Governor Taft of Ohio, all staunch 
Republicans, not a tax-and-spend liberal among them.
  But they are opposed to the underlying bill, because they realize 
that a 5-year extension will accelerate the erosion of the sales tax 
and diminish the ability of the States to fund vital services, States 
that depend on the sales tax for as much of a third of their total 
revenue. They also understand that small businesses will suffer the 
longer the underlying issues are not addressed.
  Mr. GEKAS. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from 
California (Mr. Gary Miller).
  Mr. GARY MILLER of California. Mr. Chairman, I rise in support of 
H.R. 3709, which will extend the moratorium on taxing the Internet. 
However, I must point out the irony of passing this measure while 
continuing the Federal excise tax on telephone service.
  H.R. 3709 tells the States that they cannot tax access to the 
Internet, a measure which I thoroughly support. But in order to access 
the Internet, one must have a phone line. For the past 101 years since 
the Spanish American War, the Federal Government has levied an excise 
tax on this item. As we debate limiting States' ability to tax the 
Internet, we should also limit the Federal Government's ability. I feel 
that this Congress must take responsibility for the tax it has imposed 
on the phone services which impact the Internet. My colleague just 
talked about the problem called the digital divide, the disparity 
between those who can afford high technology innovation such as home 
Internet service and those who cannot.
  By eliminating this unjust Federal excise tax on the telephone, 
Congress takes a step forward in decreasing this gap. Mr. Chairman, the 
Spanish American War is truly over. Should we not repeal the tax 
instituted to pay for it and make Internet access cheaper for everyone? 
I urge my colleagues to support the Internet Nondiscrimination Act and 
to take the next step by repealing the phone tax.
  Mr. GEKAS. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from 
New York (Mr. Lazio).
  Mr. LAZIO. Mr. Chairman, I want to thank the gentleman from 
Pennsylvania for yielding me this time.
  Mr. Chairman, I rise in support of H.R. 3709. Mr. Chairman, this is 
an age of unparalleled discovery, an age in which the boundaries of 
human knowledge are expanding at breakneck speed. Mr. Chairman, the 
high tech revolution that both propels and dominates this global 
economy is advancing so quickly that no one, no one, really knows where 
this wave of innovation is taking us. No one really knows how 
tomorrow's technology will improve our quality of life.
  Mr. Chairman, no one imposed a ship tax on Ferdinand Magellan when he 
left Spain to sail around the world. No one put a mule tax on Lewis and 
Clark when they left St. Louis to explore the American west. Why on 
earth would we want to impose a tax on an evolving communications 
medium that is reshaping our world and transforming our daily lives? 
Why would we want to impose a tax burden that might stifle the next 
wave of high tech innovation? Why would we want to inhibit the very 
revolution that has allowed students to learn from professors half a 
world away? Why would we want to smother a technology that has enabled 
doctors to save countless lives by engaging in consultations in other 
continents?
  Mr. Chairman, we do not know what life-enhancing fruits this high 
tech revolution will reap for humanity. We do not know where the high-
tech roller coaster will be taking us next. All we can do is hang on 
and enjoy this fabulous ride. All we can do is to not place unnecessary 
obstacles in its path. Mr. Chairman, no taxation without knowing the 
destination. Let us not smother the World Wide Web. Let us extend the 
moratorium on Internet taxation.
  Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
  I want to capsulize some of the arguments that have been made to the 
effect that this piece of legislation does not affect the rights of the 
States to impose or to deal with sales taxes. That is a truth that must 
be said, stated over and over again, or else we will be led astray in 
the points that are going to be made during the amendment process and 
in the final vote on this legislation. This creates a 5-year moratorium 
as recommended by the very commission which our first act in the last 
Congress promoted, and which was the core of that piece of legislation.
  So, no adverse impact on sales taxes, and the 5 years are what has 
been carved out by the people who delved into it through the work of 
the commission. These truths are self-evident, and I hope will 
constitute the basis for a final vote in favor of this legislation.
  Mr. BACA. Mr. Chairman, I regret that a White House meeting on 
providing a prescription drug benefit for America's seniors prevented 
me from voting on the point of order to H.R. 3709, the Internet 
Nondiscrimination Act (rollcall number 154).
  If I had not been meeting with the President, I would have voted 
against the point of order.
  While I share the concern of the gentleman from Michigan about the 
impact of mandates on state and local governments, this is too 
important a bill to cut off debate.
  The American people have demanded that we roll up our shirt sleeves 
and solve this issue. I have heard from hundreds of my constituents, 
who are concerned about the possibility that we will tax this new 
technology to the point where it is no longer viable.
  I see science and the Internet as the key to the future of America 
and the Inland Empire.

[[Page 7496]]

We must allow Internet companies to flourish. In fact, I invite 
Internet-based industries to come to the Inland Empire, where we will 
create 15,000 new jobs through the LAMBRA enterprise zone legislation I 
authored. We have entered a new era of prosperity and unlimited 
possibilities for our children. We have a great future if we encourage 
Internet-based companies through bills such as H.R. 3709.
  Mr. MOORE. Mr. Chairman, I rise today in opposition to H.R. 3709, the 
Internet Nondiscrimination Act, which would impose a new five year 
moratorium on the ability of our state and local governments to collect 
sales taxes on commercial Internet transactions. Instead, I will be 
supporting the Istook amendment, which will limit this new moratorium 
to two years.
  The growth of e-commerce has presented policy makers with a host of 
complex new issues over the last few years. One of the largest 
challenges, however, is not a new issue, but an age-old problem--
taxation.
  Some argue that online retail transactions should remain exempt from 
tax collections due to problems with defining points-of-sale in the 
cyber marketplace. Additionally, opponents of taxing Internet sales 
argue that requiring taxation will stifle growth, creativity, and 
innovation in this new industry. On the other hand, state and local 
officials view the Internet as a tide that will erode local and 
regional tax bases with devastating consequences to traditional brick-
and-mortar retailers as well as critical state and local government 
functions.
  To come to grips with this problem and these competing points-of-
view, in 1998, Congress passed the Internet Tax Freedom Act that 
prohibited any new state, local, or federal taxes on electronic 
commerce until October 2001. In addition, it created a 19-member 
Advisory Commission on Electronic Commerce to study the Internet 
taxation issue and report its recommendations to Congress.
  The Advisory Commission issued no recommendations, because of a lack 
of consensus on this issue. But, despite this fact, Congress is set 
today to vote on a bill that would extend the current moratorium for an 
additional five years, even though the current moratorium does not 
expire until October 1, 2001--a full 17 months from now. Congress 
should take this 17 month opportunity to hold public hearings on this 
issue, rather than rushing to the floor a contentious and politically 
motivated bill that pits traditional business against e-business.
  While almost everyone agrees that there should be no new taxes or 
fees on Internet services or access, there is little consensus on 
allowing state and local governments to collect sales taxes on remote 
electronic commerce transactions.
  The distinction between these two forms of taxation is subtle, but 
critical. Taxing Internet services and access would surely stifle the 
growth and innovation of this emerging industry. Taxing remote sales 
transactions, however, will not restrict this growth; rather it will 
ensure that all business entities--whether located on Main Street or 
Cyber Street--will be able to equitably and fairly compete.
  Moreover, allowing state and local governments to collect sales taxes 
on remote transactions will ensure that critical state and local 
services such as education and public safety will continue to be 
adequately funded and controlled at the state and local level where 
they belong.
  Mr. Chairman, this is why 34 of our nation's governors, Republican 
and Democrat, including Governor Bill Graves of Kansas, oppose 
extending this moratorium. As well, almost every municipal and county 
government in my district has passed resolutions opposing legislation 
like H.R. 3709 that erode their taxing authority. I have included one 
such resolution for the Record.
  I am supporting the Istook amendment that provides a two year 
extension of the moratorium because I believe that Congress, our states 
and our municipalities need time to develop a fair, simple and 
equitable system that is guided by the following principles:
  Fairness: Any solution should apply not only to Internet 
transactions, but to all remote transactions so as not to unfairly 
discriminate against e-commerce transactions. But we must also 
recognize that not taxing remote transactions, including e-commerce, 
unfairly discriminates against traditional face-to-face transactions.
  Simplicity: The solution should not be difficult for the digital 
economy to apply or for local and state governments to administer.
  Limited Scope: Sales should be taxed in order to provide a level of 
fairness to traditional brick-and-mortar businesses, but the use of the 
Internet itself should not. In other words, Congress should not tax 
data transmission, network services, or anything else that would amount 
to a tax on the medium itself.
  Mr. Chairman, the advent of e-commerce should not be viewed as either 
a threat or potential windfall for state and local governments. 
Assessing taxes on Internet sales should, all else being equal, have no 
effect on state and local tax revenue. What is lost as a result of 
decreasing face-to-face sales should be offset by gains from increasing 
online sales.
  Indeed, as a matter of fairness and fiscal responsibility, remote 
sales should not be beyond the scope of state and local tax 
jurisdictions. Further, those state and local jurisdictions should not 
have to cede their independent authority to a federally mandated flat 
sales tax system. The ultimate solution should use the same tools that 
enable e-commerce to construct an easy-to-use mechanism for businesses, 
consumers, and governments alike to operate in the digital economy--a 
software based solution that is able to identify and levy the 
appropriate level of sales tax based on the location of the buyer. This 
is a solution that is fair, simple, and limited in scope.

                                                February 28, 2000.
     Hon. Dennis Moore,
     U.S. Representative, 3rd Congressional District, Washington, 
         DC.
     Re: Issue of Sales Tax on Internet Commerce: ``Making 
         Commerce Fair,'' Resolution No. 2000-17.
       Dear Congressman Moore: We are writing to voice our concern 
     about the issue of sales tax on Internet commerce. Please 
     find enclosed the City of Lenexa's Resolution regarding this 
     issue. This matter is of vital concern to Kansas cities. The 
     existing moratorium greatly impacts the State of Kansas, our 
     cities, and our counties, causing a loss in sales tax 
     revenues.
       The inequity in price experienced by our Lenexa brick and 
     mortar established merchants caused by requiring them to 
     collect taxes on the sales of goods while not requiring the 
     collection of taxes on the sale of goods sold via internet, 
     mail order or phone is of grave concern to our city. This 
     practice creates a competitive disadvantage and unequal 
     treatment between our local merchants and those who sell from 
     electronic stores. We must protect our merchants from this 
     unfair and unacceptable practice.
       We must preserve the right of state and local governments 
     to establish and collect legally due sales and use taxes on 
     goods and services sold, and act to protect state and local 
     taxing authority over all remote sales. We encourage your 
     understanding of the importance of this issue to the City of 
     Lenexa, Johnson County, and the State of Kansas.
           Sincerely,
                                                      Joan Bowman,
                                            Mayor, City of Lenexa.

                         Resolution No. 2000-17


                          making commerce fair

       Whereas, the use of new electronic technologies, including 
     the Internet, as a way to conduct sales of goods and services 
     is accelerating; and
       Whereas, out-of-state sales of goods conducted via the 
     Internet, mail order and phone, under many circumstances, are 
     not subject to existing sales and use taxes imposed by the 
     states and local governments in which the purchaser of such 
     goods resides; and
       Whereas, the inequity in price experienced by not requiring 
     the collection of taxes on the sale of such goods, creates a 
     competitive disadvantage and unequal treatment between 
     merchants who sell from brick and mortar establishments and 
     those who sell from electronic stores; and
       Whereas, this migration of sales and the resulting erosion 
     of tax revenues will restrict the ability of local 
     governments, schools, and states to collect taxes which 
     finance essential public services including but not limited 
     to police, fire, emergency medical service, and education; 
     and
       Whereas, out-of-state sales have an adverse impact on local 
     infrastructure and on the continued survival of retail 
     businesses in our cities; and
       Whereas, municipal governments have long expressed concern 
     about the loss of municipal revenue due to out-of-state sales 
     (originally via mail order); and
       Whereas, these out-of-state sales are freely made as a 
     voluntary business decision to expand or establish business 
     electronically or from remote locations; and
       Whereas, 99% of the goods and services purchased over the 
     Internet are bought using electronic money transfers, as 
     exemplified by the use of credit cards, which pre-establishes 
     the ability to identify and collect taxes in non-
     discriminatory and efficient ways; and
       Whereas, the primary barrier to creating a non-
     discriminatory collection requirement is the Supreme Court's 
     judgment that only Congress should determine a collection 
     requirement that would not unduly burden interstate commerce; 
     and
       Whereas, the National League of Cities, in partnership with 
     the six national organizations representing state and local 
     governments, has adopted a joint statement of principles for 
     making electronic commerce fair which calls for:
       1. Equal treatment of all sales transactions whether that 
     transaction is done in person,

[[Page 7497]]

     on the telephone, by mail, or on the Internet;
       2. A federal law authorizing state and local governments to 
     require out-of-state sales to be subject to the collection 
     and remittance of sales and use taxes;
       3. Protection from federal preemption of state and local 
     authority to determine their own tax policies;
       4. Cooperative efforts to simplify state and local sales 
     and use tax systems and the compliance burdens those systems 
     place on out-of-state sales; and
       Whereas, the federal government has created the Advisory 
     Commission on Electronic Commerce to examine these issues; 
     Now therefore be it
       Resolved by the governing body of the city of Lenexa, 
     Kansas:
       Section One: The City of Lenexa, Kansas, a municipal 
     corporation, does hereby urge the Advisory Commission on 
     Electronic Commerce to recommend that Congress enact and the 
     President sign legislation authorizing state and local 
     governments to establish and collect legally due sales and 
     use taxes on goods and services sold, through any transaction 
     medium, regardless of the actual purchaser's state, and 
     requires states to distribute tax revenues to cities or other 
     units of local government pursuant to precedent and 
     applicable state law.
       Section Two: The City of Lenexa, Kansas encourages the 
     Kansas Congressional Delegation to act to protect state and 
     local taxing authority over all remote sales including goods 
     sold via the Internet, mail order, and phone.
       Section Three: This resolution shall become effective upon 
     passage by the Governing Body.
       Passed by the Governing Body this fifteenth day of 
     February, 2000.
  Mr. POMEROY. Mr. Chairman, I am voting for this bill because I 
believe the American public deserves unfettered and untaxed access to 
the Internet--perhaps the most significant technological innovation 
impacting our way of life in decades. I firmly believe that Internet 
access must remain open to everyone. We cannot place roadblocks in the 
path of those eager to join this new and exciting world.
  The Internet is not simply a source of entertainment or a virtual 
shopping mall. Today, people use this valuable tool to access a variety 
of information, ranging from which car to buy to reading weather and 
news reports to researching job opportunities or accessing college 
applications. The possibilities are limitless. The Internet has 
provided states such as North Dakota an unprecedented opportunity to 
overcome the traditional geographic disadvantages. We cannot stifle the 
growth of this fast moving virtual world.
  Unfortunately, the Commission formed to address the important issue 
of Internet taxation failed to develop a comprehensive plan to address 
this matter. The bill before us does not interfere with the ability of 
states to collect taxes on purchases made over the Internet. Instead it 
is aimed at ensuring that Internet Service providers, such as AOL, do 
not pass additional tax burdens onto Internet users. However, we must 
address the taxation of items purchased on the Internet. We cannot 
allow our main street shops to operate at a competitive disadvantage to 
Internet sales. As the Internet continues to flourish, Congress must 
look at these issues and take careful, appropriate action to level the 
playing field.
  Again Mr. Chairman, I believe that all Americans should have open 
access to the Internet, and for that reason, I rise in support of this 
legislation.
  Ms. DeGETTE. Mr. Chairman, today I voted for H.R. 3709, the Internet 
Nondiscrimination Act because I believe that it is important to move 
this legislation forward so that Congress stays focused on the vital 
issue of taxation of the Internet. I supported an amendment that would 
have extended the moratorium for an additional two years. I believe 
this would have provided the needed amount of time for use to find a 
balance between protecting the Internet from any new discriminatory 
taxes and preserving the ability of states and localities to collect 
sales and use taxes.
  Unfortunately, the two-year extension amendment failed and I 
therefore voted for final passage as a means of moving this legislation 
forward with the expectation that a compromise will be worked out 
between the House and the Senate to adequately address this issue.
  It is important to protect the integrity of the Internet from 
multiple and potential discriminatory taxes. It is equally important 
that this be done without inhibiting the ability of states to collect 
the taxes they have always collected. The Internet Nondiscrimination 
Act does nothing to inhibit the collection of these taxes, but it also 
does nothing to resolve the issue of how states can continue to collect 
state use and use taxes as more and more people shop via the Internet.
  I believe we can foster the booming technology and telecommunications 
industries across the country without harming our states. Congress 
needs to work closely with state government and the technology industry 
to develop a good policy that promotes growth in the technology 
industry without hurting local businesses across this country. We need 
to pursue a policy that creates a level playing field and ensures fair 
taxation across the board. I believe this can be done and I will work 
towards this end until we can come to a satisfactory resolution of this 
issue.
  I believe the passage of this legislation is an important step in an 
ongoing process that will eventually produce a bill that reflects the 
concerns of all interested parties.
  Mr. LIPINSKI. Mr. Chairman, I rise today to express my dismay that 
H.R. 3709 has been brought to the floor without ample time to discuss 
the important issue of the Internet taxation moratorium and its 
effects. There were no hearings held, nor time allotted for retailers, 
states, cities and counties to speak out on the issue. Clearly, we 
could have utilized the eighteen months before the October 21st, 2001 
moratorium expiration for meaningful discussions on the issue.
  The spirit behind the Internet Tax Freedom Act was to allow the 
Internet to flourish, while examining an approach to Internet sales. 
Adding five years to the current moratorium is not a step towards 
finding a permanent solution. We must work towards a solution that 
everyone can work with now, not three years from now, nor five years 
from now. If we wait, many of our country's ``brick and mortar'' 
businesses may likely be wiped out by the E-commerce that can sell for 
less and avoid collecting taxes. This is not fair competition.
  We cannot ignore the effects that H.R. 3709 would have on our states' 
and localities' tax base. According to a University of Tennessee study, 
the revenue lost by 2003 is projected to be $20 billion per year. This 
is the revenue that we rely on for state and local services, as well as 
for education. How can the Internet and high-tech industry continue to 
flourish without educating our children, the future of America?
  We need to find a long-term resolution to this important issue, not 
avoid dealing with it for nearly six years. For this reason, I will be 
voting against H.R. 3709 and its amendments.
  Mr. STARK. Mr. Chairman, today we have before us a bill that extends 
the current ``Internet Tax Freedom Act'' moratorium on certain 
Internet-related state sales and use taxes. While I do respect the need 
to foster growth and innovation on the Internet and for technology in 
general, I do not believe that this bill does so in a responsible way.
  The current moratorium expires in October 2001. This gives Congress 
over 17 months to come up with a plan to address Internet taxation. We 
do not need until 2006 to come up with a viable solution to Internet 
taxation. This gives Congress too much time to sit on its hands and 
place blame when a solution should be reached much sooner.
  Currently, Internet merchants are not required to collect state sales 
and use taxes unless they have a presence in the state. This does not 
statutorily relieve the purchaser from remitting the state sales and 
use taxes due from Internet purchases. However, in reality this is not 
the case when there is no enforcement mechanism.
  Clearly, Internet commerce has an advantage over traditional commerce 
if consumers are able to circumvent paying taxes on Internet purchases. 
Not only does this set up an unfair system for traditional commerce for 
having to collect the state and local taxes, thus ultimately costing 
the consumer more, but it also prevents state and local communities 
from capturing the taxes they would otherwise receive. Today's bill 
will hamper a state's ability to effectively tax Internet purchases, 
thus eroding a state's source of funding for education, health and 
other vital services.
  Congress should not implement a tax advantage for one method of 
commerce over another for five years. Instead, we should figure out how 
to level the playing field while encouraging innovation today. For 
these reasons, I oppose H.R. 3709 and urge my colleagues to do the 
same.
  Mr. BENTSEN. Mr. Chairman, I am in opposition to H.R. 3709, the 
``Internet Nondiscrimination Act,'' which extends the existing 
moratorium on state and local taxation of Internet access and commerce 
by five years and repeals the grandfather clause for existing state 
laws related to Internet taxation. Let me be clear, I am not advocating 
federal taxation of the Internet. I support a reasonable extension of 
the moratorium. But, I also support upholding state's rights under the 
10th Amendment and ensuring equity for businesses, small as well as 
large.
  H.R. 3709 would establish a five-year moratorium on all state and 
local taxes on Internet access and commerce. While this bill assumes 
that states would still be free to tax transactions under the U.S. 
Supreme Court's 1992

