[Congressional Record (Bound Edition), Volume 147 (2001), Part 14]
[Senate]
[Pages 20336-20338]
[From the U.S. Government Publishing Office, www.gpo.gov]



                   UNANIMOUS CONSENT REQUEST--S. 1504

  Mr. DORGAN. Mr. President, as long as the Senator from Virginia is 
here, I ask unanimous consent, again, that we discharge S. 1504 and 
proceed to it: that it be read a third time, and passed, and the motion 
to reconsider be laid upon the table.
  Incidentally, in my request is an extension of the Internet tax 
moratorium. The extension would last until next June 30. The Senator 
from Virginia wants the extension. I say, yes, let's have an extension. 
I will not support the 2 years at the moment. I support him until June 
30, 2002. I will be prepared to support much longer than that when we 
are able to reach agreement on the other piece.
  The second piece I have in S. 1504 is a statement by Congress saying 
to both sides, on the second problem: State and local governments, 
simplify your sales and use tax system. And then it says to them: When 
you have done so, when you have substantially simplified that system, 
we will then allow consideration of the opportunity for you to enforce 
collection of sales and use taxes with respect to remote sellers. It is 
a two-pronged approach to solve the second problem.
  The Senator from Virginia, I might say, addresses the first. I would 
ask Congress to address the first and second piece of this. I 
understand it is horribly complicated. But, by the same token, I think 
we need to address both problems.
  So I have objected to the 2-year extension proposed by the Senator 
from Virginia and would like to continue to work with him on these 
issues.
  I have now proposed and asked consent that we discharge S. 1504, 
proceed to it, that it be read a third time, passed, and the motion to 
reconsider be laid upon the table. As I have indicated, it has an 
extension to June 30, 2002 and has a paragraph at the end of the 
legislation that deals with the second important issue as well. I make 
such a request, Mr. President.
  The PRESIDING OFFICER. Is there objection?
  Mr. ALLEN. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ALLEN. Mr. President, I respect the creativity, diligence, and 
ardor with which the Senator from North Dakota pursues this issue. This 
issue of taxing or requiring retailers or sellers to tax that are not 
located within the State, that do not have a physical presence in the 
State, do not have a nexus in the State, is an argument that is as old 
as our Republic.
  One of the problems our Founders had, in going from the Articles of 
Confederation to our current Federal Republic, was that different 
States were imposing fines, taxes, and tariffs on interstate commerce. 
So that was one of the reasons we went to the current form we have--to 
at least have within our country a free trade zone and not have 
burdensome taxes on the flow of interstate commerce.
  The idea the Senator from North Dakota, Mr. Dorgan, proposes, with 
long, deliberative examination, may be worthwhile. But the issue at 
hand at this moment is that the moratorium on Internet access taxes and 
discriminatory taxes expired last Sunday, October 21.
  This issue in recent years has been worked on time after time. It 
first came up in the midst of the Bellas Hess decision and then came up 
more recently in the Supreme Court Quill decision. In those situations, 
the issue was catalog sales. But whether the catalog company is in 
Maine or New Hampshire or Oregon or whatever other State, the Supreme 
Court ruled that these States could not compel those companies--Quill 
at that particular time--to remit sales taxes to a State in which they 
had no physical presence. So that is the constitutional parameter we 
are under.
  This issue of trying to get around the Supreme Court decisions, 
trying to come up with simplification, and hamstringing the Senate in 
the future to vote on whatever this may be as far as simplification is 
concerned, while it is a very creative and, I think, very thoughtful 
approach, to me, we really have no time to act.
  Let's recognize that the other body, the House, has already acted. It 
is a 2-year extension on the very simple, clear, and clean issue of 
having a moratorium on access taxes and discriminatory taxes on the 
Internet by States or localities.
  Please note, Mr. President, when this moratorium was first put on 3 
years ago, several States and localities had imposed access taxes and 
discriminatory taxes, and they are now grandfathered. So here we are 
today generally stuck with those taxes being imposed in those 
jurisdictions, in those States.
  The longer this lapses, the more likely the legislative process will 
apply, whether in a local jurisdiction or in a State. We will end up 
with more of these taxes, and we will never be able to get rid of them. 
They will be like the Spanish-American War tax, the luxury tax that was 
put on telephone service to finance the Spanish-American War. We won 
that war 100 years ago, but that tax is still on telephone service.
  While this is a good idea and something that can be worked on over 
the

