[Congressional Record (Bound Edition), Volume 146 (2000), Part 6]
[Extensions of Remarks]
[Pages 8348-8349]
[From the U.S. Government Publishing Office, www.gpo.gov]



      INTRODUCTION OF THE INTERNET TAX SIMPLIFICATION ACT OF 2000

                                 ______
                                 

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                         Tuesday, May 16, 2000

  Mr. CONYERS. Mr. Speaker, I am pleased to join with Chairman Hyde, 
Administrative and Commercial Law Subcommittee Chairman Gekas and 
Ranking Member Nadler in introducing the ``Internet Tax Simplification 
Act of 2000.'' We are introducing this legislation at the request of a 
group of Advisory Commission on Commerce Members led by Utah Governor 
Micahel Leavitt. Several weeks ago we introduced H.R. 4267 at the 
request of a group of Advisory Commissioners led by Virginia Governor 
James Gilmore.
  This bill would amend the Internet Tax Freedom Act to extend by five 
years the moratorium on State and local taxes on Internet access and 
extend for two years the moratorium on multiple and discriminatory 
taxes on electronic commerce. It encourages the States to work 
cooperatively with the National Conference of Commissioners on Uniform 
State Laws to develop a simplified and uniform sales and use tax. The 
legislation also authorizes an interstate sales and use tax compact 
providing for a uniform sales and use tax system, authorizes the States 
to simplify their use tax rates, and authorizes those States which 
enter into the compact to collect use taxes on remote sales. Finally, 
the bill encourages States to work cooperatively with the 
telecommunications industry and other relevant groups to reduce the 
complexity of complying with State and local telecommunications taxes.
  We will be holding hearings on this bill and H.R. 4460 tomorrow, and 
it is my hope and expectation that we can quickly move to markup and 
legislative action. There are few economic issues before our committee 
which are more important than simplifying the sales tax and failure to 
act on this issue will harm all interested parties--retailers (both 
electronic and otherwise), State and local governments and consumers.

[[Page 8349]]

  The problems with the present system are several fold. First, the 
complexity of the system is daunting. There are presently over 6,500 
taxing jurisdictions in the United States, when all State, county and 
municipal authorities are included. Needless to say, any retailer with 
a physical nexus to a State (and therefore subject to state tax 
jurisdiction under the 1992 Quill decision) is subject to a myriad of 
confusing and complex State and Local taxes.
  Second, the current disparate tax treatment as between traditional 
``bricks and mortar'' retailers (which are subject to state tax) and 
remote sellers (which are not) has the potential to cause continuing 
economic distortion. As the New York Times editorial board has written, 
``[a]n elementary principle of taxation says that taxes should distort 
purchasing decisions as little as possible. It is not the role of a tax 
code to determine whether customers shop in stores, online, or by mail 
order.
  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 constitute the most important State and 
local revenue source, far greater than income and property taxes, with 
the Census Bureau estimating the 47.9% of State and local revenues come 
from sales taxes. With projections of online sales estimated to exceed 
$300 billion annually by 2002, State and local governments could lose 
as much as $20 billion in uncollected sales taxes under the present 
system.
  Finally, the present system could significantly harm individual 
consumers. This could obviously be the case if individuals faced 
increasing income and property taxes or declining services as a result 
of the loss of sales taxes from remote sales. A separate concern is the 
adverse impact of the present bifurcated system on poor and minorities. 
According to a recent Commerce Department study, wealthy individuals 
are 20 times more likely to have Internet access, and Hispanics and 
African Americans are far less likely to have such access. This means 
that poor and minorities who only buy locally face a greater sales tax 
burden than their counterparts. Maintaining the present system will 
only serve to perpetuate that disparity.
  Time is of the essence, and I look forward to the Judiciary Committee 
and the full House taking up this important issue.

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