[[Page 7498]]

decision in Quill Corp. v. Heitkamp, 504 U.S. 298 (1992), the Quill 
decision only provides for the collection of sales taxes by states when 
companies meet the ``nexus'' test for transactions within the 
geographic borders of the consumer's state. Though not explicitly 
acknowledged, proponents of H.R. 3709 appear to be seeking an eventual 
ban of Internet sales taxes. Now, of course, all of us would like to 
see less taxes, including with respect to Internet sales. At the same 
time, however, as internet sales rise as a share of the national 
economy, state and local governments will find their tax based 
substantially eroded and their ability to fund such essential functions 
as schools and public safety jeopardized. Furthermore, businesses which 
conduct sales from physical locations in a state or local jurisdiction 
will find themselves at a competitive disadvantage. That creates a 
commercial inequity, a really ignored by H.R. 3709.
  This bill should not be construed as simply an extension of the 
initial year moratorium and the Advisory Commission on Electronic 
Commerce that was adopted in 1998 with my support. Rather, H.R. 3709, 
by extending the moratorium by five years with no resolution by the 
Commission, simply postpones confronting and resolving the issue at 
hard. How can Congress and state and local governments best address 
both commercial equity between Internet sellers and ``bricks and 
mortar'' retailers as well as state and local government financial 
structures. This bill is an abdication on the part of Congress at the 
expense of others. The better approach would be to adopt the amendment 
offered by Mr. Delahunt to extend the moratorium by only two years and 
proceeding toward resolution of the broad issues. I strongly support 
this approach and I cannot support H.R. 3709, a blanket five-year 
moratorium.
  The fiscally prudent course would be to analyze the effect the 
moratorium has on states' ability to collect revenue and the degree to 
which traditional merchants are placed at a competitive disadvantage, 
as more commerce shifts to the Internet. H.R. 3709 does not address the 
complicated issues of how and when states might be able to collect 
sales taxes on Internet commerce. An outright ban on taxation of 
Internet sales could very well force states such as Texas, which rely 
heavily on sales and property taxes, to impose a personal income tax in 
order to make up new shortfalls, as Internet sales increase. I oppose 
an income tax for Texas and I particularly oppose the Congress imposing 
such a tax on Texans, a foreseeable unintended consequence of this 
bill.
  I am dismayed that my Republican colleagues have rushed H.R. 3709 
through the legislative process without proper public hearings to 
determine the impact such legislation would have on ``brick and 
mortar'' retailers and the future revenues of state and local 
governments. With the current moratorium in effect until October 2001, 
the timing of this vote is suspect. Clearly this is a transparent 
attempt by Republicans to score political points with the high-tech 
industry at the expense of state and local governments, taxpayers, our 
public schools and small businesses on Main Street, America.
  H.R. 3709 also impose financial restrictions on the State of Texas by 
eliminating the grandfather clause in the Internet Tax Freedom Act 
(ITFA) bestowed on those states which have already promulgated taxes on 
Internet access. Passage of H.R. 3709 would result in a shortfall to 
the State of Texas well in excess of $50 million. Here again, the 
Delahunt amendment is the better course of action in that it preserves 
the grandfather clause. Therefore, Mr. Chairman, without the Delahunt 
amendment, I must oppose H.R. 3709.
  Mr. GOSS. Mr. Chairman, I strongly support this modified open rule, 
which will ensure Members an opportunity to openly and fairly debate 
H.R. 3907. This bill extends the current moratorium on Internet taxes 
for five years--as recommended by the Independent Advisory Commission 
on Electronic Commerce. The creation of the Internet has revolutionized 
communication around the globe and has had a tremendous impact on our 
daily lives. One of the reasons the Internet has flourished is that the 
majority in Congress has worked hard to restrain eager regulators, 
bureaucrats and tax collectors from unnecessary interference in the 
Internet. There are areas for appropriate government action--child 
pornography and the like--but, by and large, the appropriate course of 
action is to let the Internet continue to grow without undue government 
regulation or intrusion.
  I am pleased that this bill continues to strike a commonsense 
balance. Given the lack of consensus on how to deal with imposing sales 
taxes on commercial transactions over the Internet, H.R. 3709 wisely 
continues the moratorium on this activity. In addition, the bill 
continues and strengthens the prohibition on Internet access taxes. 
Opposition to Internet access charges has been one of the top issues in 
my mail bag for some time now. Congress must continue to stand firm on 
this issue, protecting consumers and ensuring the continued growth of 
the Internet. I want to extend my appreciation to the Judiciary 
Committee and the leadership for moving expeditiously on this bill. I 
encourage my colleagues to support both this fair and open rule and 
H.R. 3709.
  Ms. DUNN. Mr. Chairman, the proliferation of the Internet has been 
the most liberating force in American life in recent history. It has 
spawned a whole new vocabulary, created a forum for social interaction 
and education, and brought unprecedented productivity to the workplace. 
Most importantly, it levels the American playing field. It makes it 
possible for the poor and underprivileged to gain access to educational 
materials once found only in the new schools of affluent suburbs. It 
also makes it possible for today's woman to make her mark in the 
business world while balancing the rigorous demands of work and family. 
The Internet is the essence of freedom and must maintain this feeling 
of uninhibited access.
  With the development of such a powerful social and business tool, 
however, come many challenges and temptations. The most pressing 
challenge before us now is how to conform a decades-old tax system 
based on geographic boundaries to a new world for which there is an 
unlimited capacity for exploration. The biggest temptation will be to 
find a quick solution to the potential loss of local government revenue 
due to E-commerce. These are serious issues with which we must deal 
with great deliberation. We cannot afford either to create barriers to 
Internet access through new taxation or to pretend that the increasing 
rate of E-commerce will not negatively impact money to support local 
schools, police, and parks. For this reason, I supported the Internet 
Non-Discrimination Act to extend the current Internet tax moratorium 
for another five years, and I call on all parties to begin a vigorous 
debate that will bridge the divide between the need to keep the 
Internet free of new barriers and the legitimate concern of local 
governments that rely on sales for basic services.
  This is a complex provision, and there has been some public 
misperception about the current moratorium and what an extension means. 
The moratorium has three main components: one that deals with Internet 
access and two that deal with E-commerce. First, it prohibits the 
implementation of a tax on Internet access. As I have previously 
stated, access to the Internet has revolutionized the lives of millions 
of Americans. We cannot allow barriers to be erected that will make it 
harder for families living on the edge of poverty to have access to 
this powerful tool. Second, it prohibits the collection of 
``discriminatory'' taxes on the Internet. If there is a product that is 
sold at the corner grocery store without a sales tax, it should not be 
taxed if purchased over the Internet. Third, it prohibits ``multiple'' 
taxes. If an individual purchases a good from another state, that good 
should not be taxed by both states. All of these measures have allowed 
people to enjoy the unfettered freedom of the Internet while helping to 
create millions of new jobs.
  It is equally important to understand what the moratorium does not 
do. Neither the original Internet moratorium nor the extension passed 
today in the House affects the ability of states to levy sales taxes on 
Internet purchases. As stated above, the moratorium bars only multiple 
and discriminatory taxes, and taxes on Internet access. The current 
rules governing the ability of states and local governments to collect 
sales tax or taxes on remote sales were set by the U.S. Supreme Court 
in 1992. The moratorium and its extension leaves these rules untouched. 
Nevertheless, the explosion of Internet traffic since this ruling has 
already made many of its guidelines problematic for state and local 
governments.
  This new world without borders must be redefined in order to provide 
local governments the ability to protect funding for key government 
services. Local governments must also participate in a discussion about 
streamlining the tax systems in the over 6,000 different tax 
jurisdictions throughout the country. They cannot simply expect that 
companies--whereever they are or whatever their size--will dedicate the 
untold amount of resources necessary to duplicate all of these tax 
systems, figure out how much tax to charge a given item, and then remit 
that tax to the particular government. Through streamlining these tax 
systems and providing some degree of uniformity, companies will be much 
more willing to partner with state and local governments.
  The Internet is changing the fundamental structure of our society and 
we are well served to change with it. Resisting its benefits or trying 
to mold it to reflect our byzantine government systems will only limit 
its full potential. As we work to ensure that the Internet

[[Page 7499]]

will be unencumbered by new barriers, let us join together to create an 
environment in which E-commerce and local communities can flourish 
together.
  Mr. UDALL of Colorado. Mr. Chairman, I am in support of H.R. 3709, 
the Internet Nondiscrimination Act.
  The bill we're voting on today addresses two main questions. One has 
to do with taxing Internet services. A consensus seems to be forming--
among a majority of the members of the Advisory Commission on 
Electronic Commerce and many others--that there should be no new 
tariffs or taxes on Internet services. I agree. H.R. 3709 would 
prohibit such taxes for 5 years, an important step to reduce the price 
of and thus eliminate barriers to Internet access.
  The other question--whether or not State government should be allowed 
to collect sales taxes on e-commerce transactions made between 
residents and companies residing in other states--is more problematic.
  We hear it argued both ways. Supporters of a permanent moratorium 
say, for instance, that the imposition of any new taxes would likely 
result in the lowering of tax revenues from other sources because of 
the deadening effect such taxes would have on overall economic growth. 
Opponents of an indefinite extension point out that the more we deprive 
states and localities of revenues from sales taxes--which are often the 
primary source of revenue to fund education--the more we risk 
neglecting the very students who we hope will fill jobs in the high-
tech economy in the future.
  I do share some of the concerns voiced by many Governors and State 
legislatures. I am concerned that an extended moratorium might 
indirectly weaken state and local funding that provides our communities 
with essential public services such as education, law enforcement and 
transportation. So I am concerned that an extension of 5 years may be 
too long because the definition of ``Internet access'' may change so 
much in the next half decades that the provisions in this bill may no 
longer fit an evolving economic context.
  It is clear that traditional businesses are disadvantaged by sales 
over the Internet. But it is also clear that many young, small e-
commerce businesses could suffer if they are forced to negotiate the 
maze of more than 7,000 State and local taxes.
  An industry still in its infancy must be handled with care. But at 
some point, the gloves must come off. What we're doing today is 
deciding to put off this decision for another 5 years. I believe that 
we're not prepared to agree on how and when the gloves should come off, 
and that's why I support this bill, although I think it would be better 
if the extension were shorter. But I do believe we must use the years 
ahead productively to seek ways to streamline and simplify sales tax 
systems, a task that many states--including Colorado--are already 
undertaking.
  Mr. Chairman, we are living in a new era. A unique constellation of 
circumstances--a burgeoning technology sector, low unemployment, and 
low interest rates--has given way to the longest peacetime period of 
economic expansion this country has ever known. We need to ensure that 
we don't do anything hastily that will derail this revolution. At the 
same time, we mustn't ignore the people and businesses that for years 
have sustained our communities.
  Mr. COOK. Mr. Chairman, I am in support of H.R. 3709, the Internet 
Nondiscrimination Act. A few short years ago, no one other than 
academics had ever heard of the Internet. Today, it has become an 
integral part of everyday life. The information that is now available 
through the click of a mouse is mind-boggling. With this new 
information has come a new form of economic growth, e-commerce. You can 
buy almost anything on the Internet, from cars, to groceries, airline 
tickets to antiques. The explosion of new business starts, online 
banking, and e-trade has been fueling the economic prosperity we have 
been enjoying the last few years.
  The Internet has removed barriers to entry for thousands of small 
businesses, particularly women and minorities. It has created millions 
of high paying e-jobs and has allowed consumers to find the highest 
quality product at the lowest cost. In 1999, the Internet was the 
second largest industry in the U.S., producing $507 billion in revenue 
and created 2.3 million new jobs. Imposing discriminatory taxes on the 
Internet, would stifle this industry and destroy the very engine that 
is driving our economy.
  I understand the concerns of state and local governments. They are 
only looking at the money they are supposedly losing in revenue. But, 
they are not looking at the revenue they have gained through a strong 
economy. States are in their best financial position in decades because 
of the strong economy and the decrease in demand for social services. 
In a time of record budget surpluses and strong economic growth, state 
governments do not need more power to tax online transactions and 
Internet access. Local governments do need funds to provide services 
like fire, police and ambulance coverage. But they need to be given a 
greater share of the state's sales tax revenues and not have to rely on 
new Internet taxation.
  In a booming economy there is no reason to impose deterrents for new 
e-business that will ultimately hit consumers. There is no need to 
charge consumers for accessing the Internet. Today's bill would place a 
5-year moratorium on taxing this new industry. I think the moratorium 
should be permanent. I urge my colleagues to support this legislation 
and keep the Internet free of discriminatory taxation.
  Ms. BALDWIN. Mr. Chairman, I am in opposition to H.R. 3709, the 
Internet Nondiscrimination Act. This legislation extends the moratorium 
on State and local internet access taxes as well as on so-called 
``multiple and discriminatory taxes'' imposed on internet transactions, 
subject to a grandfather on taxes of this nature imposed prior to 1998.
  I believe the current moratorium is good public policy. Internet 
commerce is an infant industry with huge potential growth and benefits. 
With numerous taxing jurisdictions, the practicalities of taxation of 
internet sales require extensive study and careful consideration. We 
need to ensure that internet commerce is not unduly burdened by the 
complexities of local taxing jurisdictions. Thus, the current 
moratorium, which does not expire until October 21, 2001, provides an 
appropriate period in which to examine this issue carefully.
  I am concerned, however, about a 5-year extension of the moratorium 
until 2006. The current disparate tax treatment between traditional 
``bricks and mortar'' retailers and remote sellers has the potential to 
significantly harm existing retailers. Internet business ultimately 
should be competing with traditional businesses on an equal footing. An 
extended moratorium provides an advantage to internet commerce by, in 
effect, exempting those companies from sales and other state and local 
taxes. This advantage should not continue indefinitely.
  I am also concerned about the impact on state and local government 
revenues. Sales taxes are a significant source of revenue for many 
state and local governments. As internet sales expand at the expense of 
traditional retail sales, there could be significant revenue reductions 
to States. Congress should not simply create this problem for the 
States and then leave them to solve it. States collect more than 49 
percent of their revenue from sales taxes, according to the Census 
Bureau. I fear this legislation could have a damaging impact on 
critical service such as police and safety, health, and education. 
Congress needs to work with the states to address this important issue.
  Let me be clear. I do not support discriminatory taxes on internet 
access. E-commerce should be treated in the same manner as traditional 
sales and services.
  Continuation of the internet tax moratorium beyond October 2001 is 
appropriate. I supported the Delahunt/Thune Amendment which would have 
extended the moratorium for an additional two years until October 2003. 
I believe that a two year extension is far wiser public policy than a 
five year extension or a permanent ban. I wish the House had seen fit 
to amend the bill with a two year limit. By 2003, the States could 
build on the very serious steps they have already taken to reform and 
simplify their tax laws. Congress could then consider whether we should 
approve any interstate compact that addresses the simplification issue. 
If the States were not making any progress by 2003, it would be a 
simple matter to extend the moratorium for an additional period of 
time.
  Mr. Chairman, I do not believe a five year moratorium is sound public 
policy. I urge my colleagues to defeat this legislation. The next 
Congress will have ample time to extend the current moratorium for 2 
additional years.
  Mr. CALVERT. Mr. Chairman, I strongly support H.R. 3709, the Internet 
Non-Discrimination Act. Why? Quite simply, an unhindered Internet has 
brought the benefits of knowledge, trade and communications to more 
people in more ways than ever before.
  H.R. 3709 is not about sales taxes on Internet purchases. The bill in 
no way stops or restricts states or cities from taxing sales over the 
Internet. In fact, current rules governing state or local governments' 
ability to collect regular sales or use taxes on remote sales were set 
by the U.S. Supreme Court. H.R. 3709 leaves these rules untouched.
  Instead H.R. 3709 stops new taxes that specifically target Internet 
access and sales. The bill extends for five years the current Internet 
tax moratorium, enacted in 1998. The existing moratorium outlaws taxes 
on Internet

[[Page 7500]]

access, the double-taxation of a product or service bought over the 
Internet and discriminatory taxes that treat Internet purchases 
differently from other types of sales. The bill also ensures that the 
moratorium on Internet access taxes is equally enforced in all 50 
states, for those who rushed to tax Internet access thinking that they 
could avoid the federal law.
  Mr. Chairman, I encourage my colleagues on both sides of the aisle to 
support the Internet Non-Discrimination Act. The Internet should not 
become subject to special, multiple or discriminatory taxes.
  Mr. WOLF. Mr. Chairman, I support H.R. 3709, a bill which extends the 
current moratorium on taxes on Internet access and taxes which apply 
only to e-commerce.
  It is no secret that the success of high technology and the rapid 
growth of electronic commerce are key elements of our nation's 
unprecedented recent prosperity. Additionally, the Internet has enabled 
people around the country to have access to information and services 
which were difficult--if not impossible--for them to obtain prior to 
the high tech revolution.
  I'm proud to represent Northern Virginia and the high-technology 
community that dots the landscape along the Dulles corridor and I-66. 
And I'm proud that we can boast that the place we call home is also the 
home of the Internet. Our high-tech corridor just isn't an important 
part of our regional prosperity. It's a critical part of the nation's 
prosperity. The high tech industry's growth and job creation have been 
key to our region's and America's booming economy. We must keep the 
economy growing, keep the good paying jobs, and maintain our economic 
prosperity. I believe H.R. 3709 is a key element in meeting these 
goals.
  Mr. GEKAS. Mr. Chairman, I yield back the balance of my time.

                              {time}  1230

  The CHAIRMAN pro tempore (Mr. Nethercutt). All time for general 
debate has expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule for 2 hours. The committee amendment in the 
nature of a substitute printed in the bill is considered as an original 
bill for the purpose of amendment and is considered read.
  The text of the committee amendment in the nature of a substitute is 
as follows:

                               H.R. 3709

       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 ``Internet Nondiscrimination 
     Act of 2000''.

     SEC. 2. 5-YEAR EXTENSION OF MORATORIUM ON STATE AND LOCAL 
                   TAXES ON THE INTERNET.

       (a) Extension of Moratorium.--Section 1101 of title XI of 
     division C of Public Law 105-277 (112 Stat. 2681-719; 47 
     U.S.C. 151 note) is amended--
       (1) in subsection (a)--
       (A) by striking ``3 years after the date of the enactment 
     of this Act'' and inserting ``October 21, 2006'', and
       (B) in paragraph (1) by striking ``, unless'' and all that 
     follows through ``1998'',
       (2) by striking subsection (d), and
       (3) by redesignating subsections (e) and (f) as subsections 
     (d) and (e), respectively.
       (b) Technical Amendment.--Section 1104(10) of title XI of 
     division C of Public Law 105-277 (112 Stat. 2681-719; 47 
     U.S.C. 151 note) is amended by striking ``unless'' and all 
     that follows through ``1998''.

     SEC. 3. APPLICATION OF AMENDMENTS.

       The amendments made by this Act shall not apply with 
     respect to conduct occurring before the date of the enactment 
     of this Act.

  The CHAIRMAN pro tempore. During consideration of the bill for 
amendment, the Chair may accord priority and recognition to a Member 
offering an amendment that he has printed in the designated place in 
the Congressional Record. Those amendments will be considered read.
  The Chairman of the Committee of the Whole may postpone a request for 
a recorded vote on any amendment and may reduce to a minimum of 5 
minutes the time for voting on any postponed question that immediately 
follows another vote, provided that the time for voting on the first 
question shall be a minimum of 15 minutes.
  Are there any amendments to the bill?


     Amendment in the Nature of a Substitute Offered by Mr. Bachus

  Mr. BACHUS. Mr. Chairman, I offer an amendment in the nature of a 
substitute.
  The Clerk read as follows:

       Amendment in the nature of a substitute offered by Mr. 
     Bachus:
       Strike all after the enacting clause and insert the 
     following:
       

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Interstate Sales and Use Tax 
     Compact Act of 2000''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) the moratorium of the Internet Tax Freedom Act on new 
     taxes on Internet access and on multiple and discriminatory 
     taxes on electronic commerce should be extended;
       (2) States should be encouraged to simplify their sales and 
     use tax systems;
       (3) as a matter of economic policy and basic fairness, 
     similar sales transactions should be treated equitably, 
     without regard to the manner in which the sales are 
     transacted, whether in person, through the mails, over the 
     telephone, on the Internet, or by other means;
       (4) Congress may facilitate such equitable taxation 
     consistent with the Supreme Court's decision in Quill Corp. 
     v. North Dakota, 502 U.S. 808 (1992), which based its 
     decision not to extend States' collection powers in 
     significant part on its view that Congress has, by virtue of 
     its constitutional power to regulate interstate commerce, the 
     ability to authorize States to require out-of-State sellers 
     to collect taxes on sales to in-State residents;
       (5) States that adequately simplify their tax systems 
     should be authorized to correct the present inequities in 
     taxation by requiring sellers to collect taxes on sales of 
     goods or services delivered in-State, without regard to the 
     location of the seller or to the means by which the good or 
     service is sold;
       (6) the States have experience, expertise, and a vital 
     interest in the collection of sales and use taxes, and thus 
     should take the lead in developing and implementing sales and 
     use tax collection systems that are fair, efficient, and 
     nondiscriminatory in their application;
       (7) States, by their own initiative, have formed the 
     Streamlined Sales Tax System Project, a cooperative effort 
     with local governments to radically simplify the sales and 
     use tax system by bringing uniformity to tax bases, 
     definitions, and administration, by simplifying the tax rate 
     structure and administration, and by incorporating stringent 
     privacy controls and technology into the collection process 
     to preserve the basic tenets of consumer privacy, and that 
     such project should be allowed to proceed without 
     intervention by Congress; and
       (8) online consumer privacy is of paramount importance to 
     the growth of electronic commerce and must be protected.

     SEC. 3. EXTENSION OF INTERNET TAX FREEDOM ACT MORATORIUM 
                   THROUGH 2006.

       Section 1101(a) of the Internet Tax Freedom Act (112 Stat. 
     2681-719; 47 U.S.C. 151 note) is amended by striking ``3 
     years after the date of the enactment of this Act--'' and 
     inserting ``on December 31, 2006:''

     SEC. 4. STREAMLINED SALES AND USE TAX SYSTEM.

       (a) Development of Streamlined System.--It is the sense of 
     the Congress that States and localities should work together 
     to develop a streamlined sales and use tax system that 
     addresses the following:
       (1) A centralized, one-stop, multi-state registration 
     system for sellers.
       (2) Uniform definitions for goods or services that may be 
     included in the tax base.
       (3) Uniform and simple rules for attributing transactions 
     to particular taxing jurisdictions.
       (4) Uniform rules for the designation and identification of 
     purchasers exempt from sales and use taxes, including a 
     database of all exempt entities and a rule ensuring that 
     reliance on such database shall immunize sellers from 
     liability.
       (5) Uniform procedures for the certification of software 
     that sellers rely on to determine State and local use tax 
     rates and taxability.
       (6) Uniform bad debt rules.
       (7) Uniform tax returns and remittance forms.
       (8) Consistent electronic filing and remittance methods.
       (9) State administration of all State and local sales 
     taxes.
       (10) Uniform audit procedures.
       (11) Reasonable compensation for tax collection that 
     reflects the complexity of an individual State's tax 
     structure, including the structure of its local taxes.
       (12) Exemption from use tax collection requirements for 
     remote sellers falling below a specified de minimis 
     threshold.
       (13) Appropriate protections for consumer privacy.
       (14) such other features that the member States deem 
     warranted to promote simplicity, uniformity, neutrality, 
     efficiency, and fairness.
       (b) No Undue Burden.--Congress finds that if States adopt 
     the streamlined system described in subsection (a), such a 
     system does not place an undue burden on interstate commerce 
     or burden the growth of electronic commerce and related 
     technologies in any material way.

     SEC. 5. INTERSTATE SALES AND USE TAX COMPACT.

       (a) Authorization and Consent.--States are authorized to 
     enter into an Interstate Sales and Use Tax Compact, and 
     Congress

[[Page 7501]]

     hereby consents to such a compact. The Compact shall provide 
     that member States agree to adopt a uniform, streamlined 
     sales and use tax system consistent with section 4(a).
       (b) Expiration.--The authorization and consent in 
     subsection (a) shall automatically expire if the Compact has 
     not been formed before January 1, 2004.
       (c) Compliance.--The streamlined sales and use tax system 
     prescribed by the Compact as provided in subsection (a) shall 
     be evaluated against the requirements of section 4(a) in a 
     report submitted to Congress in a timely fashion by the 
     Secretary of the Treasury who shall certify whether such a 
     system has met the requirements in section 4(a).