[[Page 20337]]

years, if something such as this should pass the Senate, it is 
obviously different from what has passed the House, which means it 
would have to go to a conference committee. Who knows when that might 
meet? We may be here only a few more weeks, and most likely those 
differences would not be ironed out.
  It is fine to work on simplification. It has been worked on for 
decades. I don't think this issue of access taxes on the Internet or 
discriminatory taxes ought to be held hostage to that very problematic 
although understandable concern of the Senator from North Dakota and 
many others.
  With that, I object to the request of the Senator from North Dakota.
  The PRESIDING OFFICER. Objection is heard.
  The Senator from North Dakota.
  Mr. DORGAN. Mr. President, the Senator from Virginia and I have had 
some nice conversations on this subject. I know he feels strongly about 
this. I did want to clear up a couple things.
  First of all, when someone purchases something on the Internet or 
from a catalog, there is actually a tax owed in most cases. It is just 
that it is never paid. Most Americans when they order something from a 
catalog are required to submit a use tax to the State, because the 
seller wasn't required to collect the sales tax. The buyer is supposed 
to send a use tax to the State government, but they never do and never 
will because it would require literally millions of tax returns being 
filed for a $1.20 or $2.80 purchase. That is why it was always much 
more effective to collect a sales tax at the source.
  I agree with those who say we don't think catalog sellers or Internet 
sellers or remote sellers ought to be required to subscribe to 7,000 
different taxing jurisdictions; that is not fair. I agree with that. 
That is why I say, if you are going to simplify the collection system 
and allow it to have the remote sellers collect it, then you really 
need to simplify it in a way that is substantive.
  Let me make this point also: It is not the case that the Supreme 
Court has said there is no inherent right for State governments to tax 
in these circumstances. That is not what the Supreme Court has said. 
They said the sole arbiter of what the States can or can't do with 
respect to what is called nexus or whether they have jurisdiction is 
the Congress because it deals with the commerce clause. That decision 
is only reserved for the Congress, not for the States. That is what the 
Supreme Court decision said.
  That is why Congress has to decide what to do and how to do it at 
this point. While we perhaps have a disagreement at this moment, I hope 
we might be able to figure out how to resolve it. It does not make any 
sense to me, if we are going to lose $20 or $30 or $40 billion in local 
revenues, to have somebody hire tens of thousands of tax collectors to 
go knock on doors and ask for them to submit their $3.38 in use tax 
they owe. That doesn't make any sense. I don't believe the Senator from 
Virginia or anyone else would want to do that. All you do is add to the 
employment rolls of the Government and hassle people.
  It makes far more sense to require State and local governments to 
simplify their local sales and use tax base and then to say to the 
remote sellers, those above $5 million a year in sales: Collect this 
now and remit it to the States and save everybody from trouble. We 
simplified the system for you. We simplified it for the consumer. 
Everybody wins. That is the point of all of this.
  With respect to the question of the tax incidence that the Senator 
from Virginia mentioned, as I said before, there is no new tax here. 
This is not a discussion about a new tax versus an old tax or whether 
there is a tax versus not a tax; this is a question of how you collect 
a tax that is owed, in what circumstances would it be fair to require a 
remote seller to collect it; that is all.
  On the final subject of this issue of an expiring moratorium, I 
supported the moratorium. I was on the floor of the Senate at that 
point and worked with Senators Wyden, McCain, and others. I supported 
the moratorium. I now support it and would be willing to extend it 
until June 30, 2002 at this point. We can perhaps extend it beyond that 
as we go along.
  My expectation is that the narrow time-frame in which this moratorium 
has expired will not give opportunity to those who might want to take 
advantage of it. I frankly don't think that is going to happen. I am 
here on the floor perfectly prepared to work with the Senator from 
Virginia and others to extend this moratorium, if he will work with me 
and Senators Enzi, Voinovich, Graham, Kerry and other colleagues to 
help solve the other side of the equation. And we may not solve it all 
now, but put a provision in that says this is congressional intent. If 
he will work with me to solve the second side of the issue, I will work 
with him to solve the first side. We will make some progress on this 
issue.
  This is a complicated issue. I admit that. It is one of some 
consequence with more and more remote sales occurring. More than forty 
Governors have now written letters saying: We have literally tens of 
billions of dollars we are not going to collect, much of which is 
needed to run our school system. You need to help us find a way to 
collect that revenue that is owed.
  We say to the Governors: God bless you. You have a problem. We will 
help you solve that problem, but you have to do something for us. You 
have to simplify your system so that we are not going to whipsaw 
businesses out there that have to comply with thousands of different 
jurisdictions.
  I want to do two things. I want to require dramatic simplification on 
the part of State and local governments and require the collection of a 
tax that is owed on the part of remote sellers, and I want to extend 
the moratorium so that we don't have discriminatory and punitive taxes 
applied anywhere in the system, with Internet sellers, remote sellers, 
and so on.
  I certainly am someone who works in the Commerce Committee with the 
Senator from Virginia. I am proud to do that. I believe technology is 
critically important to our country. It is an accelerator to the growth 
of our economy. There are a lot of important things that are happening 
with respect to technology. That is the reason I, too, am interested in 
extending this moratorium. That is why I offered the consent request 
last week, why I offer it today, and I will continue to offer it. It is 
my hope that others will continue to join me in trying to solve the 
second side of the equation.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ALLEN. Mr. President, this issue is foundational to the formation 
of our Republic. It is actually similar to what Patrick Henry talked 
about, taxation without representation. Obviously, the use taxes are to 
be collected by the States.
  This is not a decision to be made by the States. If it were up to the 
States, obviously, they would be collecting and compelling retailers 
who do not have a physical presence in their State, who don't vote in 
their State, who do not receive any fire services, any police services, 
any services whatsoever from that State. If it were up to the States, 
for their convenience, they would be requiring them to collect and 
remit these taxes. This really becomes an issue of convenience for the 
tax collectors at a locality or at a State.
  It is, as Senator Dorgan rightly stated, a decision for Congress to 
make. It does deal with interstate commerce. However, Congress, in all 
the decades this has been considered, has never said, before the 
Internet was even contemplated for use of communications or commerce or 
education, when people were more concerned about catalog sales, even 
then Congress said, no, we are not going to burden interstate commerce.
  So that is the reason why Congress has never agreed. Now, the States 
and the localities can simplify. There is a ZIP code reported to me in 
the Denver, CO, area, that within that same code there are four 
different sales taxes applied to the very same product. I agree with 
Senator Dorgan that all of this ought to be simplified. I think if the 
States on their own, along with their