     SEC. 6. AUTHORIZATION TO SIMPLIFY STATE USE TAX RATES THROUGH 
                   AVERAGING.

       Notwithstanding any other provision of law, any State 
     levying a sales tax is authorized to administer a single 
     uniform statewide use tax rate relating to all remote sales 
     on which it assesses a use tax, provided that for each 
     calendar year in which such statewide rate is applicable, if 
     such rate had been assessed during the second calendar year 
     prior to such year on all such sales on which a sales tax was 
     assessed by such State or its local jurisdictions, the total 
     taxes assessed on such sales would not have exceeded the 
     total taxes actually assessed on such sales during such year.

     SEC. 7. AUTHORIZATION TO REQUIRE COLLECTION OF USE TAXES.

       (a) Grant of Authority.--Any member State that has adopted 
     and participates in the streamlined system prescribed by the 
     Compact is authorized, notwithstanding any other provision of 
     law, to require all sellers not qualifying for the de minimis 
     exception specified in such system to collect and remit use 
     taxes on remote sales in such State.
       (b) Conditions.--The authority in subsection (a) shall be 
     of no effect unless both of the following conditions are met:
       (1) The streamlined system prescribed by the Compact has 
     been submitted to Congress prior to January 31, 2004, with 
     the approval of at least 26 member States.
       (2) 90 days have passed from the date such system was first 
     submitted to Congress under paragraph (1), and no joint 
     resolution disapproving the system has been enacted pursuant 
     to the procedures in subsection (c).
       (c) Procedure for Joint Resolution of Disapproval.--If the 
     Congress determines that the system prescribed by the Compact 
     does not meet the requirements of section 4(a), a joint 
     resolution disapproving such system may be enacted within 90 
     days of the submission of such system to Congress under 
     subsection (b), pursuant to expedited procedures similar to 
     and consistent with the procedures prescribed in section 2908 
     of the Defense Base Closure and Realignment Act of 1990 (10 
     U.S.C. 2687 note).

     SEC. 8. LIMITATIONS.

       (a) No Effect on Nexus.--No obligation imposed by virtue of 
     authority granted in section 7(a) shall be considered in 
     determining whether a seller has a nexus with any State for 
     any tax purpose.
       (b) No Effect on Licensing, Regulation, Etc..--Nothing in 
     this Act shall be construed to permit a State to license or 
     regulate any person, to require any person to qualify to 
     transact intrastate business, or to subject any person to 
     State taxes not related to the sales of tangible personal 
     property.

     SEC. 9. DEFINITIONS.

       For purposes of this Act--
       (1) the term ``State'' means 1 of the 50 States of the 
     United States of America and the District of Columbia;
       (2) the term ``the Compact'' means the Interstate Sales and 
     Use Tax Compact authorized by section 5;
       (3) the term ``goods or services'' includes any tangible or 
     intangible personal property and services;
       (4) the term ``member State'' means a State that has joined 
     the Compact;
       (5) the term ``remote sale'' means a sale in interstate 
     commerce of goods or services attributed, under the rules of 
     section 4(a)(3) of this Act, to a particular taxing 
     jurisdiction which jurisdiction could not, except for the 
     authority granted by this Act, require the seller of such 
     goods or services to collect and remit sales or use taxes on 
     such sale;
       (6) a remote sale ``in'' a particular taxing jurisdiction 
     means a remote sale of goods or services attributed, under 
     the rules of section 4(a)(3) of this Act, to a particular 
     taxing jurisdiction;
       (7) the term ``seller'' means a seller of goods or 
     services; and
       (8) the term ``Uniform'' refers to interstate uniformity.

  Mr. GEKAS. Mr. Chairman, on that I reserve a point of order.
  The CHAIRMAN. The gentleman from Pennsylvania (Mr. Gekas) reserves a 
point of order.
  Mr. BACHUS. Mr. Chairman, we have heard a lot of discussion this 
morning to the effect that this legislation affects sales tax. Others 
have said that this legislation does not affect sales tax. We've heard 
that this legislation threatens funding for local governments and State 
governments. We have also heard that this legislation has nothing to do 
with reducing funding for State and local funding.
  The truth, Mr. Chairman, lies somewhere in between. The truth is that 
this legislation alone does not address sales tax. This legislation 
alone does not affect the States' ability to collect sales tax, to fund 
law enforcement, to fund education. However, there is a fear, a 
legitimate fear, that this legislation may slow the process of 
addressing the states and their ability to collect sales and use taxes. 
This is an important issue.
  Now, let me say first of all, we say that this legislation extends 
``the moratorium.'' What is the meaning of ``extends the moratorium?'' 
Well, the Internet Tax Freedom Act of 1998 banned taxes on Internet 
access and it banned multiple or discriminatory taxes on electronic 
commerce. The Act did not ban the collection of sales and use taxes on 
sales made over the Internet. I repeat, the Act did not ban the 
collection of sales and use taxes on sales made over the Internet. So 
extending this moratorium will not ban the collection of sales and use 
taxes.
  Now, what is the current law? Under current law, sales or actually 
use taxes are already imposed on all remote sales. If the remote 
retailer has a physical presence in the State, a store, a warehouse 
where the buyer is, then the retailer is required to collect and remit 
a sales tax. However, under the Supreme Court decision, 1992 decision, 
Quill decision, they said, if the remote retailer does not have a nexus 
or sufficient physical presence in the State, then the State cannot 
compel collection of sales tax. The buyer, however, is required to pay 
the use tax to their home taxing jurisdiction. Now, there is the rub. 
The use tax is not highly enforced, the compliance is very low. So when 
these sales are made over the Internet, then the State, in fact, does 
lose a sizable chunk of revenue. They will continue to do so until this 
issue is addressed with some reliable mechanism for collection from 
remote sellers.
  The Supreme Court decision, the Quill decision has resulted in the 
situation where large Internet retailers, without stores in a State, 
are not required to collect sales tax, while other brick and mortar 
stores, or even an e-commerce firm with a warehouse or an office in a 
State, they are required to collect taxes on all sales. So we have an 
inequitable situation, and I think we all realize that. It's unfair. 
It's preferential. It should not be allowed to continue unaddressed.
  In the 1992 Supreme Court case, the Supreme Court actually said, this 
is a situation that Congress can address. I agree. This is something 
that Congress, under the interstate commerce clause, should address. 
They made it clear that we had the authority to take action to cure 
this inequity. We have not done that since 1992.
  Now, because I support a level playing field, and that is where in-
store, catalog and on-line sales have the same tax collection 
treatment, I am introducing my amendment. I am introducing it also 
because, without this amendment, without us addressing this inequity in 
sales tax treatment, we are putting at jeopardy our local communities, 
the welfare of our children, the safety on our streets, because it is 
the sales and use tax proceeds that fund education in most States. It 
is the sales tax which funds local government. It is the sales tax 
which pays for police and fire protection.
  In my own State, almost 50 percent of all State and local revenues 
are sales tax. In some States, over 50 percent are sales tax.
  Now, Mr. Chairman, as I said earlier, there is a fear, there is a 
concern that merely extending the current moratorium does not address 
the main issue, and that is allowing States to require remote retailers 
to collect and remit sales tax. There is a fear among retailers and 
among 42 of the governors who have expressed this fear to us that 
merely extending the moratorium will only delay a decision on the issue 
of the States being able to collect sales tax.
  The CHAIRMAN. The time of the gentleman from Alabama (Mr. Bachus) has 
expired.
  (By unanimous consent, Mr. Bachus was allowed to proceed for 3 
additional minutes.)

[[Page 7502]]


  Mr. BACHUS. Mr. Chairman, as I said, the 42 governors have expressed 
a concern, and that concern is, will extending the moratorium delay a 
decision on the issue of allowing States to require remote retailers to 
collect and remit sales taxes. They have said that if that is the case, 
that we should not move for a moratorium.
  Now, Mr. Chairman, I have assurances that is not the case. I have 
assurances that the issue will be addressed. I have offered this 
amendment to address the situation. My amendment would authorize States 
to develop and enter into an interstate sales and use tax compact. The 
legislation would provide that States joining the compact would be 
required to adopt a simplified sales tax system. In turn, States 
adopting the simplified system would automatically be authorized to 
require remote sellers above the sales volume threshold to collect use 
tax on all taxable sales into a State. Retailers would also be provided 
a collection allowance to offset the cost of compliance.
  What that would do, Mr. Chairman, is give a level playing field to 
all sales. The legislation would provide a framework for 
simplification, allowing States to require collection when the States 
achieve simplification, and I think it is a reasonable and necessary 
step for this Congress to take to pass this legislation. Merely 
extending the moratorium while failing to deal with this underlying 
problem I think would be irresponsible. We can deal with it. This 
Congress can and should deal with it this session.
  I have assurances that the Committee on the Judiciary is going to 
take up this issue next week. For that reason, I am going to support 
the legislation on the floor. I am doing it despite my concern and that 
of both governors and the retailers, in that I have assurances that we 
will address this issue and that we will address it this year. I hope 
that my trust in this institution is well founded.
  Let me say, in closing, this: ``The governors have made this request 
of the Congress. They have requested Congress to create incentives for 
States to streamline and simplify their sales tax systems so that 
remote sellers, whether Internet, catalog, or whatever, can collect 
sales and use tax as simply and easily as other retailers do, applying 
them only when companies surpass a minimal level to justify the 
burden.''
  I think there is almost unanimous agreement in this body that we need 
to move in this direction For that reason, I am offering this 
amendment.
  However, Mr. Chairman, I am told that it is not germane to this 
legislation, so I will withdraw the amendment, but I do so strongly 
urging this Congress to address this issue. If we pass this moratorium 
and we do not address this issue, we do it at the peril of local 
government, of educating our children, of all of the fears and concerns 
that have been raised by the opponents of this legislation. If we pass 
this moratorium and then we take up legislation to address this issue, 
then we will have the best of both worlds.
  Mr. Chairman, at this time, I ask unanimous consent to withdraw the 
amendment.
  The CHAIRMAN pro tempore. Is there objection to the request of the 
gentleman from Alabama?
  There was no objection.


                   Amendment Offered by Mr. Delahunt

  Mr. DELAHUNT. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Delahunt:
       Strike sections 2 and 3, and insert the following (and make 
     such technical and conforming changes as may be appropriate):

     SEC. 2. 2-YEAR EXTENSION OF MORATORIUM ON STATE AND LOCAL 
                   TAXES ON THE INTERNET.

       Section 1101(a) of title XI of division C of Public Law 
     105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is amended 
     by striking ``3 years after the date of the enactment of this 
     Act'' and inserting ``October 21, 2003''.

  Mr. DELAHUNT (during the reading). Mr. Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
Record.
  The CHAIRMAN pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  Mr. DELAHUNT. Mr. Chairman, I am pleased to join with the gentleman 
from South Dakota (Mr. Thune) in offering this amendment. It would 
extend the Internet tax moratorium for 2 years rather than 5 years 
beyond its current expiration date to October 21, 2003, and it would 
leave in place the existing provisions grandfathering the 10 States 
that had some form of Internet tax-related tax when the moratorium was 
first enacted in 1998.
  The amendment would allow the States a reasonable extension of time 
to simplify their system for taxing transactions so as to foster the 
growth of electronic commerce, while continuing to meet their 
responsibilities to provide essential services to their citizens.
  Let me be clear, Mr. Chairman. I support the moratorium. In fact, I 
was among its early cosponsors, because it did seem essential to me 
that Congress provide sufficient breathing room and time to develop a 
more uniform, efficient and fair and neutral system of taxation. Over 
the past 2 years, the States have made considerable headway in this 
effort. I see no reason why it should take them 5 more years to 
complete it. In fact, a full 5-year extension, all it will do is 
eliminate a major incentive to address the real issues here.
  That is why a 5-year extension is opposed by the National Governors' 
Association, the National Conference of State Legislatures, the Council 
of State Governments, the U.S. Conference of Mayors, and numerous other 
groups, both business and labor. That is why a 5-year extension is 
opposed by 36 governors, Republican and Democrats alike, including 
Governor Leavitt of Utah, Governor Sundquist of Tennessee, Governor 
Thompson of Wisconsin, Governor Ryan of Illinois, Governor Engler of 
Michigan, Governor Ridge of Pennsylvania, and Governor Taft of Ohio.
  These governors realize that a 5-year extension will accelerate the 
erosion of the sales tax and diminish the ability of the States to fund 
vital services. States that depend on the sales tax for as much as a 
third to a half of their total revenues will be forced to either cut 
spending or raise other taxes to make up the shortfall, the income tax 
or the property tax.

                              {time}  1245

  That is why the administration opposes the 5-year extension.
  Let me read the statement of administration policy issued yesterday, 
May 9: ``The administration would support a 2-year extension of the 
current moratorium. The proposed 5-year extension would significantly 
reduce the incentive for States to simplify their tax systems right 
now, to the detriment of all interested parties, particularly small 
business.''
  We talk about encouraging e-commerce. A 5-year extension discourages 
Internet sales. A 2-year extension fosters and embraces e-commerce.
  The only information, the only hard data that we have so far, it is 
not simply rhetoric, it is evidence and it is clear and convincing, 
State governments lost $525 million in taxes on online sales last year 
alone. That is only the beginning. Unless there is a system in place 
that enables the States to collect taxes on the sales, they will lose 
more than $20 billion per year by 2003.
  In conclusion, Mr. Chairman, the Delahunt-Thune amendment would 
provide a reasonable extension of the moratorium without changing the 
rules in midstream and without eliminating the incentive for all 
interested parties to devise an efficient, equitable, and technology-
neutral system for the taxation of sales of goods and services, whether 
it be online or in the stores, in our communities and neighborhoods.
  I urge support for the amendment.
  Mr. GOODLATTE. Mr. Chairman, I rise in strong opposition to this 
amendment.
  Mr. Chairman, this amendment will have the effect of shortening of 
length of time that taxpayers of this country are protected from some 
of the most regressive taxes that we can imagine, taxes on access to 
the Internet.
  It is important to remind everybody again, this legislation had 
absolutely

[[Page 7503]]

nothing to do with the collection of sales taxes on the Internet. That 
issue is going to be addressed starting with hearings in the Committee 
on the Judiciary this month. If we are going to try to mix these two 
things together, we are going to do so to the great detriment of the 
American people.
  Five years is actually a compromise. There were members of the 
Committee on the Judiciary who wanted to make this extension permanent. 
And why not make it permanent? After all, permanent extension of very 
unfair taxes on people's charges, the things that show up on their 
bills from their Internet service provider companies, where they have 
to pay $2, $3, $5, whatever the charge might be to be able to just get 
online and to experience all the benefits of the Internet, we have to 
pay that same amount no matter what our level of income is, that is a 
real effort to dig the hole deeper that many people have called the 
digital divide. The way to close that divide and get every American on 
the Internet is to eliminate these access charges.
  I oppose it for that reason. I also oppose it because it takes away 
something we have done in this legislation, and that is to stop some 
States who were grandfathered under the old law from being able to 
continue these very unfair access charges.
  This bill ends those grandfathered provisions in the bill. This 
amendment takes that away. So to me, when I hear the other side talking 
about fairness, yes, if they want to talk about sales tax fairness, I 
would love to participate in that debate at another time. If we want to 
really talk about fairness, let us have a law that applies fairly to 
everybody with regard to these very unfair taxes on access to the 
Internet.
  Five years is the amount recommended by the Commission report. At the 
appropriate time, I will introduce a letter that I have just received 
addressed to the Speaker of the House and asked to be made in order in 
the full House, a letter from my Governor, who was the chairman of this 
Commission, strongly endorsing the provisions of this legislation as 
they stand.
  It is my hope that we will follow it, because it was not just the 
majority who wanted the 5-year extension of this moratorium. Governor 
Leavitt, the opponent of the recommendations of Governor Gilmore, his 
alternative proposal included a 5-year extension of the moratorium on 
these very unfair taxes on access to the Internet.
  So if we are going to be fair and we are going to recognize a truly 
consensus opinion, we ought to go forward with the 5-year extension and 
reject a 2-year extension, which quite simply puts the taxpayer in this 
country at jeopardy in a short period of time of again facing these 
very unfair, regressive charges that have nothing to do with the 
imposition of sales taxes on the Internet.
  There is nothing to prevent the Congress or the States from 
addressing the sales tax issue individually, collectively, in 
cooperation with the Congress, at any time during this extension of the 
moratorium.
  So this 2-year extension is simply a way of taking away from 
taxpayers a protection against an unfair tax that creates this digital 
divide. Instead, I would hope that everyone would reject this amendment 
and promote closing the digital divide by removing some of the most 
unfair taxes on the Internet. Some that exist now in some States, they 
should be removed, and in the States that are under the current 
moratorium, that moratorium should be extended for 5 years.
  Mr. CONYERS. Mr. Chairman, I rise in support of the amendment.
  Mr. Chairman, at last, a bipartisan amendment has arrived on the 
floor. We put our arms around it and thank the gentleman from 
Massachusetts (Mr. Delahunt) and the gentleman from North Carolina, who 
have recognized that if we limit this extension of the present 
moratorium on Internet access taxes and discriminatory taxes for 2 
years, we will have arrived at a place that most of us will be much 
happier about.
  It is unfortunate that the speaker before me has not seen the letter 
in which the Governors are asking us to please, please take into 
consideration the fact that they want their taxes extended. Twenty-two 
of them are Republican Governors.
  I believe that this 2-year extension is a far more appropriate period 
for the moratorium. It is my hope that by such time the States could 
build on the very serious steps they have already begun to reform and 
simplify their laws. Then we could consider whether we want to approve 
any interstate process affecting these simplification efforts. If the 
States were not making progress by 2003, it would be a simple matter to 
extend the moratorium for an additional period of time if that were 
needed.
  By contrast, there is a real risk that extending the moratorium 
through 2006 would, in effect, delay this issue and create a situation 
where the States have no incentive for reform. This would have the 
effect of codifying into the law the present Byzantine, unmanageable, 
complex State tax system which harms both consumers and business.
  So this is why so many concerns have been raised about a 5-year 
extension. It is too long. It is opposed by the administration, which 
has written that ``The proposed 5-year extension would significantly 
reduce the incentive for States to simplify their tax systems, to the 
detriment of all interested parties,'' but especially hurt would be 
small businesses.
  A 5-year extension is also opposed by the National Governors 
Association. Read the letter. It is now on the Record. It is opposed by 
labor, the AFL-CIO, the NEA, the AFT, AFCSME, and by business through 
the National Retail Federation, the Wal-Marts, the Sears, the Home 
Depot and K-Mart, and many, many others.
  So we have arrived at a place where we can all come together, 
Republicans and Democrats, high-tech supporters and brick and mortar 
people. Let us come around to the Delahunt-Thune proposal now before 
the floor, now on the floor, which would give a 2-year extension, no 
more 5-year extension, a 2-year extension that would give our own 
committee the opportunity to hold the hearings and to deal with the 
realities and complexities of these problems on a sober and bipartisan 
basis to solve these very large problems that are facing us.
  Such a process has been sorely missing to date in our headlong rush 
to the floor to secure political points. For that reason, my 
commendations to the gentleman from North Carolina and to my dear 
friend, the gentleman from Massachusetts (Mr. Delahunt). I urge that 
their amendment be given further consideration.
  Mr. THUNE. Mr. Chairman, I move to strike the last word.
  Mr. Chairman, let me, just for the point of the record, say that the 
State is South Dakota, not North Carolina. But I am sure North Carolina 
cares very deeply about this.
  I say to the gentleman from Michigan, let me just speak to this 
issue, if I might, in favor of this amendment, for a couple of reasons. 
I think it is critical in the time that I have been here in Congress, 
and actually prior to the time that I arrived here.
  I have heard a lot of debates about how important it was that we move 
power out of Washington, D.C. and decision-making out of Washington, 
D.C. and give more power to the States, because we trust the ability of 
the individual States to make decisions about what is in their best 
interest.
  That is I believe what is at stake here in this debate today. That is 
the issue of States' rights, and whether or not those States who have 
chosen already to employ certain taxes should be allowed to continue 
along those lines.
  The amendment we have before us right now would restore States' 
rights on Internet services. The Tax Freedom Act which we adopted a 
couple years ago grandfathered those States which imposed, actually 
imposed such a tax prior to enactment. This amendment would allow those 
grandfathered States to assess taxes on Internet services in the same 
manner as other services.
  I want to make one thing very clear here. In my State of South 
Dakota, and I think it is fair to say that the vast majority of States 
who are impacted by this who already had provisions in

[[Page 7504]]

law, we are not talking about a new tax on Internet services that is in 
any way discriminatory. This simply allows them to assess the sales tax 
which is currently being assessed on this service.
  In our State of South Dakota this is a very important issue. We do 
not have an income tax. Fifty-three percent of our State's revenue is 
raised by the sales tax. This bill fundamentally represents an attack 
on the revenue base of our State. Our municipalities also, that is 
their primary way of running their operation. They are very dependent 
upon the sales tax. Main Street businesses agree that there should be 
tax equity and tax fairness.
  I would say to my colleagues who are looking at this issue and trying 
to determine how they might want to vote that what we are attempting to 
accomplish here is nothing more than was done in 1998 when we acted on 
this last time. That is to grandfather those States, about eight States 
around the country, who already have provisions in law that allow them 
to tax equally these services in the same manner that all other 
services are taxed. We are not talking about a new tax.
  I think my record in this body as a tax cutter is clear. This 
amendment does not address the issue of tax on Internet sales or the 
question of permanent charges. What it does do is allow those States 
that currently have a sales tax in place to continue to apply that tax 
in equal manner on Internet services, just like they would on any other 
service in their States.
  Mr. Chairman, what I would simply say today is that as Members look 
at this issue, there are a couple of things to keep in mind. One is 
that what we are talking about here really I think in a very 
fundamental way is the rights of States.
  As I said earlier, I believe in the debates we have held in this 
House since I have been here, we have talked a philosophical vein about 
how better to shift power and decision-making back to the States. What 
we are telling the States today is we are sorry, they cannot do it this 
way, and we are going to deprive them of a revenue source that they 
have chosen to adopt in terms of raising revenue to run their 
operation.

                              {time}  1300

  And the other issue very simply I would say, too, is a matter of tax 
equity, and that is, this is not a discriminatory tax Internet 
services, this is the same tax that is applied to all other services 
across this country or across our State, at least, and I think to the 
other States that are affected by this.
  One other point I would make with respect to the moratorium, and the 
gentleman from Massachusetts has spoken to that, but the current 
moratorium does not expire until October 21, 2001. This amendment would 
extend the moratorium an additional 2 years, that gives us 3\1/2\ years 
in which to address this issue.
  I believe that to be ample amount of time. Furthermore, I think the 
longer that we extend that deadline into the future, the less pressure 
there is on this institution to grapple with and deal what is going to 
be a very important issue to our States, our municipalities and our 
small businesses.
  I would also add that this is one of the very rare issues in my 
experience here in Congress where I have the business community in my 
State, municipal leadership, State leadership, our governor, all on the 
same side of the issue. This is an issue which impacts small businesses 
across our State, many of our businesses, small retailers and Main 
Streets across South Dakota are already at a competitive disadvantage 
in a lot of ways to catalog sales, but the Internet services that are 
underway today, the sales that occur there are yet another way in which 
they are put at a competitive disadvantage.
  Mr. Chairman, I believe that this is an issue which cries out for a 
fix. I think it is going to be incumbent upon this Congress to act in a 
way that would enable our States to address this issue to resolve it, 
and to have a stable and predictable revenue source as they head into 
the future.
  I would simply say to my colleagues that I believe this amendment to 
be a sound amendment. I do think it provides ample time in which to 
resolve these issues, and furthermore, it eliminates the provision that 
would penalize those States that already, in law, have chosen in a 
nondiscriminatory way, in an equal way, in a neutral way to tax all 
their services at the same level. I urge the adoption of the amendment.
  Mr. NADLER. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman, let me start by making two comments on some things that 
have been said before by some opponents of the amendment, the gentleman 
from Pennsylvania, the gentleman from Virginia. It was said that this 
bill seeks to give effect to the recommendations of the commission, the 
commission that was appointed under the first Internet moratorium bill, 
which I supported 2 years ago. It simply is not true. The commission 
made no recommendations whatsoever.
  The law establishing the commission was very careful to specify that 
the commission could only make a recommendation of anything by a two-
thirds vote. The commission was divided, nothing got a two-thirds vote. 
The chairman of the commission, the governor of Virginia, took it upon 
himself to disobey the law, and in the name of the commission, to make 
a recommendation, even though it did not have the two-thirds vote.
  We should give no weight to those recommendations as recommendations 
of the commission. They are recommendations of some members of the 
commission. The commission made no recommendation whatsoever, because 
they could not agree.
  Second, we are told that by supporting a 2-year moratorium, we are 
going to be very unfair to business. We are going to be very unfair. Is 
the governor of Ohio, Mr. Taft, suggesting very unfair provisions? Is 
Governor Ridge suggesting unfair provisions, Governor Leavitt, Governor 
Thompson, Governor Engler, most of the Democratic governors in this 
country, are they all being very unfair here or are they all simply 
being prudent and asking us not to interfere with the welfare of their 
States, which is what I think is happening.
  Let us go back to basics here as we look at this amendment and as we 
look at this bill. The Internet is a great thing. We want to promote 
its growth. We do not want burdensome or unfair taxation to inhibit its 
growth. There are certain problems that arise when we talk about how to 
tax the Internet.
  Mr. Chairman, there are 6,000 jurisdictions in this country, and it 
might very well be burdensome to say okay, if you ordered something in 
New York from a seller in Wisconsin and the signals go through 22 other 
States, however the Internet is routed, I do not understand it, there 
may have 22 different States levying sales tax or trying to, and who 
knows how many jurisdictions, obviously we cannot have that.
  We have to figure out a different way of doing that. We have to 
simplify it so that it is not a burdensome thing for an Internet 
company or a seller over the Internet to adhere to the law and to levy 
or collect a tax.
  Fine, to figure out how to do that, we enacted a 3-year moratorium, 
and we appointed a commission, the States are working it out. The 
governors tell us it will take another year or two to work a very 
simplified sales tax, uniform sales tax system throughout the country 
that will permit a simplified collection that would not be burdensome; 
okay, that makes sense.
  We also want to make sure that everybody is on the level playing 
field. We know that the economy grows fastest. We know that economic 
growth is greatest, productivity is greatest, wealth creation is 
greatest when economic decisions are made on the basis of economics.
  When people in the private sector make their decisions what to buy, 
what not to buy, how to ship their goods, how to order something, where 
to buy it from, on the basis of efficiency and economic utility not on 
the basis of taxes. So we want taxes insofar as possible not to affect 
economic decisions.
  If you want to order something, whether you order it by walking into

[[Page 7505]]

the store on Main Street or into the mall a couple miles away or from a 
catalog seller or over the Internet, should be decided on the basis of 
any number of factors, but not on the basis that one has an advantage 
of tax over the other.
  Mr. Chairman, that is an improper consideration. If the Internet is 
going to grow, and it is, it ought to be on its own merits. If brick-
and-mortar companies are going to be advantaged or disadvantaged, it 
should be on the basis of their economic advantage, not on the basis of 
tax advantage or disadvantage, that, too, is something we have to make 
sure we do right, that taxes raise revenue, but do not unfairly 
advantage one sector over another because it is unfair. It inhibits the 
growth of the economy; that we have to make sure we do.
  A 2-year moratorium extension, especially a year in advance of the 
moratorium end that we have, we have another year and 16 months to go 
into the existing moratorium, gives ample time to figure all of this 
out. A 5-year moratorium would be another 6 years, as was said by the 
gentleman from South Dakota (Mr. Thune), would freeze into practice too 
many practices, it might be impossible to change them 6 years from now, 
especially at the rate that things are growing.
  Now, we are told that this bill does not deal with the sales tax 
question. It is true, it does not. But to allow half a solution and not 
the other half would freeze things, and that we should not do.
  Ms. JACKSON-LEE of Texas. Mr. Chairman, I move to strike the 
requisite number of words.
  Mr. Chairman, I rise to support the Delahunt amendment, and to make 
the arguments that, as I indicated in general debate, it amazes me that 
we would rush to the floor of the House to deprive 10 States, 
comprising a large population of the United States, their inherent 
rights. The right to make independent assessments and determinations as 
to how they collect revenue.
  Now, I am prepared to spend a lot of time in hearings. I think it is 
extremely important that this body acts as a fact-finder. It is 
interesting that, having participated in the revising of the 
Telecommunications Act or the revising of telecommunications in the 
United States by way of the Telecommunications Act in 1996, I 
understand those who preceded me in tenure indicated that that process 
lasted many, many long years. But yet today in the year 2000, we are 
confronting issues in the Telecommunications Act that are sticking 
points and have not been resolved, because all legislative initiatives 
cannot foresee down the road what the problems may be.
  Mr. Chairman, we have problems with the Telecommunications Act right 
now as we speak. But yet we want to precipitously deny the rights of 10 
states, some 17 million citizens in the State of Texas and many others 
around the Nation, with the limited amount of hearings and 
understanding of how we can best encourage E-commerce and, as well, 
address the needs of those such as the State of Texas that would lose 
over $1 billion in revenue.
  I cannot understand why, in fact, there is such an urgency with 8 
months out, I believe, a time frame in which we can study the issues 
appropriately. I will subsequently add an amendment or debate an 
amendment that I will offer that adheres to the 5 years, but 
grandfathers the State in. I believe it is crucial that we are fact-
finders and that we get the information. This will deny the cities of 
this Nation, the States of this Nation, the opportunity to provide 
reasonable revenue for health care and for education.
  Then, secondarily, though there are 37 million people who may access 
the Internet. And I might say in Texas, we allow $25 worth of access 
fees that are nontaxable, so we are sensitive to the idea of opening up 
the Internet. But this will be denying these individuals the 
opportunity for resources that they greatly need.
  I do not know how this Congress can do it. Particularly a Congress 
that represents itself to be respectful of States rights. This is 
harming 10 States and harming the State of Texas. I believe we should 
seek a moratorium that allows us to stay this issue. I believe, 
however, that we should not take away the rights of those 10 States 
and, more importantly, I do not think we should move precipitously when 
we really do not know the best way to approach this.
  Mr. Chairman, my last point is to simply say as much as we may not 
want to view this as an equity question, it seems to me that we should 
consider all of those individuals who go into stores and buy their 
goods. And I disagree with any comparison that this is like a fee going 
into a shopping mall. It is not. Consumers are on the Internet and 
buying the goods right there. They go into a store we pay sales tax. 
Let us be fair and make sure that we have a situation where we respect 
those States who have already opted to make their choices on taxation.
  Mr. COX. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman, I would like to respond to the comments that were just 
made. It is suggested that a continuation of the status quo, which 
protects users of the Internet from discriminatory taxation, would 
somehow harm the State of Texas. But the State of Texas is increasing 
its tax take under the status quo. As a matter of fact, sales tax 
collections in the State of Texas for the year we have just completed 
are up 5 percent.
  The same is true across the country. There is not a State in America 
that is not better off now than it was before the passage of the 
Internet Tax Freedom Act and the two are not disconnected, because the 
growth of the new economy is fueling a growth in American productivity 
and a record increase in jobs and a flood of revenues to government at 
all levels.
  There is no revenue impairment. There is no revenue loss. There is 
more taxation and more collection of taxes for State and local 
governments, and for the Federal Government, than ever before in our 
Nation's history.
  Mr. Chairman, let us look at the figures. At the end of 1999, all 50 
States were in surplus. The States finished 1999 with $35 billion in 
total surpluses. And that is at the same time that they were growing 
their spending by nearly 8 percent on average. Total tax collections 
among the 50 States are up not by 1 percent, not by 2 percent, not by 3 
or 4 percent, the range of our economic growth, but by 11 percent. 
Total tax collections among the States, up 11 percent from $420 billion 
in 1998 to $466 billion in 1999.
  We do not need more taxes. We do not need discriminatory taxes. We do 
not need double taxation. And all that this bill does, all that it 
does, is ban discriminatory taxes and multiple taxes. So I need to know 
which one, which kind of taxes, the discriminatory ones or the multiple 
ones, the opponents of this legislation are in favor of.
  But in my view, there should not be a moratorium. There should be a 
permanent ban on such taxes. We should not have discriminatory taxes 
against the Internet and we should not have multiple taxation. Two 
States should not tax the same commerce twice. One State ought to do 
that, and that is what this legislation wisely does.
  Now, in truth the debate is not about what it seems to be about. We 
are not really arguing about that. Instead, people are taking a very 
good piece of legislation, the Internet Tax Freedom Act, and they are 
holding it hostage. They are saying, ``All right. We agree with you, 
there should not be multiple taxation. There should not be 
discriminatory taxation. But we have another issue with sales taxes and 
we would like you to address that some time, and we think that only if 
we take this perfectly good piece of legislation and hold it hostage 
will you listen to us.''

                              {time}  1315

  I remember once when I was in college, I think, maybe I was a little 
older than that, the National Lampoon put out one of their magazines. 
Some of my colleagues have seen the National Lampoon, and it had a very 
clever cover. On the cover was this adorable little puppy with a gun to 
its head. It said, ``Buy this magazine or we will shoot this dog.'' Of 
course the message

[[Page 7506]]

was meant to be humorous, but it is an illustration of the legislative 
tactic at work here.
  People do not like the fact that they have a Supreme Court decision 
that impairs State sales tax collection on remote sales. They would 
like Congress to address that legislatively under our Article I, 
Section 8 power. Because that is not what we are debating here on the 
floor today, they want to take this piece of legislation hostage and 
say, well, at least it is about the Internet. Let us slow down this 
legislation and make them add on to this other issue.
  That would be a bad idea because what it would mean is that people 
would not have the certainty that they now have that we are not going 
to at the Federal level, we are not going to at the State level, and we 
are not going to at the local level impose discriminatory taxes on the 
Internet that tax the Internet when the off-line commerce would not be 
taxed in the same way or multiple taxes on the Internet. We are not 
going to tax Internet access because we really do care about the 
digital divide.
  If my colleagues care about the digital divide, do not pile new taxes 
on Internet access. That is what the existing legislation, which this 
would extend, prevents. There are many good reasons, but none more 
significant than the flood of revenues to our States to support the 
Internet Tax Freedom Act and its extension in the form of the Internet 
Nondiscrimination Act.
  For those reasons, I urge strongly that we oppose the amendment.
  Mr. ROGAN. Mr. Chairman, I move to strike the requisite number of 
words.
  Mr. Chairman, first I want to associate myself with the gentleman 
from California (Mr. Cox). I think that he has hit the nail directly on 
the head.
  Mr. Chairman, I am pleased to yield to the gentleman from Virginia 
(Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Chairman, I thank the gentleman from California 
for yielding to me.
  Mr. Chairman, Congress created the Advisory Commission on Electronic 
Commerce in 1998. The purpose of the Commission was to study the 
Internet taxation issue and submit a report of its findings to the 
Congress. The Commission consists of representatives from State and 
local governments, the administration, the business community, and 
others.
  In its recent report to Congress, the Commission suggested that the 
Internet tax moratorium that was in existence, created at the same time 
the Commission was created, be extended for 5 years. While there was 
disagreement on several Internet tax issues, which we are not 
addressing today, including the sales tax issue, which some want to 
keep bringing up, there was complete agreement on a 5-year moratorium 
extension.
  While Congress is not bound by the Commission's report, we should 
follow its suggestions unless there is good reason to do otherwise. 
After all, that is why Congress created a Commission. No good reason 
exists to deviate from the Commission's suggestion that the moratorium 
be extended for 5 years.
  Choosing to extend the moratorium for 2 years is completely 
arbitrary. There is no evidence that a 2-year extension is better than 
the Commission's suggestion of 5 years. Again, Congress should follow 
the Commission's lead, especially on an issue where there was complete 
agreement unless there is good reason not to, which does not exist 
here.
  While it is true that the recent Commission report was not supported 
by two-thirds of the commissioners, which was a requirement for 
submitting formal recommendations to Congress, it is also true that 
some of the issues examined by the Commission were supported by two-
thirds of the commissioners. Extending the moratorium for 5 years was 
one of those issues.
  If we take this amendment and extend it only 2 years, we are 
depriving the American taxpayers a protection against one of the most 
unfair, most regressive taxes one can imagine.
  Sales taxes, which the gentleman wants to take up and find a way to 
impose on people who buy goods and services on the Internet, they are 
regressive taxes because, generally speaking, they hit lower income 
people harder than other taxes.
  But taxes on access to the Internet, which is what we are addressing 
in this bill, not the sales taxes, are far more regressive because, 
regardless of one's income, regardless of one's wealth, one pays the 
same amount of tax for that access to the Internet.
  So, again, for everyone here who wants to close the so-called digital 
divide and make sure that every American has the opportunity to have 
access to the Internet for the educational benefits that arise from it 
and the ability to do business on it to have jobs related to it, to be 
able to shop on the Internet, to be able to advocate political points 
of view on the Internet, we should not be allowing a tax on that 
access.
  So we should extend this moratorium as long as we could. But we 
certainly should extend it no less than what the two-thirds majority of 
the commissioners recommended, what the Committee on the Judiciary has 
recommended, because we are, in effect, simply keeping people free from 
some of the worst taxes that one can possibly impose.
  I urge my colleagues again to reject this amendment.


    Amendment Offered By Mr. Chabot to the Amendment Offered By Mr. 
                                Delahunt

  Mr. CHABOT. Mr. Chairman, I offer an amendment to the amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Chabot to the amendment offered by 
     Mr. Delahunt:
       Strike line 1 and all that follows through the end of the 
     amendment, and insert the following (and make such technical 
     and conforming changes as may be appropriate):
       

     SEC. 2. COMPREHENSIVE AND PERMANENT MORATORIUM ON STATE AND 
                   LOCAL TAXES ON THE INTERNET.

       (a) Comprehensive and Permanent Moratorium.--Section 1101 
     of title XI of division C of Public Law 105-277 (112 Stat. 
     2681-719; 47 U.S.C. 151 note) is amended--
       (1) in subsection (a)--
       (A) by striking ``3 years'' and inserting ``99 years'', and
       (B) in paragraph (1) by striking ``, unless'' and all that 
     follows through ``1998'',
       (2) by striking subsection (d), and
       (3) by redesignating subsections (e) and (f) as subsections 
     (d) and (e), respectively.
       (b) Technical Amendment.--Section 1104(10) of title XI of 
     division C of Public Law 105-277 (112 Stat. 2681-719; 47 
     U.S.C. 151 note) is amended by striking ``unless'' and all 
     that follows through ``1998''.

  Mr. CHABOT (during the reading). Mr. Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
Record.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Ohio?
  There was no objection.
  Mr. CHABOT. Mr. Chairman, this is a perfecting amendment to the 
Delahunt amendment. The intent of the amendment is to make the 
moratorium permanent. For parliamentary reasons, it was necessary to 
pick a date specific, a certain amount of time. In this case, we chose 
99 years, which, in essence, effectively makes the moratorium 
permanent.
  Mr. Chairman, back in 1998, I worked with the gentleman from 
California (Mr. Cox) to introduce and push legislation that would place 
a moratorium on Internet taxation. The effort resulted in the passage 
of the Internet Tax Freedom Act, which placed a 3-year moratorium on 
three particular types of Internet taxation: taxes on access charges, 
multiple taxes, and discriminatory taxes.
  At that time, we were warned of the dire consequences for State and 
local governments if such a moratorium were enacted. However, contrary 
to these concerns, the moratorium has proved to be quite successful.
  Since enactment of the Internet Freedom Act, millions of Americans 
have gained access to the Internet, and electronic commerce has grown 
exponentially. The Internet economy has created millions of new jobs, 
and new economic opportunities for Internet businesses as well as more 
traditional companies.
  As a result of this rapid expansion, most State and local governments 
are

[[Page 7507]]

experiencing massive increases in tax revenues and record budget 
surpluses. There has been a lot of talk in this Chamber about bridging 
the so-called digital divide and providing all Americans with access to 
the Internet.
  According to a Department of Commerce report released last July, only 
12 percent of those households with combined incomes from $20,000 to 
$25,000 have Internet access, compared to 60 percent of those 
households earning $75,000 or more. Raising taxes and increasing prices 
on consumers will only make that situation worse.
  The most reliable way to ensure that Internet access is available to 
all is to help keep prices and costs low. By extending the moratorium 
and permanently banning Internet access taxes, we can lower future 
costs and ensure that Internet access remains affordable for all 
Americans.
  Mr. Chairman, thriving new industries have always been prime targets 
for new and discriminatory taxation in this country. For example, our 
constituents are still paying for the Spanish-American War courtesy of 
an excise tax on telephone use enacted all the way back in 1898 and 
still on the books. If we do not act affirmatively to protect the 
Internet, it will soon be subject to these same types of bogus charges 
which can hinder its growth, raise prices, and hurt consumers.
  By merely extending the current moratorium rather than making it 
permanent, Congress is leaving the flood gates open for a tidal wave of 
future taxation, which could cripple this vital technology. It is time 
to slam those gates shut, lock them tightly, and throw away the key.
  If we do not enact a permanent moratorium and, instead, continue to 
pass temporary extensions, no one, not State and local government 
entities, not the Internet business community, and not the consumers, 
will know what the future may bring. By enacting a permanent ban ,we 
can end this uncertainty and allow the Internet to flourish, free from 
the threat of future taxation.
  Mr. Chairman, we have an obligation to pass this proposal today. The 
Internet is a global network, and subjecting it to a myriad of State 
and local access taxes will cripple its development and prevent some 
families from gaining access to this wonderful tool.
  I urge my colleagues to protect our constituents' access to this 
thriving technology and vote to make this moratorium permanent.
  Mr. NADLER. Mr. Chairman, I rise in opposition to the perfecting 
amendment.
  Mr. Chairman, I rise in opposition to the amendment offered by the 
gentleman from Ohio (Mr. Chabot) which would provide for a permanent 
extension of the moratorium on Internet taxation.
  I obviously do not support multiple or discriminatory taxes, but I 
oppose a permanent moratorium because I fear, if we pass a permanent 
moratorium, we will never return to the more important issue of State 
tax simplification. Failure to revisit this issue will harm all 
interested parties: retailers, both electronic and otherwise, State and 
local governments, and consumers.
  The fact is that we have a moratorium in order to allow the States 
and the Governors and the Federal Government to address the issue of 
how one fairly taxes transactions conducted over this new medium, 
without giving an advantage, without stifling it, without burdening it, 
but also without giving it an unfair advantage over other types of 
business and over other media for the conduct of business.
  If we do not solve that problem, one of two things results. One could 
have stifling taxation on the Internet which would inhibit its growth, 
and that is why we want a moratorium to avoid that. I have no problem 
with the moratorium. I was one of its sponsors 2 years ago.
  Secondly, if we do not allow sales taxes on goods purchased over the 
Internet, then we, to a very large extent, destroy the tax bases of 
State and local government, and we give an unfair advantage to 
purchases over the Internet compared with purchases not over the 
Internet.
  As I said before, the economy, the growth of the economy, the 
efficiency of the economy demands that economic decisions be made on 
economic bases, not in order to avoid tax by going in one direction and 
not the other. That is a formula for less economic growth, less 
economic efficiency, lower economic productivity.
  If we make this moratorium permanent now, without dealing with the 
problem of how to fairly and without undue burden taxing transactions 
over the Internet, we may never get back to that.
  The Internet entrepreneurs quite properly want relief and assurance 
against future multiple or discriminatory tax. The moratorium gives 
them that for the time being. But to give them that permanently without 
dealing with the other half of the problem is probably to mean we will 
never get to the other half of the problem. That is wrong.
  Why rush? We are first having hearings on that question next week in 
the Committee on the Judiciary. We should, from those hearings, come to 
some agreement on how to deal with it legislatively. We do not have to 
act now at all until those hearings and until we know what we are 
doing, but we are acting anyway for purely political reasons.
  The moratorium has another year to run. If we want to extend it 2 
years, okay, so we have 3 years to solve this problem. A permanent 
extension now, when the moratorium has not finished and we have another 
year, is simply saying we do not care about solving the problem of 
sales taxes; and that would lead, as the Washington Post notes in its 
editorial today, to damage to our State and local governments which we 
claim to care about.
  I notice the cavalier attitude on the part of the majority of this 
House today toward unfunded mandates in this bill. We give lip service 
to opposing unfunded mandates. I do not mind them. I voted against the 
unfunded mandates bill. But most of the Members in this House give lip 
service to not imposing unfunded mandates in this bill, but we are 
doing it even though one of the sponsors of this bill says he has no 
idea the amount of the unfunded mandates. He does not want to take the 
time to find out.
  So I suggest that we should not have a permanent moratorium. A 2-year 
moratorium is adequate to enable us to do what we have to do; namely, 
figure out a rational and fair way of giving everyone fair and equal 
taxation while burdening the Internet with multiple and discriminatory 
taxation.
  So I urge the defeat of the amendment.
  Mr. Chairman, I yield to the gentleman from Massachusetts (Mr. 
Delahunt).

                              {time}  1330

  Mr. DELAHUNT. Madam Chairman, will the gentleman yield?
  Mr. NADLER. I yield to the gentleman from Massachusetts.
  Mr. DELAHUNT. Madam Chairman, I thank the gentleman for yielding to 
me, and he did so for the purpose of my making a unanimous consent 
request.
  Madam Chairman, I ask unanimous consent that the time of the debate 
on the perfecting amendment and the underlying amendment, the Delahunt-
Thune amendment, be limited to 10 minutes, to be divided equally 
between the sides.
  The CHAIRMAN pro tempore (Mrs. Biggert). Is there objection to the 
request of the gentleman from Massachusetts?
  Mr. GOODLATTE. Madam Chairman, reserving the right to object, the 
gentleman has asked for a total of 20 minutes additional time?
  Mr. DELAHUNT. Madam Chairman, will the gentleman yield?
  Mr. GOODLATTE. I yield to the gentleman from Massachusetts.
  Mr. DELAHUNT. I would advise the gentleman that I am asking for 10 
minutes; that we should limit the time for the debate on the Chabot 
perfecting amendment and my underlying amendment to 10 minutes, to be 
divided equally between the sides.
  Mr. GOODLATTE. Well, I am concerned that I have a lot of speakers 
over here. How would that time be managed?

[[Page 7508]]


  Mr. DELAHUNT. Well, if the gentleman will continue to yield, the 
ranking member of the subcommittee would manage it for the opponents, 
and I presume the gentleman from Ohio (Mr. Chabot) or the gentleman 
from Virginia (Mr. Goodlatte) would manage it for the proponents.
  Mr. GOODLATTE. And that is 10 minutes on each side?
  Mr. DELAHUNT. That is 5 minutes on each side.
  Mr. CHABOT. Madam Chairman, I object. There are a number of speakers, 
I believe, who are interested in speaking on this amendment.
  The CHAIRMAN pro tempore. Objection is heard.


                         parliamentary inquiry

  Mr. ISTOOK. Madam Chairman, an inquiry of the Chair.
  The CHAIRMAN pro tempore. The gentleman may state his parliamentary 
inquiry.
  Mr. ISTOOK. Madam Chairman, under the rule, is it correct that 
remaining debate time, which must include the additional amendments 
which have been prefiled and are to be offered the remaining time for 
debate, is limited to 1 hour? So that if everyone keeps speaking on 
this, they are effectively trying to stifle the consideration of other 
amendments?
  The CHAIRMAN pro tempore. The time for consideration will expire at 
2:30.
  Mr. ISTOOK. Will expire at 2:30. So that any time consumed by this 
amendment, should it consume all the remaining time between now and 
2:30, would have the effect of preventing the House from considering 
the other pending amendments?
  The CHAIRMAN pro tempore. That is correct. The Committee of the Whole 
will have to conclude consideration of amendments at 2:30.
  Mr. ISTOOK. Madam Chairman, is there any way that someone who, in 
good faith, has sought to offer an amendment to this bill can avoid 
this filibuster tactic?
  The CHAIRMAN pro tempore. That is not a parliamentary inquiry.
  Mr. ISTOOK. But it is a good point. I thank the Chair.
  Mr. NADLER. Madam Chairman, may I inquire of someone over there how 
much time, perhaps the gentleman from Virginia (Mr. Goodlatte), if 5 
minutes on each side is not acceptable for a UC request, ask how much 
might be?
  Mr. GOODLATTE. I would have to defer to the gentleman whose amendment 
is on the floor.
  The CHAIRMAN pro tempore. The gentleman from Ohio (Mr. Chabot) may 
respond.
  Mr. NADLER. Would 10 and 10 be acceptable?
  Mr. CHABOT. There are a number of speakers over here that have 
indicated they want to have sufficient time to address this particular 
amendment. I do not think it will take a tremendous amount of time, and 
I would hope that we will have an opportunity to get to the amendment 
of the gentleman from Oklahoma (Mr. Istook) or any other amendments 
that might be offered.
  Mr. NADLER. Would 10 minutes on each side be acceptable to the 
gentleman?
  Mr. CHABOT. Not at this point in time. The Committee on Rules set 
this rule. I am not on the Committee on Rules, I do not know how many 
folks sitting here are. But this is the rule we are dealing with. If we 
could move on and have the Members who would like to speak on this 
amendment, hopefully we will be able to have time to get to other 
amendments. That is, I think, the goal of all of us.
  The CHAIRMAN pro tempore. Is the gentleman from New York stating a 
parliamentary inquiry?
  Mr. NADLER. I am simply trying to ascertain if there is any amount of 
time. I do not know what other amendments people have.
  The CHAIRMAN pro tempore. Is the gentleman from New York stating a 
unanimous consent request?
  Mr. NADLER. Madam Chairman, I ask unanimous consent for a 20-minute 
time limit for this debate, to be divided equally between the two 
sides. That would allow 40 minutes for all other amendment combined.
  Mr. COX. Reserving the right to object, Madam Chairman, I think this 
discussion is consuming time off the clock, and that if we simply 
proceeded with debate on the amendment that is already under 
consideration, we could then proceed in order to the next amendment and 
the next amendment.
  I am aware, for example, that the amendment of the gentleman from 
Oklahoma (Mr. Istook) is largely duplicative. It also is for 2 years, 
which we are already debating. A lot of this debate is supportive of 
debate on the other amendments as well. But I would urge we stop the 
parliamentary infighting and just get back to our regular business.
  I, therefore, object.
  The CHAIRMAN pro tempore. Objection is heard.
  Mr. ROGAN. Madam Chairman, I move to strike the last word.
  Madam Chairman, I am pleased to support the amendment offered by my 
friend and colleague, the gentleman from Ohio (Mr. Chabot) that would 
make the moratorium on taxation on Internet access permanent. This 
amendment will send a message that Congress is opposed to excessive 
regulation and taxation of e-commerce.
  There is little debate here today on the impact of the Internet on 
our economy. Yet, despite its rapid growth, the Internet is still in 
its technological infancy. The potential for growth and the creation of 
new wealth is tremendous. This growth will continue to affect Americans 
at all economic levels. This rising tide of economic expansion has and 
will continue to lift all boats.
  In fact, the largest growth potential remains in home-based 
businesses. Goods, services and technology are available to consumers 
around the globe as never before. Taxation on the Internet raises many 
unanswered questions. Nationwide, there are some 6,000 competing 
separate tax levying jurisdictions. Congress must act to ensure that 
the electronic engine of our national economic growth is not unfairly 
punished by any of these competing jurisdictions or by an unwieldy 
combination of them.
  Today, we have the opportunity to continue the explosion of 
productivity and growth that we have seen from the Internet. From the 
booming tech companies of the Atlantic to the heart of the Silicon 
Valley, to those companies in my district in Los Angeles County, e-
commerce is touching the lives of all Americans. Internet companies are 
fueling hometown economic revivals.
  With this broad impact, Congress must act responsibly and decisively. 
By passing the amendment of the gentleman from Ohio and the underlying 
legislation, we will be sending a message that e-commerce is a 
technology to be embraced and not choked under the heel of government 
taxation.
  I urge my colleagues to support this amendment offered by our 
colleague from Ohio to enact a long-term ban on access to Internet 
taxation.
  Mr. DELAHUNT. Madam Chairman, I move to strike the requisite number 
of words.
  Mr. GANSKE. Madam Chairman, will the gentleman yield?
  Mr. DELAHUNT. I yield to the gentleman from Iowa.
  Mr. GANSKE. Madam Chairman, I rise in opposition reluctantly to the 
amendment by my good friend from Ohio in favor of the amendment of the 
gentleman from Massachusetts (Mr. Delahunt) and also, when it comes up, 
the amendment offered by the gentleman from Oklahoma (Mr. Istook).
  Madam Chairman, the Internet taxation issue is the number one issue 
for small town business men and women in my district. They see this 
lengthy moratorium on e-commerce taxes as unfair. They are paying taxes 
and losing business to competitors who do not pay those taxes.
  This tax policy gives on-line retailers a competitive advantage over 
brick-and-mortar retailers. It is a myth that e-commerce needs 
preferential tax treatment because it is a new industry. The Internet 
has reached 50 million people in 4 years. Look at some of the earlier 
breakthroughs. Radio needed 38 years to reach the same number of users; 
television 13 years. So the Internet's development has been nothing 
short of phenomenal. With that robust

[[Page 7509]]

growth, requiring on-line retailers to collect sales taxes will not 
harm their growth.
  This is really a question of somebody else getting hurt. I agree with 
Governor Leavitt of Utah when he said, ``You know, we all hate taxes. 
But if we have to pay them, then at least they ought to be fair.'' At 
the White House and in Congress we hear a lot about fair trading 
practices. Let us talk about fair trade at home. Let us deal with the 
issue promptly and not pass on it. Taxing some companies but not others 
is not fair. What prevents a huge retailer like Wal-Mart, with 
unlimited resources, from setting up computers instead of registers so 
that customers could purchase goods on-line and avoid a sales tax?
  We should not put off a decision on Internet taxation for 6 years. 
The current moratorium ends in October of next year. Next year we will 
have a new President and a new Congress. That will be a reasonable 
period of time for us to deal with this issue. Putting it off for 6 
years is unreasonable and unfair.
  As an article in today's Washington Post explains, ``The extension is 
deceptive legislation that in the short run doesn't do what most people 
think, and that in the long run could do real harm. The measure does 
not ban sales taxes on e-commerce, transactions over the Internet, but 
it sounds as if it does, which suits the sponsors just fine.''
  Let us not pass the buck on this decision to a Congress 6 years away. 
Let us not pass the bucks, the bucks that businessmen in my district 
are now losing to an unfair tax. I am going to support the Delahunt 
amendment, and I am going to support the Istook amendment on extending 
the moratorium from 5 years to a realistic 2 more years, right into the 
next Congress. If that drawback fails, I am voting no on the bill.
  Let us deal with this issue soon and not pass the buck. At a time 
when the majority is pushing to devolve political power and authority 
back to State and local levels, I believe this issue is all the more 
important. If we are to expect many of the important governmental 
programs to be implemented in this way, States and localities must be 
allowed the means to raise that revenue.
  In February, the University of Tennessee published a report that 
projects how much money States will lose per year by 2003 if businesses 
are not required to collect use taxes that are owed by purchasers on 
electronic commerce. The report found that the State of Iowa alone 
would lose $162 million, and nationwide, States would lose $20 billion.
  According to the U.S. Census Bureau, 47.9 percent of State revenues 
come from sales taxes. If sales tax is not collected on e-commerce 
transactions, State and local governments will have to find other ways 
to offset their losses. This could mean raising taxes on income or 
cutting back on essential community services, such as education, law 
enforcement, public libraries, and transportation.
  Once again, my colleagues, Congress needs to stop passing the buck on 
this issue. My small businessmen and businesswomen consider this their 
number one issue. Vote for Delahunt, vote for Istook. If they fail, 
vote ``no'' on the underlying bill.
  Mr. HUTCHINSON. Madam Chairman, I move to strike the requisite number 
of words.
  I am pleased to rise in support of the Internet Nondiscrimination 
Act, and I want to thank my colleague from Virginia for his work on 
this important issue.
  The bill before us provides a moratorium on access taxes on the 
Internet for 5 years. I think this is important to allow the 
development of this new technology that is truly in its infancy stage. 
There is an amendment that has been offered that would limit this 
moratorium to 2 years. I believe that is too temporary. It is not long 
enough and, therefore, I will oppose that amendment.
  The present amendment that is offered makes that permanent, or for 99 
years, and I appreciate my colleague from Ohio for raising this point 
in the debate and allowing us to have this discussion, but I think 
everyone here in Congress knows that a permanent ban is probably not in 
the dictionary when it comes to the actions of Congress, because we can 
change that down the road. So I think it is somewhat of a meaningless 
gesture, however, I believe it is important, because of the other 
issues surrounding this moratorium, that we do reengage in this debate 
down the road.
  One of the issues that are on the periphery of this moratorium is the 
States' concern that this somehow impedes their collection of sales 
taxes on distance sales. I know that my governor of Arkansas has 
written a letter expressing the concern about this moratorium impacting 
the collection of sales taxes by the States. When, in fact, as it has 
been pointed out, this clearly would not prohibit the States from 
trying to develop a means to collect sales taxes on distance sales via 
the Internet or catalogue sales.
  I am sympathetic to that concern, and I believe it is important that 
the Committee on the Judiciary engage in hearings to address this 
issue, to continue the debate on that. We need to continue to watch to 
see the impact on sales tax collections by our States that impact our 
schools and other services provided. But I am also concerned about the 
brick-and-mortar businesses, the Main Street businesses, those that 
rely upon in-store shopping. They are obviously concerned about the 
Internet having a competitive advantage, those engaged in e-commerce.
  I think we need to wait and see, but the debate is very important, 
and I hope that will continue in hearings in the Committee on the 
Judiciary, and I know legislation will be introduced to clarify and 
reduce the obstacles that States face in collecting the sales taxes. It 
is not an obstacle created by this moratorium, but it is an obstacle 
created by the fact that there are no collection methods at present 
that the Supreme Court has not found creates an undue burden on 
interstate commerce.

                              {time}  1345

  So, therefore, I think we need to look at what we can do to help the 
States, make sure that there is not a burden, as well as the problem 
with the brick-and-mortar businesses, as I mentioned.
  The Internet development clearly should be encouraged. I believe that 
if there is a possibility that taxes would be imposed on access to the 
Internet that that would be a hinderment. I believe that we should 
support this moratorium for that reason.
  In my district in Arkansas, where middle America is rural America, I 
believe the Internet explosion, the opportunities for e-commerce, the 
development of dot-coms represents the future of rural America even. We 
see it in the Silicon Valley. We see it on the East Coast. But in rural 
America, we have in my district a dot-com which has developed that is 
employed. I think we are going to see more of that. And so, I do not 
think we want to hamper it right now with the potential for new taxes 
on access to that great future that is really in its infancy now.
  For that reason, I oppose the amendment to make the moratorium 
permanent, I support the underlying bill, and I ask my colleagues to 
join in that effort.
  Mr. CONYERS. Madam Chairman, I rise to strike the requisite number of 
words.
  Madam Chairman, members of the committee, I am, first of all, 
saddened that the Chabot amendment was attached to the Delahunt 
provision. If only it could have been a more fair parliamentary 
universe, we would all be better off in trying to make these decisions.
  But having said that, I have no other alternative but to oppose a 
permanent extension of a moratorium on Internet access and 
discriminatory taxes. Because if we pass a moratorium now, I guarantee 
my colleagues that we will never return to the important issue of tax 
simplification. We just will not come back, this is it. To try to nail 
this on to the Delahunt amendment that narrows to 2 years this 
extension I think is very, very unwise.
  The problems with the present system are fairly well-known by now. 
The

[[Page 7510]]

complexity is daunting. Six-and-a-half thousand taxing jurisdictions in 
the United States, and we want to provide for a permanent extension of 
the moratorium without so much as a hearing, without anyone ever having 
examined what it is that we would be doing were we to accept such a 
provision?
  Needless to say, any retailer with a physical nexus to his State is 
subject to a myriad of confusing and complex State and local taxes.
  Next, the current disparate tax treatment as between brick-and-mortar 
and remote sellers has the potential to cause continuing economic 
distortion.
  In the New York Times, it has been written, an elementary principle 
of taxation says that taxes should distort purchasing decisions as 
little as possible and it is not the role of the Tax Code to determine 
whether a customer shops in stores, on-line, or by mail order.
  The gentleman from New York (Mr. Nadler), the ranking member of the 
subcommittee, has made that point repeatedly. This is not the job of 
Tax Codes to determine where customers shop.
  Now, with regard to the impact on State and local governments, 
maintenance of the current system carries with it the potential for 
significant financial loss. Sales taxes in State after State is the 
most important revenue source, far greater than income or property 
taxes.
  And so, what are we doing here with projections of on-line sales 
estimated to exceed $300 billion in only a couple years from now, State 
and local governments could lose as much as $20 billion in uncollected 
sales tax.
  So, my colleagues, please let us vote no on the Chabot amendment, as 
well-intended as it may be, and continue our support for the Delahunt 
provision.
  Mr. CUNNINGHAM. Madam Chairman, I move to strike the requisite number 
of words.
  Madam Chairman, I strongly support a permanent ban on the tax of the 
Net. We need to free the Net. If we look at the Internet, e-commerce 
and technology today, it has stimulated the economy. There is an 
explosion of the stimulated economy.
  In the year 2000, we need not to go back to an analogue system of 
government or an analogue system of business. Some of my colleagues 
have said that jobs will be threatened in small business. Small 
business can join the Net just like anybody else. Many already have. 
And the smart ones will in the future join the Net. It will benefit 
them and free them from unnecessary taxes.
  Because I want to tell my colleagues, Madam Chairman, if we increase 
taxes, government at State, at local and at Federal will spend it. I 
absolutely guarantee they will. An increase in jobs due to the Internet 
actually stimulates growth and has increased tax revenue of existing 
taxes. The increase in production of goods produces an increase of 
existing taxes.
  But my friends on the other side of this issue want a brand new tax. 
Think of the bureaucracy alone that it would take to regulate this new 
tax. Some of my friends like big bureaucracy. Small business will 
actually benefit from taking off and freeing the Net.
  I would take a look at the other side of this issue and the spin. 
There is a group here in Congress that has never found a tax that they 
do not like, never; and any tax relief that we want to give, it is only 
for the rich. Whether it is for a marriage penalty, whether it is for 
the death tax, whether it is for capital gains, whether it is for 
education relief and scholarships, it is only for the rich.
  Well, let me tell my colleagues, the same group, my colleagues on the 
other side, let me put it in perspective.
  In 1993, when the Democrats controlled the White House and the House 
and the Senate, they increased the tax on the middle class, they 
increased the tax on Social Security and said it was good for the 
country. They increased the gas tax. They even had a retroactive tax. 
And that was supposedly good for the country because, if we did not 
have those taxes, we were going to have to cut education, we were going 
to have to do this. But, at the same time, they increased spending.
  The Vice President was the deciding vote on all of those tax 
increases. And yet, they will spin this that a new tax is always good 
for the country. I reject that, Madam Chairman.
  In essence, we need to go forward in this country in the year 2000.
  There is another group here, Madam Chairman, that further supports my 
contention that there are groups that will spin anything to increase or 
support a new tax. That is a group called dsausa.org, Democrat 
Socialists of America. It is on the Net. This is their Web page.
  Under that Democrat Socialists of America, there are 58 Democrats 
that belong to the Progressive Caucus that are listed under this. Now, 
the Democrat Socialists of America support government control of health 
care, government control of education, government control of private 
property and, number four, the highest tax possible so that they can 
have the highest socialized spending.
  My contention is that there are those in this body that would 
increase taxes at any cost, prevent tax relief at any cost, and 
increase spending in the Government, which has driven us into a debt of 
nearly national oblivion.
  I rise in strong support of the underlying bill.
  Mr. FRANK of Massachusetts. Madam Chairman, I move to strike the 
requisite number of words.
  Madam Chairman, first let me announce that a prize will be given to 
anyone who can connect the dots between the previous speech and the 
subject under discussion.
  As to the subject under discussion, it is whether or not we should 
extend a moratorium for 2 years or 5 years, and it is a moratorium 
which already has more than a year to go. That is, there are no 
advocates right now of taxing the Internet, per se.
  There are many of us, nefarious organizations, one that the previous 
speaker did forget to mention, most of the governors of the United 
States, whom some people here do not trust because they believe that if 
the governors are allowed to continue to administer their sales taxes, 
they will spend us into oblivion.
  But what we are talking about is not allowing taxes on the Internet 
as the Internet. We are talking about the dilemma we face in not being 
able to enforce the collection of sales tax which are concededly 
legally due and owing through Internet purchases.
  Now, there is currently a moratorium. It expires next year. The 
gentleman from Massachusetts (Mr. Delahunt), my colleague, has offered 
an amendment to extend that for 2 years. The underlying bill would 
extend it for 5 years.
  There is an amendment, the never-never land amendment, that would 
extend it out indefinitely. But I believe the real issue of a serious 
note is whether we extend it for 5 years or 2 years. That is the key, 
do we extend the moratorium until 2006 or until 2003.
  So it is not a case of wanting to tax the Internet. It is not a case 
of letting the moratorium fail, even though it has no expiration date 
until next year. The question is whether it is a 3-year extension or a 
5-year extension of a moratorium; in other words, a moratorium or a 
less-atorium. But it is still going to be a veto on any taxes.
  The question, then, is why are some of us against a 5-year extension. 
The answer is this: States today depend in many cases heavily on the 
sales tax. There is a reason for allowing the States to collect the 
sales taxes that are already owing, both to finance important State 
activity, and also so that retailers who operate in cities and 
elsewhere are not at a competitive disadvantage because the purchaser 
has to pay a tax when, de facto, a purchaser over the Internet may not 
have to.
  Collecting sales taxes on Internet purchases is conceptually easy but 
has some specifics of that to be worked out.
  What we need is the participation of the people who do the retailing 
over the Internet and the local and State governments and others so 
that we can work out a sensible regime whereby sales taxes that are 
legally owing can be collected once, not in a duplicative

[[Page 7511]]

fashion, so that we do not put the Internet at any disadvantage but 
neither do we give them a competitive advantage over those physical 
retailers located in communities and so we do not detract from the 
revenues that States need to carry out their responsibilities.
  The problem many of us feel is this: If we further extend this 
moratorium for 5 years and, a fortiori, if we do it forever, as the 
pending amendment proposes, we reduce substantially any incentive for 
those who have the expertise about e-retailing to participate in the 
negotiations we need to work out a fair system.
  The retailers over the Internet will say, well, wait a minute. We are 
worried we may have multiple sales tax claims. People may claim we owe 
in this State and owe in that State. How do we find out the best way to 
enforce it?
  By some conversations and negotiations.
  The effect of passing indefinite moratoria, first until 2001 and then 
to 2006 and then maybe ultimately forever, will be to undermine the 
possibility of discussions so that we can come up with a regime not 
where we tax the Internet but where we fairly allow State sales taxes 
to be collected irrespective of where the purchase is made.
  That is the goal. We do not want economic decisions to be made based 
on tax avoidance or tax advantage. We want them to be made based on the 
real economic activity. And, therefore, the legal system ought to be 
neutral as between physical stores in particular locations and 
retailers over the Internet.

                              {time}  1400

  In fact, today they are not. In fact, there is an advantage in buying 
over the Internet because of the difficulty of collecting the sales 
taxes and the uncertainties. What we are trying to achieve is a regime 
where there will be no such disadvantage, where the States will not be 
losing revenues. People have said, ``Well, not that much is sold over 
the Internet now.'' But the goal, of course, is greatly to increase 
that. That is a perfectly legitimate goal. That ought to be a matter of 
consumer choice. Whether to do it through the Internet or do it through 
a physical location, or go back and forth. But if we allow a tax 
disadvantage, then we will not reach that ideal.
  Mr. COX. Madam Chairman, I move to strike the requisite number of 
words.
  I rise in support of the amendment that is pending, the Chabot 
amendment.
  Madam Chairman, the preceding speaker began by asking whether anyone 
could connect the dots between the preceding speakers and the subject 
under discussion, then told us that the subject under discussion was 
whether we should have a 2-year extension or a 5-year extension of the 
existing moratorium. Whereas, in fact, the subject under discussion is 
the Chabot amendment, and the Chabot amendment, as the author made very 
plain when he explained it, would make the existing moratorium on 
discriminatory and multiple Internet taxes permanent. It is not a 
question of 2 years or 5 years. The subject under debate, the current 
amendment, and every Member should focus on this, is whether or not to 
make the existing moratorium permanent. So that is mistake number one 
that I wanted to correct. It is, we are not debating 2003 or 2006, we 
are debating permanent or not.
  The second thing that the gentleman said is that we should oppose 
either a 5-year extension or impliedly a permanent extension because 
States depend on sales taxes. But it is very, very important to repeat, 
again, as we have so many times in this debate, that neither the Chabot 
amendment, which is now under consideration, nor the underlying bill 
which it amends, nor the existing Cox-Wyden moratorium on Internet 
taxes, multiple and discriminatory taxes, even mentions sales taxes. 
Sales taxes are not covered by this amendment or by the legislation.
  The third thing that the speaker mentioned is that we need to give e-
tailers, that is, small businesses and businesses of all kinds that do 
business on the Internet, an incentive to negotiate on the sales tax 
question, which I think everyone in the Chamber appreciates is an 
important question. But doing something unfair, injurious to them and 
to the economy as a means of getting their attention and supposedly 
giving them an incentive to negotiate is hardly a legitimate means for 
this government to proceed. It is like offering to help you by driving 
a nail through your hand and then saying, I will pull it out.
  The ban on multiple taxes and on discriminatory taxes is one that 
ought to be made permanent because it is the right thing to do. The 
governors agreed with me when I originally wrote the legislation that 
we should not have taxes on Internet access and indeed they support a 
permanent ban on taxes on Internet access. Governor Leavitt, as the 
head of the National Governors Association, has long supported a 
permanent ban, not just one for 2 years or 5 years, or what have you, 
on Internet access taxes, because he, like so many of us is, worried 
about the digital divide or does not wish one further to develop.
  If you are interested in getting broader access to the new economy 
through the Internet to more Americans, we would like to keep the 
freight charge on getting on the Internet in the first place as low as 
possible. And certainly we should not have people piling on with new 
taxes.
  Lastly, let me add to what has already been said. That not a single 
State in the country has enacted legislation to tax the Internet. Not 
one. All of these attempts to tax the Internet are illegitimate acts of 
bureaucrats, tax-collecting bureaucrats in the States who are 
reinterpreting the tax laws of those jurisdictions to apply to the 
Internet which Al Gore had not even invented yet when these laws were 
passed, but not a single State out of all 50 has passed an Internet tax 
in this country. That is to say, the legislature never said, ``Here's 
the Internet, let's tax it.'' Instead, they have utility taxes or they 
have telecommunications taxes or line charges or various things that 
have been laying around that were designed for something else, and the 
bureaucrats, the tax administrators, have decided that they were going 
to reinterpret them cleverly to apply to the Internet, even though the 
legislature of the State never made any such determination.
  That is why Democratic Senator Ron Wyden and Republican Congressman 
Chris Cox first got together with the Internet Tax Freedom Act to say, 
no, there are plenty enough taxes on the books already. We do not want 
new taxes, either ones cooked up in the imaginations of tax bureaucrats 
or by legislatures that will single out the Internet for 
discrimination, for discriminatory treatment.
  There are only three kinds of taxes that are covered in this 
moratorium, and I will conclude by saying this, Madam Chairman. The 
first is a tax on Internet access. The second is a discriminatory tax, 
that singles out the Internet and taxes it when a main street business 
would not be taxed in the same way, or a street corner would not be 
taxed in the same way. The last is a multiple tax where two States 
would tax the same commerce. Since none of us is in favor of those 
things, we should be in favor of the Chabot amendment. I urge all my 
colleagues to vote for it.
  Ms. JACKSON-LEE of Texas. Madam Chairman, I move to strike the 
requisite number of words.
  Madam Chairman, might I say to my colleagues, it is interesting. We 
are actually having the debate that I believe would be more appropriate 
in each of our respective committees. I know that the Committee on 
Commerce is addressing this question. I know the National Governors 
Association has proposals that they would like us to consider. The 
Committee on the Judiciary is going to have hearings next week, or the 
week after next. Let me say to my colleagues, if we are concerned about 
the 10th amendment, here is what we can do today.
  Frankly, we could do nothing, which is not to have this bill on the 
floor of the House. But we can respect the fact that we do not have all 
the answers and

[[Page 7512]]

we could, as I had intended to do, to offer an amendment that ensures 
that the grandfathered States remain grandfathered, the 10 States that 
are the ones that have already addressed this question in the best way 
that they feel appropriate for garnering revenue in their respective 
States.
  Might I, for the record, indicate that those States include Texas, 
Connecticut, Montana, New Mexico, Ohio, South Carolina, Tennessee, 
Washington and Wisconsin. I do not know what other States may have 
pending legislation. We have an expiration date of 2001. We could 
continue that expiration date with the grandfathered-in states, we 
could continue to have hearings and we could determine the most 
appropriate manner to address this question. It is not often that 
Members of Congress want to cite editorials, but I think it is 
important to note that even The Washington Post, which I think is known 
for its progressiveness and certainly would be supportive of Internet 
companies and access to the Internet, recognizes that the States have 
the ability and the rights to make some of these decisions.
  For example, they cite one form that could be utilized, the answer is 
for the States to make their tax codes more uniform, not the rates but 
the definitions, what constitutes food, for example, which is often 
exempt, and that Congress should authorize an interstate compact. That 
is just one suggestion. But we are here with no suggestions and we have 
the Chabot amendment that wants to make it a permanent moratorium. They 
want to bankrupt cities and counties and States permanently. Texas is 
poised to lose $1 billion. Our State comptroller says that we are 
getting a $50 million revenue. Does everybody want to put all their 
eggs in the lottery basket? Is that what we are going to send States 
to, is that everybody has to depend on the big day in the lottery and 
see if they can get any small dollars out of that? I think that what we 
are doing is a great disservice. The amendment that I had intended to 
offer clearly spoke to the idea that States have found their way into 
structuring a tax system that responds to their needs.
  In the instance of Texas, we even gave relief to the first $25 access 
fee. I think that clearly shows that States have an intellect about 
this access fee and are not intending to gouge e-commerce. They want it 
to thrive. They want it to grow. I do not know how we could imagine 
that we could have a permanent moratorium without reasonable hearings 
and listening to the National Governors Association and answering the 
question.
  As I indicated, Madam Chairman, I had intended to offer this 
amendment because, as I gathered with my constituents, the concern was 
to ensure that we do not bankrupt States, period. I am encouraged by 
the debate on the Delahunt amendment, and I certainly do not want the 
Chabot perfecting amendment, permanent moratorium to pass, for I think 
we would be characterized as clearly doing business in the dark. We 
have no information that would warrant a permanent moratorium, a 
permanent bankruptcy of local jurisdictions or State jurisdictions.
  I would therefore like to ask the gentleman from Massachusetts (Mr. 
Delahunt), in light of my concern, whether his underlying amendment 
speaks to the issue, one, of the question of the grandfathered States, 
are they still included as the present legislation has them in the main 
bill?
  Mr. DELAHUNT. Madam Chairman, will the gentleman yield?
  Ms. JACKSON-LEE of Texas. I yield to the gentleman from 
Massachusetts.
  Mr. DELAHUNT. The Delahunt-Thune amendment just simply extends the 
current existing status quo for an additional 2 years upon the date of 
expiration of the current moratorium. That date is October 21, 2001.
  Ms. JACKSON-LEE of Texas. Which then, as it extends, it would include 
already present law which is the existing grandfathered states?
  Mr. DELAHUNT. It would include everything that is currently embraced 
by the existing moratorium.
  Ms. JACKSON-LEE of Texas. I thank the gentleman.
  Let me just say that in concluding, the expiration date is 2001. This 
gives us an extra 2 years beyond that, an opportunity for detailed work 
on this issue. I oppose the Chabot amendment. Vote for the Delahunt 
amendment and get us back to where we need to be.
  Madam Chairman, I rise to raise my amendment seeking to maintain the 
grandfather clause permitting states that already impose Internet 
access taxes, to continue to do so; which I intend not to offer in 
order to oppose the Chabot amendment which calls for a permanent 
moratorium and instead support the Delahunt amendment which extends 
current law with the grandfathered states remaining for two years.
  This bill seeks to change the current five-year moratorium 
prohibiting states or political subdivisions from imposing taxes on 
transactions conducted over the Internet. I do not support extending 
the moratorium through 2006 because it bars states from collecting much 
needed tax revenue.
  Under current law, there is a limited moratorium on state and local 
Internet access taxes as well as multiple and discriminatory taxes 
imposed on Internet transactions, subject to a grandfather clause 
permitting states that already tax Internet access to continue such 
practice.
  My amendment would restore the grandfathering clause of present state 
practices that permit the taxation of Internet access charges. The 
current moratorium is scheduled to expire on October 21, 2001, and was 
merely designed as an interim device to allow a commission to study the 
problem of Internet taxation.
  There is simply no reason to change the law at this time. For this 
reason, I was concerned that this particular bill was rushed for 
consideration at a full judiciary mark-up.
  My amendment will allow states to maintain the ability to generate 
vital tax revenues that fund essential state programs for the public. 
Many states across our nation already rely on these crucial revenue 
streams.
  The ability of states to decide and implement their own tax policies 
is their right. The Congress should not enact this legislation without 
voting for my amendment which would allow the states of Connecticut, 
Montana, New Mexico, North Dakota, Ohio, South Dakota, Tennessee, 
Texas, Washington, and Wisconsin to continue the funding of vital 
services for their states.
  Madam Chairman, we should not support a bill that champions the 
growth of an industry on the backs of hard working Americans who often 
do not directly benefit from the technological revolution. We must 
first address the digital divide in our country before we enact another 
measure of corporate welfare.
  Mr. STEARNS. Madam Chairman, I move to strike the requisite number of 
words.
  Madam Chairman, I rise in support of the Chabot amendment. I would 
say to those who are against this, that there are other ways to tax 
these products once they get into the State of jurisdiction, either 
through a tax on UPS or a tax on Federal Express, there are lots of 
other ways to tax it. I submit also the way the tax structure is from 
State to State is so complicated that you cannot even understand how to 
even tax it.
  So I think the moratorium, until we figure it out, is the way to go.
  I had an amendment, Madam Chairman, to extend the 19-member advisory 
commission on electronic commerce. That is the proper way to do it. 
This commission, as we know, had the formidable task of studying the 
impact of sales and use tax collection on Internet sales. They made 
some recommendations. I am disappointed, of course, that the commission 
failed to gain the two-thirds majority necessary for a formal 
recommendation to Congress. As a result of the commission's impasse and 
procedural wrangling, several of the most important questions the 
commission was given to solve, they could not answer. For example, 
whether Congress should mandate simplification of sales and use tax 
administration and whether the existing nexus standards for interstate 
commerce should be overturned still have not been solved. That is why I 
thought the amendment was appropriate for this debate this afternoon 
which was not in order, the parliamentarian said it was not in order, 
an amendment to offer to revise and reconvene the 19-member advisory 
commission on electronic commerce in order to finish the task that they 
were assigned originally.

[[Page 7513]]

  The underlying bill, the Chabot bill, which is to extend the 
moratorium forever and the Cox bill, which is to go for 5 years, I 
support in both cases. Without this 19-member commission reconvened, I 
do not think they can really start to understand some of the major 
questions of the Internet, mainly, the simplification of sales and use 
tax, and how we are going to even tax the Internet. So until we do 
that, we should have a moratorium on this. That is why I am very 
supportive of this Chabot amendment.
  This goes to a larger question. If, in fact, we cannot determine to 
simplify taxes through the Internet and understand it, maybe that goes 
to the overall question of reforming the tax code in America, which 
would be either a flat tax or a sales tax. I submit a sales tax is 
based upon taxing Americans on their consumption rather than how hard 
they work. That would be done on a State-by-State basis, and they would 
make that decision. I submit, also, that a moratorium on the tax on the 
Internet does not preclude the States from taxing within their State on 
products that are brought in through either location or through Federal 
Express or UPS and things of that sort. I think the actual way to 
handle this on a larger measure is to reestablish the 19-member 
advisory commission on electronic commerce, let them finish the task of 
determining how to simplify taxes and whether there should be taxes on 
the Internet, finish their job and present their recommendations to 
Congress, and hopefully the whole landscape of electronic commerce and 
the Internet will become more obvious, more mainstream and technology 
will catch up, and the answers that we are trying to grapple with this 
afternoon, we will be able to solve better.
  In the meantime, I think we should support the Chabot amendment. I 
urge adoption of it. Madam Chairman, I will draw up as a separate bill 
the idea of extending the 19-member commission to study the 
simplification of taxes on the Internet. I urge all my colleagues to 
support my bill.

                              {time}  1415

  Mr. KASICH. Madam Chairman, I move to strike the requisite number of 
words.
  Madam Chairman, I find myself very frustrated with this discussion, 
because it is my sense that in a lot of regard, we have missed the 
point of the debate about the Internet. When I listen to some of my 
colleagues talk about the need to be able to collect all these 
revenues, I almost think of the Pharisees in the Bible who were so hung 
up on the micro that they, in fact, missed the macro issues at hand.
  The Internet is the engine that is helping us to generate, frankly, 
unprecedented economic growth, certainly unprecedented economic growth 
over the period of the last several decades. The Internet has driven 
the growth of jobs, a million people are now employed in a sector that 
did not even exist 5 years ago. It is not just driving jobs in the 
sector affecting the Internet, but if we just look at that one, there 
are 1 million people who did not have jobs in this area just a few 
years ago. It is driving the growth of wealth. What we see happening in 
America for the first time in a long time is that this growth in 
productivity and this growth in wealth is not just affecting people at 
the top, but it is affecting all Americans. Everybody is better off 
today as a result of the growth of this economy and the growth of 
productivity.
  What this growth in productivity has done is to lower inflation. If 
one is an American and one is trying to figure out how to think about 
the economy, look at productivity. Productivity is the ability of a 
worker to produce more in the same amount of time, squeezing out 
inflation, which gives us real economic growth and a growth in wages.
  That is what has been happening in America. The single largest 
contributor to the growth in productivity, the growth in wealth, and 
the growth in wages for Americans at all levels has been information 
technology, the Internet. Why would we try to tax something, why would 
we try to abuse something, why would we try to limit something that is 
generating for us unprecedented growth, unprecedented wealth, 
unprecedented opportunity, and unprecedented individual power?
  When we look at the Internet and what it offers in the area of health 
care and education, the benefits can be unlimited. Just yesterday, as a 
result of the computer and its ability to, in an exponential factor, be 
able to calculate, just yesterday it was announced that we have been 
able to isolate the gene that affects Down's syndrome. How many mothers 
and fathers in this country have wished that we had isolated the gene 
for Down's syndrome decades ago?
  There are a lot of young staffers that watch this debate on the House 
floor, and this Internet is about you, it is about the future, it is 
about your power and your children's power.
  People say we do not collect enough revenue. We are going to lose 
revenue growth. Madam Chairman, 46 States are running surpluses, they 
totaled $7.5 billion from 1992 to 1998, State revenues grew by 45 
percent, that is more than the growth of inflation and population 
combined. The States are awash in revenue. Government at all levels is 
growing too big, not just in Washington, but at the State level and the 
local level, and it should be the mission of government in the 21st 
century to break the hold of government, retrench government and get 
government to not do what we can do for ourselves, and only to perform 
those functions that we cannot do for ourselves. If we tax something, 
we get less of it. That is precisely what we would do if we began to 
tax an infant industry that offers us limited potential.
  Frankly, where we need to go is to let this industry grow unabated, 
to not have access fees and to tax the sales on the Internet. Let it 
grow. Let it realize its complete potential, because its potential 
affects each and every one of us in a very positive way. At some point, 
it will be necessary to look at a tax system in the 21st century that 
will be consistent with the growth of the new economy. To apply a 20th 
or a 19th century tax system to this new economy is like putting the 
wheels from a Volkswagen on an Indy racing car. We want that car to go 
as fast as it can, and our tax system in America ought to be one that 
is consistent with economic growth, which frankly leads us in the 
direction of consumption taxes, taxes that reward savings and 
investment, that is consistent with the new growth and new economy and 
the growth and the potential that we have.
  Madam Chairman, I say to my colleagues, we should not have access 
fees, all sorts of taxes on this Internet. Let us extend the gentleman 
from Ohio's amendment. Let us hold up on taxing the Internet and let us 
give technology and individuals a chance.
  Mr. ISTOOK. Madam Chairman, I have an amendment at the desk on behalf 
of myself and the gentleman from Maryland (Mr. Cardin).
  Mr. GOODLATTE. Madam Chairman, I reserve a point of order.
  The CHAIRMAN pro tempore (Mrs. Biggert). The gentleman from Virginia 
(Mr. Goodlatte) reserves a point of order.
  There is already an amendment pending. The Chairman of the Committee 
of the Whole has to first dispose of the amendments pending.
  Does the gentleman wish to speak on this amendment?
  Mr. ISTOOK. Madam Chairman, I wish to speak on my amendment and to 
offer the amendment for consideration.
  The CHAIRMAN pro tempore. Is there objection to the request of the 
gentleman from Oklahoma to offer an amendment notwithstanding the 
pendency of another amendment?
  Mr. GOODLATTE. Madam Chairman, I object to the consideration of 
another amendment when there are two amendments pending on the floor.
  The CHAIRMAN pro tempore. Objection is heard.
  Does the gentleman from Oklahoma (Mr. Istook) wish to speak on this 
amendment?
  Mr. ISTOOK. Madam Speaker, I wish to offer my amendment which is at 
the desk. If there are no further speakers, I believe it is proper to 
proceed.
  Mr. GOODLATTE. Madam Chairman, I would insist upon my point of order.

[[Page 7514]]

  The CHAIRMAN pro tempore. The Chair would first put the question on 
the pending amendment. Another amendment is not in order at this point.
  Are there any other speakers on the pending amendment?
  Mr. LEVIN. Madam Chairman, there is a poignant scene in Homer's epic, 
The Odyssey, that bears mention as we consider the legislation before 
the House today. On his journey home, Odysseus' ship must pass by the 
island of the Sirens, whose beguiling song has the power to hold men 
spellbound to such an extent that the sea around their island is heaped 
with wrecks of ships that have fallen under their spell. Forewarned of 
the danger ahead, Odysseus stops up the ears of his crew with wax so 
they cannot hear the Sirens' song, and has himself bound to the ship's 
mast, and thus safely makes the passage.
  I was reminded of this ancient narrative when I read the bill before 
us today. The legislation we are considering extends the Internet tax 
moratorium until October 21, 2006. It seeks to bind our course when the 
only certainty is that we haven't the faintest idea of what lies ahead. 
E-commerce did not exist six years ago. Who know what it will look like 
six years from now? Some projections show that on-line sales could 
exceed $300 billion a year by 2002. We have not adequately explored the 
ramifications of this legislation or considered the concerns of the 
vast majority of the nation's governors who seek a mechanism to level 
the playing field between the bricks-and-mortar shops of Main Street 
and the clicks-and-mortar shops of cyberspace. But the authors of this 
legislation have stopped their ears with wax. There were not even any 
hearings on this bill.
  We need to chart a reasonable course. There is not yet a consensus on 
what course we should set on the issues of Internet taxation and state 
tax simplification. Clearly there is a need for an extension of the 
moratorium, and I actively support an extension of two years. But to 
stifle action for six years regardless of what might be the winds of 
change is not a prudent navigation of public policy. A two-year 
extension of the moratorium would provide us additional and hopefully 
sufficient time to resolve outstanding issues of considerable 
complexity. We can always revisit this issue and grant another 
extension if conditions warrant it. I therefore urge my colleagues to 
support the Delahunt amendment, which extends the current moratorium 
until October 21, 2003. We shouldn't legislate without a compass on an 
issue of this importance.
  The CHAIRMAN pro tempore. Are there any speakers on this amendment? 
The Chair will put the question on the pending amendment.
  The question is on the amendment offered by the gentleman from Ohio 
(Mr. Chabot) to the amendment offered by the gentleman from 
Massachusetts (Mr. Delahunt).
  The question was taken; and the Chairman pro tempore announced that 
the noes appeared to have it.
  Mr. CHABOT. Madam Chairman, I demand a recorded vote, and pending 
that, I make a point of order that a quorum is not present.
  The CHAIRMAN pro tempore. Pursuant to the House Resolution 496, 
further proceedings on the amendment offered by the gentleman from Ohio 
(Mr. Chabot) and on the pending first degree amendment will be 
postponed.
  The point of no quorum is considered withdrawn.


                    Amendment Offered by Mr. Istook

  Mr. ISTOOK. Madam Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Istook:
       After section 3 insert the following:

     SEC. 4. STREAMLINED NON-MULTIPLE AND NON-DISCRIMINATORY TAX 
                   SYSTEMS.

       It is the Sense of Congress that a State tax relating to 
     electronic commerce, to avoid being multiple or 
     discriminatory, should include the following:
       (1) a centralized, one-step, multi-state registration 
     system for sellers;
       (2) uniform definitions for goods or services that might be 
     included in the tax base;
       (3) uniform and simple rules for attributing transactions 
     to particular taxing jurisdictions;
       (4) uniform rules for the designation and identification of 
     purchasers exempt from the Non-multiple and Non-
     discriminatory tax system, including a database of all exempt 
     entities and a rule ensuring that reliance on such database 
     shall immunize sellers from liability;
       (5) uniform procedures for the certification of software 
     that sellers rely on to determine Non-multiple and Non-
     discriminatory taxes and taxability;
       (6) uniform bad debt rules;
       (7) uniform tax returns and remittance forms;
       (8) consistent electronic filing and remittance methods;
       (9) state administration of all Non-multiple and Non-
     discriminatory taxes;
       (10) uniform audit procedures;
       (11) reasonable compensation for tax collection that 
     reflects the complexity of an individual state's tax 
     structure, including the structure of its local taxes;
       (12) exemption from use tax collection requirements for 
     remote sellers falling below a specified de minimis 
     threshold;
       (13) appropriate protections for consumer privacy; and
       (14) such other features that the member states deem 
     warranted to remote simplicity, uniformity, neutrality, 
     efficiency, and fairness.

  Mr. ISTOOK (during the reading). Madam Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
Record.
  The CHAIRMAN pro tempore. Is there objection to the request of the 
gentleman from Oklahoma?
  There was no objection.
  The CHAIRMAN pro tempore. Considering the remaining time, the 
gentleman from Oklahoma (Mr. Istook) is recognized for 3 minutes in 
support of his amendment, and the Chair will recognize a Member opposed 
for 3 minutes.
  Mr. GOODLATTE. Madam Chairman, I reserve a point of order on the 
amendment.
  The CHAIRMAN pro tempore. The gentleman from Virginia (Mr. Goodlatte) 
reserves a point of order.


                         Parliamentary Inquiry

  Mr. FRANK of Massachusetts. Madam Chairman, parliamentary inquiry.
  The CHAIRMAN pro tempore. The gentleman will state it.
  Mr. FRANK of Massachusetts. Is there a copy of this available? We do 
not have a copy over here.
  Mr. ISTOOK. Madam Chair, I will make sure an additional copy is sent 
to the gentleman immediately.
  Mr. FRANK of Massachusetts. The gentleman could e-mail it to me.
  Mr. ISTOOK. Madam Chair, I would if I had a terminal right here.
  The CHAIRMAN pro tempore. The gentleman from Oklahoma (Mr. Istook) is 
recognized for 3 minutes.
  Mr. ISTOOK. Madam Chairman, this is the amendment that has the 
support of the governors who have serious concerns about this 
legislation, and also of the retail merchants who seek nothing but 
fairness in this. We should not discriminate against those who do 
business via the Internet, nor should we discriminate against those who 
do business outside of the Internet.
  Now, as has been brought forward, the big problem with the underlying 
legislation is that it tries to take an easy thing, saying we do not 
discriminate against the Internet and ignore the difficult task of 
resolving the difficulties of equal treatment, a level playing field.
  As has been proposed by the governors, and proposed by retail 
merchants, and we have letters of endorsement from them, we need 
something that they know is a road map. This is how we do it uniformly 
and fairly. As the legislation sense of Congress specifies, it would be 
through a centralized, multi-State registration system for sellers, 
uniform definitions for goods and services that are subjected to a 
potential tax; uniform and simple rules for attributing transactions to 
one jurisdiction and one jurisdiction only, so there would be no 
multiple taxation and no discriminatory taxation; similarly, uniformity 
which the States frequently do through the Commission on uniform laws.
  Madam Chairman, this is simply Congress trying to give a road map. 
That is what people have been crying out for. We want to do things in a 
fair, nondiscriminatory fashion. Just give us some assistance in doing 
so instead of saying no. That is what this is. It is a sense of 
Congress. It is not binding, but it certainly gives the States and 
retailers guidance. I am pleased that it has support of the E-Fairness 
Coalition, the National Retail Merchants Federation, the International 
Mass Retail Association, governors and others with an issue at stake in 
this. After all, Madam Chairman, the underlying registration, who does 
it restrict? It restricts the governors, the State legislators, the 
mayors, the city council members, the

[[Page 7515]]

county commissioners. It basically says, we are not going to let you 
make decisions on your own taxes in your own State. That violates the 
10th amendment to the Constitution, reserving the rights of the States 
which do not properly belong to the Federal Government.
  This amendment would go a great deal forward in fixing the underlying 
problems that this legislation attempts to ignore. Madam Chairman, I 
think that it is hard to imagine how anybody would oppose this. We have 
certainly worked diligently with the Parliamentarian to make sure that 
it is in order and within the House rules of germaneness and all of the 
other rules, and I certainly believe that it is time that we move ahead 
with its adoption.
  Mr. NADLER. Madam Chairman, I rise to strike the last word.
  The CHAIRMAN pro tempore. Is the gentleman in opposition?
  Mr. NADLER. No, Madam Chairman, I am in support.
  The CHAIRMAN pro tempore. Is there a Member in opposition?
  Mr. GOODLATTE. Madam Chairman, I rise in opposition.


                         Parliamentary Inquiry

  Mr. NADLER. Madam Chairman, parliamentary inquiry.
  The CHAIRMAN pro tempore. The gentleman will state it.
  Mr. NADLER. When we are under the 5-minute rule, what rule says a 
Member has to be in support or opposition to be recognized first?
  The CHAIRMAN pro tempore. The Chair stated prior to debate on the 
amendment that the gentleman would speak in support of his amendment 
for 3 minutes and then the opposition would have 3 minutes.
  Mr. NADLER. Madam Chair, I do not recall any such unanimous consent 
request.
  The CHAIRMAN pro tempore. The Chair exercised her discretion to 
divide the time because of the shortness of time remaining under the 
rule. That is the ruling of the Chair and there is precedent for it.
  Mr. NADLER. Madam Chairman, in light of the fact that the other side 
of the aisle refused a unanimous consent request to have a reasonable 
limit on debate on the last amendment so that we can have proper time 
here, and there is no unanimous consent request, I believe that the 
Chair is not in order in using discretion to impose a time limit like 
that.
  The CHAIRMAN pro tempore. It has been the long-standing practice of 
the Chair in its discretion to divide the time equally when there is a 
time limit placed on the bill.
  Mr. NADLER. Could the Chair specify the rule that permits that, 
please, in the absence of unanimous consent.
  The CHAIRMAN pro tempore. It is the practice of the Chair under 
modern recorded precedent.


                         Parliamentary Inquiry

  Mr. FRANK of Massachusetts. Parliamentary inquiry, Madam Chair.
  The CHAIRMAN pro tempore. The gentleman will state it.
  Mr. FRANK of Massachusetts. Officially, what time is it now?
  The CHAIRMAN pro tempore. There is 1 minute remaining.
  Mr. FRANK of Massachusetts. So 1 minute remains to debate, and then 
the vote. I thank the Chairperson.

                              {time}  1430

  The CHAIRMAN pro tempore (Mrs. Biggert). The gentleman from Virginia 
(Mr. Goodlatte) is recognized in opposition for the remainder of the 
time.
  Mr. GOODLATTE. Madam Chairman, I rise in strong opposition to this 
amendment.
  Madam Chairman, this is extraneous to the purpose of this bill. This 
bill is not about sales taxes on the Internet. The gentleman has 
attempted to craft this in such a way that it does not cover sales 
taxes, but this is an issue that we have not gotten into.
  We have announced that we are going to hold hearings on this. We 
would love to have the gentleman's participation in the process, but 
this amendment is not germane to the legislation at hand.
  I strongly urge my colleagues not to adopt an amendment which has not 
been examined or properly debated.
  Madam Chairman, I yield back the balance of my time.
  Mr. NADLER. Madam Chairman.
  The CHAIRMAN pro tempore. The gentleman from New York.
  Mr. NADLER. Madam Chairman, the whole point of this debate is that 
when the Internet Moratorium Act was passed 2\1/2\ years ago, the 
commission was charged with recommending a fair and equitable and 
nonburdensome way of giving equal taxation for the Internet and non-
Internet, insofar as State sales taxes are concerned. This amendment is 
essential so when we are extending the Internet, whether for 2 years or 
5 years, or whether we are extending the moratorium, whether for 2 
years or 5 years or permanently, we at least have some basis for saying 
we are going to look also at the entire question which is intimately 
associated with this question.
  Mr. CARDIN. Madam Chairman, yesterday I received a fax in my office 
from an organization supporting this bill. I expect each member of the 
House received the same fax.
  Across the top of the page, in big, bold letters, the fax read, ``NO 
MORE TAXES! VOTE ``YES'' ON H.R. 3709.''
  The text of the message says that the bill is needed because it will 
``allow Americans to continue to make purchases without overreaching 
taxes.'' The problem with the message is that it adds to the confusion 
and misinformation that surrounds this issue.
  Anyone who reads the message would reasonably conclude that the 
purchases of goods over the Internet are currently exempt from State 
sales and use taxes, and that the moratorium will prevent the 
imposition of any taxes on these transactions.
  The problem is that all but five states already have taxes on the 
books that legally apply to purchases made over the Internet. For 
reasons arising under the 1992 Supreme Court decision in the case Quill 
v. North Dakota, those taxes are not usually paid or collected. The 
most important issue considered--but not resolved--by the Advisory 
Commission on Electronic Commerce, was the question of how to continue 
the tremendous growth of the Internet as an economic force while 
assuring a level playing field between different forms of retailers.
  With more than 6,500 state and local sales and use tax regimes across 
the country, there is no question that simplification and uniformity 
are desperately needed. The massive complexity and inefficiency of the 
current system imposes an unreasonable burden on the retailers who are 
required, because they have ``physical nexus'' in jurisdictions across 
the country. At the same time, it presents an absurd challenge to on-
line or mail order retailers who compete with ``brick and mortar'' 
retailers.
  There is a growing consensus that the states must develop a 
simplified tax system, along the lines of the Uniform Commercial Code, 
that will make compliance feasible. I had the benefit of hearing a full 
discussion of these issues at a meeting two weeks ago with business 
leaders, state tax officials, and the chairs of the tax-writing 
committees in Maryland's State Legislature. Coming out of that meeting, 
I am convinced that it is in the interest of fairness to all retailers, 
as well as of the state and local governments which depend on the 
revenues generated by sales taxes for education and law enforcement, 
for us to resolve this problem.
  The amendment that I have offered with the gentleman from Oklahoma, 
Mr. Istook, expresses the sense of Congress that the States should 
develop a streamlined, non-multiple and non-discriminatory tax system. 
This amendment is a needed expression of our understanding of the need 
both to protect the crucial revenue sources of the states, as well as 
to move toward a level playing field between all retailers, regardless 
of whether they are on-line or in the neighborhood.
  We had hoped to include in the amendment language expressing the 
sense of the Congress that once the states develop such a non-multiple, 
non-discriminatory tax system, the bar against fair application of the 
sales taxes presented by the Quill decision would be removed. The 
language we had hoped to propose would have expressed Congress's 
finding ``that if states adopt the streamlined system . . ., such a 
system does not place an undue burden on interstate commerce or burden 
the growth of electronic commerce and related technologies in any 
material way.'' Unfortunately, to comply with the germaneness 
requirements of the House rules, we were forced to drop that language.
  I urge support for the amendment as a necessary step in the 
continuing effort to adjust the existing tax system to reflect the new 
reality of the Internet economy.
  The CHAIRMAN pro tempore. The time for consideration of this bill

[[Page 7516]]

under the 5-minute rule as established by House Resolution 496 has 
expired.
  The CHAIRMAN pro tempore. The Chair will now put the question on the 
pending amendment.
  The question is on the amendment offered by the gentleman from 
Oklahoma (Mr. Istook).
  The question was taken; and the Chairman pro tempore announced that 
the ayes appear to have it.
  Mr. CHABOT. Madam Chairman, I demand a recorded vote.
  The CHAIRMAN pro tempore. Pursuant to House Resolution 496, further 
proceedings on the amendment offered by the gentleman from Oklahoma 
(Mr. Istook) will be postponed.


        Sequential Votes Postponed in the Committee of the Whole

  The CHAIRMAN pro tempore. Pursuant to House Resolution 496, 
proceedings will now resume on those amendments on which further 
proceedings were postponed in the following order:
  The second degree amendment offered by Mr. Chabot of Ohio;
  First degree amendment offered by Mr. Delahunt of Massachusetts;
  Amendment offered by Mr. Istook of Oklahoma.
  The Chair will reduce to 5 minutes the time for any electronic vote 
after the first vote in this series.


    Amendment Offered By Mr. Chabot to the Amendment offered by Mr. 
                                Delahunt

  The CHAIRMAN pro tempore. The pending business is the demand for a 
recorded vote on the amendment offered by the gentleman from Ohio (Mr. 
Chabot) to the amendment offered by the gentleman from Massachusetts 
(Mr. Delahunt) on which further proceedings were postponed and on which 
the noes prevailed by voice vote.
  The Clerk will designate the amendment to the amendment.
  The Clerk designated the amendment to the amendment.


                             Recorded Vote

  The CHAIRMAN pro tempore. A recorded vote has been demanded.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 90, 
noes 336, not voting 8, as follows:

                             [Roll No. 155]

                                AYES--90

     Aderholt
     Barr
     Barrett (NE)
     Bartlett
     Bilbray
     Boehner
     Bono
     Burton
     Cannon
     Chabot
     Chambliss
     Chenoweth-Hage
     Coburn
     Collins
     Combest
     Cook
     Cox
     Crane
     Cunningham
     Davis (VA)
     DeLay
     DeMint
     Diaz-Balart
     Dickey
     Doolittle
     Fletcher
     Forbes
     Fossella
     Franks (NJ)
     Goode
     Goodlatte
     Goodling
     Graham
     Hastings (WA)
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hilleary
     Horn
     Kasich
     Kingston
     Kuykendall
     Linder
     Martinez
     McCollum
     McInnis
     McKinney
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Nethercutt
     Packard
     Pease
     Peterson (PA)
     Pitts
     Pombo
     Radanovich
     Rogan
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Salmon
     Scarborough
     Schaffer
     Sensenbrenner
     Shadegg
     Shays
     Sherwood
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stabenow
     Stearns
     Sununu
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Toomey
     Upton
     Walden
     Weldon (FL)
     Weller
     Wolf

                               NOES--336

     Abercrombie
     Ackerman
     Allen
     Andrews
     Archer
     Armey
     Baca
     Bachus
     Baird
     Baker
     Baldacci
     Baldwin
     Ballenger
     Barcia
     Barrett (WI)
     Barton
     Bass
     Bateman
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilirakis
     Bishop
     Blagojevich
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Bonilla
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Bryant
     Burr
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Capps
     Capuano
     Cardin
     Carson
     Castle
     Clay
     Clayton
     Clement
     Clyburn
     Coble
     Condit
     Conyers
     Cooksey
     Costello
     Coyne
     Cramer
     Crowley
     Cubin
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     Deal
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Ewing
     Farr
     Filner
     Foley
     Ford
     Fowler
     Frank (MA)
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Gordon
     Goss
     Granger
     Green (TX)
     Green (WI)
     Greenwood
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hansen
     Hastings (FL)
     Hayes
     Hill (IN)
     Hilliard
     Hinchey
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Holt
     Hooley
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inslee
     Isakson
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Jones (OH)
     Kanjorski
     Kaptur
     Kelly
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kleczka
     Klink
     Knollenberg
     Kolbe
     Kucinich
     LaFalce
     LaHood
     Lampson
     Lantos
     Largent
     Larson
     Latham
     LaTourette
     Lazio
     Leach
     Lee
     Levin
     Lewis (CA)
     Lewis (KY)
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Manzullo
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCrery
     McDermott
     McGovern
     McHugh
     McIntosh
     McIntyre
     McKeon
     McNulty
     Meehan
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Moran (KS)
     Morella
     Murtha
     Myrick
     Nadler
     Napolitano
     Neal
     Ney
     Northup
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Ose
     Owens
     Oxley
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Pelosi
     Peterson (MN)
     Petri
     Phelps
     Pickering
     Pickett
     Pomeroy
     Porter
     Portman
     Price (NC)
     Pryce (OH)
     Quinn
     Rahall
     Ramstad
     Rangel
     Regula
     Reyes
     Reynolds
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogers
     Rothman
     Roukema
     Roybal-Allard
     Rush
     Ryun (KS)
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sanford
     Sawyer
     Saxton
     Schakowsky
     Scott
     Serrano
     Sessions
     Shaw
     Sherman
     Shimkus
     Shows
     Shuster
     Sisisky
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Spence
     Spratt
     Stark
     Stenholm
     Strickland
     Stump
     Stupak
     Sweeney
     Talent
     Tanner
     Tauscher
     Taylor (MS)
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Thune
     Thurman
     Tiahrt
     Tierney
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Vento
     Visclosky
     Vitter
     Walsh
     Wamp
     Waters
     Watkins
     Watt (NC)
     Watts (OK)
     Waxman
     Weiner
     Weldon (PA)
     Wexler
     Weygand
     Whitfield
     Wicker
     Wilson
     Woolsey
     Wu
     Wynn
     Young (AK)
     Young (FL)

                             NOT VOTING--8

     Campbell
     Fattah
     Kennedy
     Lewis (GA)
     Lucas (OK)
     Meek (FL)
     Moran (VA)
     Wise

                              {time}  1455

  Messrs. SPENCE, OLVER, McKEON, BERMAN and PICKERING changed their 
vote from ``aye'' to ``no.''
  Messrs. HEFLEY, GOODLATTE, DAVIS of Virginia, PACKARD, BURTON of 
Indiana, and Ms. McKINNEY changed their vote from ``no'' to ``aye.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.


                   Amendment Offered by Mr. Delahunt

  The CHAIRMAN pro tempore (Mrs. Biggert). The question is on the 
amendment offered by the gentleman from Massachusetts (Mr. Delahunt).
  The question was taken; and the Chairman pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

  Mr. DELAHUNT. Madam Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The CHAIRMAN pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 208, 
noes 219, not voting 8, as follows:

                             [Roll No. 156]

                               AYES--208

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baker
     Baldacci
     Baldwin
     Barrett (WI)
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Boehlert
     Bonior
     Borski
     Boswell
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Burr
     Capps
     Capuano
     Cardin
     Carson
     Castle
     Clay
     Clayton
     Clement
     Clyburn
     Coble
     Condit
     Conyers
     Coyne
     Cramer
     Crowley
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeGette
     Delahunt
     DeLauro
     Dickey

[[Page 7517]]


     Dicks
     Dixon
     Doggett
     Dooley
     Doyle
     Duncan
     Edwards
     Emerson
     Engel
     Etheridge
     Evans
     Farr
     Filner
     Foley
     Ford
     Fowler
     Frank (MA)
     Frost
     Ganske
     Gephardt
     Gillmor
     Gonzalez
     Gordon
     Green (TX)
     Greenwood
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hastings (FL)
     Hill (IN)
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Hoyer
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jenkins
     John
     Johnson, E. B.
     Jones (NC)
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     Latham
     Leach
     Lee
     Levin
     Lewis (GA)
     Lewis (KY)
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McDermott
     McGovern
     McKinney
     McNulty
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Moore
     Moran (KS)
     Myrick
     Nadler
     Napolitano
     Neal
     Ney
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Peterson (MN)
     Pickett
     Porter
     Price (NC)
     Pryce (OH)
     Rahall
     Rangel
     Regula
     Reyes
     Rodriguez
     Roemer
     Rogers
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sanford
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Shows
     Shuster
     Skelton
     Slaughter
     Snyder
     Spratt
     Stark
     Stenholm
     Stupak
     Tanner
     Tauscher
     Thompson (CA)
     Thompson (MS)
     Thune
     Thurman
     Tierney
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Vento
     Visclosky
     Waters
     Watkins
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Weygand
     Whitfield
     Wilson
     Woolsey
     Wynn

                               NOES--219

     Aderholt
     Archer
     Armey
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehner
     Bonilla
     Bono
     Boucher
     Bryant
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Chabot
     Chambliss
     Chenoweth-Hage
     Coburn
     Collins
     Combest
     Cook
     Cooksey
     Costello
     Cox
     Crane
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeFazio
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dingell
     Doolittle
     Dreier
     Dunn
     Ehlers
     Ehrlich
     English
     Eshoo
     Everett
     Ewing
     Fletcher
     Forbes
     Fossella
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Gejdenson
     Gibbons
     Gilchrest
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Granger
     Green (WI)
     Gutknecht
     Hansen
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hilleary
     Hilliard
     Hobson
     Hoekstra
     Hooley
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inslee
     Isakson
     Jefferson
     Johnson (CT)
     Johnson, Sam
     Kasich
     Kelly
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     LaTourette
     Lazio
     Lewis (CA)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lucas (KY)
     Manzullo
     Martinez
     McCarthy (NY)
     McCollum
     McCrery
     McHugh
     McInnis
     McIntosh
     McIntyre
     McKeon
     Meehan
     Meeks (NY)
     Menendez
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Mollohan
     Morella
     Murtha
     Nethercutt
     Northup
     Norwood
     Ose
     Oxley
     Packard
     Pease
     Pelosi
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Pombo
     Pomeroy
     Portman
     Quinn
     Radanovich
     Ramstad
     Reynolds
     Riley
     Rivers
     Rogan
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Simpson
     Sisisky
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Spence
     Stabenow
     Stearns
     Strickland
     Stump
     Sununu
     Sweeney
     Talent
     Tancredo
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Toomey
     Towns
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Wicker
     Wolf
     Wu
     Young (AK)
     Young (FL)

                             NOT VOTING--8

     Bachus
     Campbell
     Fattah
     Gekas
     Lucas (OK)
     Meek (FL)
     Moran (VA)
     Wise

                              {time}  1504

  Mr. SIMPSON, Mr. HILLIARD, and Mrs. McCARTHY of New York changed 
their vote from ``aye'' to ``no''.
  Mr. ABERCROMBIE and Mr. Edwards changed their vote from ``no'' to 
``aye''.
  So the amendment was rejected.
  The result of the vote was announced as above recorded.


                    Amendment Offered By Mr. Istook

  The CHAIRMAN pro tempore (Mrs. Biggert). The pending business is the 
demand for a recorded vote on the amendment offered by the gentleman 
from Oklahoma (Mr. Istook) on which further proceedings were postponed 
and on which the ayes prevailed by voice vote.
  The Clerk will designate the amendment.
  The Clerk designated the amendment.


                             Recorded Vote

  The CHAIRMAN pro tempore. A recorded vote has been demanded.
  A recorded vote was ordered.
  The CHAIRMAN pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 289, 
noes 138, not voting 7, as follows:

                             [Roll No. 157]

                               AYES--289

     Ackerman
     Aderholt
     Allen
     Andrews
     Baca
     Bachus
     Baird
     Baker
     Baldacci
     Baldwin
     Ballenger
     Barcia
     Barrett (NE)
     Barrett (WI)
     Barton
     Bateman
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Bilirakis
     Bishop
     Blagojevich
     Blumenauer
     Boehlert
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Bryant
     Burton
     Buyer
     Capps
     Cardin
     Carson
     Castle
     Chambliss
     Chenoweth-Hage
     Clay
     Clayton
     Clement
     Clyburn
     Coburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cubin
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Dooley
     Doyle
     Duncan
     Dunn
     Edwards
     Ehlers
     Emerson
     Engel
     Eshoo
     Etheridge
     Evans
     Ewing
     Farr
     Filner
     Foley
     Ford
     Fowler
     Frank (MA)
     Frost
     Gallegly
     Ganske
     Gejdenson
     Gephardt
     Gilchrest
     Gillmor
     Gonzalez
     Gordon
     Green (TX)
     Greenwood
     Hall (OH)
     Hall (TX)
     Hastings (FL)
     Hastings (WA)
     Hill (IN)
     Hilleary
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Hoekstra
     Holden
     Holt
     Hooley
     Hostettler
     Hoyer
     Hulshof
     Hutchinson
     Hyde
     Isakson
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson, E. B.
     Jones (NC)
     Jones (OH)
     Kanjorski
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kleczka
     Klink
     Kucinich
     LaFalce
     LaHood
     Lampson
     Lantos
     Largent
     Larson
     Latham
     LaTourette
     Leach
     Lee
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCrery
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meeks (NY)
     Menendez
     Metcalf
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Moran (KS)
     Morella
     Murtha
     Myrick
     Nadler
     Napolitano
     Neal
     Nethercutt
     Ney
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Ose
     Owens
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Pelosi
     Peterson (MN)
     Petri
     Phelps
     Pickett
     Pomeroy
     Porter
     Price (NC)
     Pryce (OH)
     Rahall
     Ramstad
     Rangel
     Regula
     Reyes
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogers
     Ros-Lehtinen
     Rothman
     Roybal-Allard
     Rush
     Ryan (WI)
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Shaw
     Sherman
     Shimkus
     Shows
     Shuster
     Sisisky
     Skelton
     Slaughter
     Smith (MI)
     Smith (WA)
     Snyder
     Souder
     Spence
     Spratt
     Stabenow
     Stenholm
     Stupak
     Sweeney
     Talent
     Tanner
     Tauscher
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thune
     Thurman
     Tierney
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Vento
     Visclosky
     Vitter
     Walsh
     Wamp
     Waters
     Watkins
     Watt (NC)
     Watts (OK)
     Waxman
     Weiner
     Weldon (PA)
     Wexler
     Weygand
     Wicker
     Wilson
     Woolsey
     Wu
     Wynn
     Young (AK)
     Young (FL)

                               NOES--138

     Abercrombie
     Archer
     Armey
     Barr
     Bartlett
     Bass
     Biggert
     Bilbray
     Bliley
     Blunt
     Boehner
     Bonilla
     Bono
     Burr
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Capuano
     Chabot

[[Page 7518]]


     Coble
     Collins
     Combest
     Cook
     Cooksey
     Cox
     Crane
     Cunningham
     Davis (VA)
     Deal
     DeLay
     DeMint
     Dickey
     Doggett
     Doolittle
     Dreier
     Ehrlich
     English
     Everett
     Fletcher
     Forbes
     Fossella
     Franks (NJ)
     Frelinghuysen
     Gekas
     Gibbons
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Granger
     Green (WI)
     Gutierrez
     Gutknecht
     Hansen
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hobson
     Horn
     Houghton
     Hunter
     Inslee
     Johnson, Sam
     Kaptur
     Kasich
     Kelly
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     Lazio
     Levin
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Manzullo
     McCollum
     McHugh
     McInnis
     McIntosh
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Northup
     Oxley
     Packard
     Pease
     Peterson (PA)
     Pickering
     Pitts
     Pombo
     Portman
     Quinn
     Radanovich
     Reynolds
     Rogan
     Rohrabacher
     Roukema
     Royce
     Ryun (KS)
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Sessions
     Shadegg
     Shays
     Sherwood
     Simpson
     Skeen
     Smith (NJ)
     Smith (TX)
     Stearns
     Strickland
     Stump
     Sununu
     Tancredo
     Tauzin
     Terry
     Thornberry
     Tiahrt
     Toomey
     Upton
     Walden
     Weldon (FL)
     Weller
     Whitfield
     Wolf

                             NOT VOTING--7

     Campbell
     Fattah
     Lucas (OK)
     Meek (FL)
     Moran (VA)
     Stark
     Wise

                              {time}  1512

  Mr. DICKEY changed his vote from ``aye'' to ``no''.
  So the amendment was agreed to.
  The result of the vote was announced as above recorded.
  Stated for:
  Mr. LEVIN. Madam chairman, on rollcall No. 157, the Istook Amendment, 
I unintentionally cast my vote as ``no'' when I intended to vote 
``aye.''
  The CHAIRMAN pro tempore. The question is on the committee amendment 
in the nature of a substitute, as amended.
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The CHAIRMAN pro tempore. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Gillmor) having assumed the chair, Mrs. Biggert, Chairman pro tempore 
of the Committee of the Whole House on the State of the Union, reported 
that that Committee, having had under consideration the bill (H.R. 
3709) to make permanent the moratorium enacted by the Internet Tax 
Freedom Act as it applies to new, multiple, and discriminatory taxes on 
the Internet, pursuant to House Resolution 496, she reported the bill 
back to the House with an amendment adopted by the Committee of the 
Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on the amendment to the committee 
amendment in the nature of a substitute adopted by the Committee of the 
Whole? If not, the question is on the committee amendment in the nature 
of a substitute.
  The committee amendment in the nature of a substitute was agreed to.
  The CHAIRMAN pro tempore. The question is on the engrossment and 
third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.

                              {time}  1515


               Motion to Recommit Offered by Mr. Conyers

  Mr. CONYERS. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore (Mr. Gillmor). Is the gentleman opposed to 
the bill?
  Mr. CONYERS. Yes, sir.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Conyers moves to recommit the bill to the Committee on 
     the Judiciary with instructions to report back forthwith with 
     the following amendment:
       Page 2, line 15, strike ``5-YEAR'' and insert ``2-YEAR''.
       Page 2, line 23, strike ``2006'' and insert ``2003''.

  The SPEAKER pro tempore. The gentleman from Michigan (Mr. Conyers) is 
recognized for 5 minutes on his motion to recommit.
  Mr. CONYERS. Mr. Speaker, this is a motion to recommit, which is a 
very simple solution to the Delahunt amendment, which was nearly 
accepted by eight votes a few minutes ago.
  My motion would extend the present moratorium on Internet access 
taxes and multiple discriminatory taxes for 2 years, from 2001 to 2003, 
but would eliminate the grandfathering of State access taxes, unlike 
that which was in the Delahunt amendment, which just recently failed.
  By taking the grandfathering out, my colleagues, I suggest that we 
have an excellent conclusion to a very difficult problem; namely, to 
continue to work on this not for 6 or 7 years, but for only 2 years, 
and to eliminate the grandfathering of the State access taxes that were 
included in the Delahunt amendment, which many of us supported.
  I urge that we support this motion to recommit, because I think it 
will marry the best of both of these provisions.
  Mr. NADLER. Mr. Speaker, will the gentleman yield?
  Mr. CONYERS. I yield to the gentleman from New York, the ranking 
subcommittee member on the Committee on the Judiciary.
  Mr. NADLER. Mr. Speaker, the central question of this bill is 
twofold: One, will we protect the Internet from multiple and 
discriminatory taxes? And I think we all agree the answer is we must do 
that. And, two, will we set it up in such a way that the States will 
not be prevented from levying appropriate but nondiscriminatory and 
nonburdensome sales taxes on transactions over the Internet so that the 
tax bases are not destroyed, and so that all the local malls and stores 
are not discriminated against?
  A 2-year moratorium gives us the time to work that out without 
allowing practices to become so set that it is impossible to deal with 
that question later. So that is why we ought to adopt this motion to 
recommit for 2 years. And unlike the previous 2-year amendment, it does 
not grandfather in those multiple taxes in certain States.
  So for a 2-year moratorium to deal with these questions and help 
small businesses all over the country, my colleagues should vote for 
this recommittal motion.
  Mr. CONYERS. Reclaiming my time, Mr. Speaker, I tell my colleagues 
that we cannot stop the information highway progress by hobbling it 
with taxes. Our proposal would reach the support of the governors of 
the labor movement, of the retailers, of the small business people who 
cannot wait for 6 or 7 years.
  Support this motion to recommit, which would limit the moratorium to 
2 years and eliminate the grandfathering provision.
  Mr. ISTOOK. Mr. Speaker, will the gentleman yield?
  Mr. CONYERS. I yield to the gentleman from Oklahoma.
  Mr. ISTOOK. Mr. Speaker, I thank the gentleman for yielding to me, 
and I think everyone should be clear, Mr. Speaker. Previously we voted 
on the Delahunt amendment. It was two things in one. It was changing 
the 5-year moratorium to 2 years, and it was eliminating the, and I 
guess it is a double negative, it was eliminating the elimination of 
the grandfather clause. But what we have now in the motion to recommit 
is one thing and only one thing. It changes the proposed 5-year 
additional moratorium to 2 years.
  So, instead of a moratorium that expires in October of 2006, it will 
be a moratorium that expires in October of 2003. That is the issue.
  Certainly with the speed at which knowledge advances and the Internet 
progresses, to think we could hide our heads in the sand for 5 years, 
on top of the next year and a half, I do not think is realistic and I 
do not think it is responsible. So I certainly urge people to do the 
commonsense thing.
  We wanted to offer this amendment on the floor, but time limits did 
not let us do so. This simply says not a 5-year moratorium, only 2. We 
need to bring consensus together, bring the governors together, the 
retailers, and all the key people involved with a consensus, with 
renewing a moratorium in a responsible way.

[[Page 7519]]


  Mr. CONYERS. Mr. Speaker, reclaiming my time, I want to assure my 
colleagues that as soon as I talk to the chairman of this committee, as 
ranking member, the Committee on the Judiciary will be ready to move 
forward with expedited speed, as I look at the gentleman from Illinois 
(Mr. Hyde), who is nodding his head in agreement.
  Mr. Speaker, I urge the Members to support the recommit motion.
  Mr. GOODLATTE. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  Mr. Speaker, I urge my colleagues to oppose this motion to recommit. 
It was just mentioned on the other side that we are all going to have 
the opportunity, and it is a great opportunity to vote against new and 
discriminatory taxes on the Internet, to vote against taxes on access 
to the Internet, one of the most regressive taxes there is because 
everybody pays the same amount no matter what their income is.
  If that is the case, why would we vote to only make that provision 
for 2 more years instead of for 5 more years? It is important to 
understand this has absolutely nothing to do with the sales tax. The 
sales tax is a separate debate. We will have the opportunity to have 
hearings on it and debate it. This is an issue about discriminatory 
taxes on the Internet, taxes that appear on people's phone bills and 
other bills that get them on the Internet, and we should avail 
ourselves of the opportunity to keep it at 5 years.
  Those who voted for the Delahunt amendment earlier because they were 
concerned about their grandfathering, can now join us in voting against 
this motion to recommit because the grandfathering is left eliminated, 
as it was in the original bill, which is the way it should be. This 
should be equally and fairly applied to everyone.
  So we have the opportunity today to send a message to the American 
people that we do not want to tax children's opportunity to be educated 
on the Internet, people's opportunity to shop on the Internet. This is 
what this is about, not the sales tax issue.
  Mr. COX. Mr. Speaker, will the gentleman yield?
  Mr. GOODLATTE. I yield to the gentleman from California.
  Mr. COX. Mr. Speaker, I thank the gentleman for yielding to me.
  As the author of the legislation, along with Democratic Senator Ron 
Wyden, in the other body, I just want to underscore what the gentleman 
from Virginia (Mr. Goodlatte) has said. There are only two points that 
need to be made so that we can vote on this motion to recommit.
  The first is, as the gentleman from Virginia pointed out, that 
nothing in the motion to recommit, nothing in the amendments that we 
have adopted, nothing in the underlying legislation, and nothing in the 
Cox-Wyden moratorium that we are extending here has anything to do with 
sales taxes. The ban on multiple taxes, the ban on discriminatory taxes 
in the current moratorium is what we are talking about extending here.
  In my view, we ought not to have any taxes on Internet access because 
we are trying to deal with the digital divide, and that ban should be 
permanent. In addition, multiple taxes, taxes by two States on the same 
commerce, ought to be banned indefinitely. And, likewise, also 
discriminatory taxes that would target the Internet but not off-line 
commerce. That is all this legislation is about.
  The reason that we are having this debate at all is that people want 
to take this perfectly good bill hostage so that they can get a debate 
on a different subject, Internet sales taxes. I remember the cover of 
National Lampoon some years back where they had this cute little puppy 
with a pistol to its head, and it said, ``Buy this magazine or we'll 
shoot this dog.'' It was a macabre example of the dark humor of the 
editors of National Lampoon, but a good illustration of what is going 
on here. We should not take this perfectly good Internet moratorium 
hostage for our separate debate on sales taxes.
  The 5 years is already a compromise. Let us go with that compromise, 
as we have earlier, so that we can move forward and provide certainty 
to the participants in the new economy that there will not be 
discriminatory and multiple taxes on the Internet.
  Mr. GOODLATTE. Mr. Speaker, reclaiming my time, in a few minutes, we 
will have the opportunity to all join together and vote for final 
passage of this legislation, which will do a great thing for the 
American taxpayers. In the meantime, I would urge my colleagues to vote 
against this motion to recommit.

                              {time}  1530

  Let us not miss the opportunity to keep these access charges, these 
regressive charges. We talk about the digital divide. This is the kind 
of thing that keeps a lower-income person off of the Internet, these 
kind of taxes on access to the Internet.
  That is what this is about. It is not about the sales tax. That is to 
be saved for another day, and we are going to take that up and hold 
hearings on it in the Committee on the Judiciary soon. This is about 
another issue that we ought to join together and pass and send to the 
American people a message that we want them all on the Internet, we 
want them all availing themselves of these new opportunities in the 
Information Age and no one should be left out because of discriminatory 
taxes, because of multiplicitous taxes or because of taxes on access to 
the Internet.
  I urge my colleagues to reject the motion to recommit and join with 
me in supporting final passage of this legislation.
  The SPEAKER pro tempore (Mr. Gillmor). Without objection, the 
previous question is ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

  Mr. CONYERS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to a minimum of 5 minutes the period of time within which a 
vote by electronic device, if ordered, will be taken on the question of 
passage of the bill.
  The vote was taken by electronic device, and there were--ayes 177, 
noes 250, not voting 7, as follows:

                             [Roll No. 158]

                               AYES--177

     Abercrombie
     Ackerman
     Allen
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett (WI)
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson
     Clay
     Clayton
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Crowley
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Etheridge
     Evans
     Farr
     Filner
     Ford
     Frank (MA)
     Frost
     Ganske
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hastings (FL)
     Hill (IN)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Hoyer
     Inslee
     Istook
     Jackson (IL)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     LaTourette
     Lee
     Levin
     Lewis (GA)
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meeks (NY)
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Moore
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Peterson (MN)
     Pickett
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Skelton
     Slaughter
     Snyder
     Spratt
     Stark
     Stenholm
     Stupak
     Tanner
     Thompson (CA)
     Thompson (MS)
     Thune
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Velazquez
     Vento
     Visclosky
     Waters
     Watkins
     Watt (NC)

[[Page 7520]]


     Waxman
     Weiner
     Weygand
     Woolsey
     Wu
     Wynn

                               NOES--250

     Aderholt
     Andrews
     Archer
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boswell
     Boucher
     Brady (TX)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Clement
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cooksey
     Cox
     Cramer
     Crane
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeFazio
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dickey
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Eshoo
     Everett
     Ewing
     Fletcher
     Foley
     Forbes
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Gejdenson
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Granger
     Green (WI)
     Greenwood
     Gutknecht
     Hansen
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hilleary
     Hobson
     Hoekstra
     Hooley
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Kasich
     Kelly
     King (NY)
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     Latham
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lipinski
     LoBiondo
     Lofgren
     Lucas (KY)
     Manzullo
     Martinez
     McCarthy (NY)
     McCollum
     McCrery
     McHugh
     McInnis
     McIntosh
     McKeon
     Meehan
     Menendez
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Mollohan
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ose
     Oxley
     Packard
     Paul
     Pease
     Pelosi
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Regula
     Reynolds
     Riley
     Rivers
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Sisisky
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Spence
     Stabenow
     Stearns
     Strickland
     Stump
     Sununu
     Sweeney
     Talent
     Tancredo
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Toomey
     Traficant
     Udall (NM)
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--7

     Campbell
     Fattah
     Linder
     Lucas (OK)
     Meek (FL)
     Moran (VA)
     Wise

                              {time}  1548

  Mr. LEWIS of Kentucky changed his vote from ``aye'' to ``no.''
  Mr. HALL of Ohio changed his vote from ``no'' to ``aye.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Gillmor). The question is on the passage 
of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. CONYERS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 352, 
noes 75, not voting 7, as follows:

                             [Roll No. 159]

                               AYES--352

     Ackerman
     Aderholt
     Andrews
     Archer
     Armey
     Baca
     Bachus
     Baker
     Baldacci
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilbray
     Bilirakis
     Bishop
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boswell
     Boucher
     Brady (TX)
     Brown (FL)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Capps
     Cardin
     Carson
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Clement
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cooksey
     Costello
     Cox
     Cramer
     Crane
     Crowley
     Cubin
     Cummings
     Cunningham
     Davis (FL)
     Davis (VA)
     Deal
     DeFazio
     DeGette
     DeLauro
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Ewing
     Farr
     Filner
     Fletcher
     Foley
     Forbes
     Ford
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Frost
     Gallegly
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Granger
     Green (TX)
     Green (WI)
     Greenwood
     Gutierrez
     Gutknecht
     Hall (OH)
     Hansen
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (IN)
     Hill (MT)
     Hilleary
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Holt
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inslee
     Isakson
     Istook
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Kaptur
     Kasich
     Kelly
     Kildee
     Kind (WI)
     King (NY)
     Kingston
     Kleczka
     Klink
     Knollenberg
     Kolbe
     Kuykendall
     Lampson
     Lantos
     Largent
     Larson
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Linder
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Manzullo
     Martinez
     Mascara
     McCarthy (NY)
     McCollum
     McCrery
     McGovern
     McHugh
     McInnis
     McIntosh
     McIntyre
     McKeon
     McKinney
     McNulty
     Meehan
     Meeks (NY)
     Menendez
     Metcalf
     Mica
     Millender-McDonald
     Miller (FL)
     Miller, Gary
     Mink
     Moakley
     Mollohan
     Morella
     Murtha
     Myrick
     Nadler
     Napolitano
     Northup
     Norwood
     Nussle
     Ortiz
     Ose
     Owens
     Oxley
     Packard
     Pallone
     Pascrell
     Pastor
     Pease
     Pelosi
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pickett
     Pitts
     Pombo
     Pomeroy
     Portman
     Price (NC)
     Pryce (OH)
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Regula
     Reyes
     Reynolds
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Sanchez
     Sandlin
     Sawyer
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Serrano
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Simpson
     Sisisky
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Spence
     Stabenow
     Stearns
     Strickland
     Stump
     Stupak
     Sununu
     Sweeney
     Talent
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Thurman
     Tiahrt
     Toomey
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Upton
     Velazquez
     Visclosky
     Vitter
     Walden
     Walsh
     Wamp
     Waters
     Watkins
     Watts (OK)
     Waxman
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Weygand
     Whitfield
     Wicker
     Wilson
     Wolf
     Woolsey
     Wu
     Wynn
     Young (AK)
     Young (FL)

                                NOES--75

     Abercrombie
     Allen
     Baird
     Baldwin
     Bentsen
     Blagojevich
     Bonior
     Borski
     Boyd
     Brady (PA)
     Brown (OH)
     Capuano
     Clay
     Clayton
     Clyburn
     Condit
     Conyers
     Coyne
     Danner
     Davis (IL)
     Delahunt
     Frank (MA)
     Ganske
     Gordon
     Hall (TX)
     Hastings (FL)
     Hilliard
     Hinchey
     Jackson (IL)
     Jackson-Lee (TX)
     Jones (OH)
     Kanjorski
     Kennedy
     Kilpatrick
     Kucinich
     LaFalce
     LaHood
     Lee
     Levin
     Lipinski
     Markey
     Matsui
     McCarthy (MO)
     McDermott
     Miller, George
     Minge
     Moore
     Moran (KS)
     Neal
     Ney
     Oberstar
     Obey
     Olver
     Paul
     Payne
     Peterson (MN)
     Porter
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sanford
     Schakowsky
     Scott
     Shuster
     Slaughter
     Snyder
     Spratt
     Stark
     Stenholm
     Thune
     Tierney
     Vento
     Watt (NC)

                             NOT VOTING--7

     Campbell
     Fattah
     Lucas (OK)
     Meek (FL)
     Moran (VA)
     Nethercutt
     Wise

                              {time}  1602

  Messrs. HASTINGS of Florida, GEORGE MILLER of California,

[[Page 7521]]

BENTSEN and MINGE changed their vote from ``aye'' to ``no.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  The title of the bill was amended so as to read: ``A bill to extend 
for 5 years the moratorium enacted by the Internet Tax Freedom Act; and 
for other purposes.''.
  A motion to reconsider is laid upon the table.

                          ____________________