[[Page 20338]]

subdivisions--counties, cities, or municipalities--worked to simplify, 
they will find many, especially the larger retailers that are from out 
of State, willing to comply as long as it is simplified and there is 
auditing, which is logical, and they get a reasonable remittance back 
for collecting and sending in those sales taxes, as is accorded to most 
retailers within a State. Then I think you will find it all being 
handled in that regard.
  Again, all of this is separate from the most pressing issue, which is 
these access taxes and discriminatory taxes which on Senator Dorgan and 
I would be in absolute agreement; we would not want to see more of them 
coming on, and there are many in effect now. Indeed, I am researching 
South Carolina, where the legislature has enacted a moratorium on State 
sales taxes on charges for Internet access effective from October 1998 
through October 2001. Outside of this moratorium period, South Carolina 
can subject charges for Internet access to the State's sales tax. It 
may be automatic, by virtue of that law in South Carolina, that such 
taxes can be imposed even if the legislature may not be meeting. So for 
the most part I don't suspect many are going to be able to go to public 
hearings to get them done. But this is how this may be applying in 
South Carolina, unless the Governor said let's hold off on this and see 
what happens in Washington.
  Mr. DORGAN. If the Senator will yield, I believe the Senator from 
Virginia raised the question of South Carolina. I am not familiar with 
that circumstance, but I think the Senator said South Carolina could, 
in fact, begin collecting. I don't know that he said they would or are 
collecting. I say this to the Senator. We will, in my judgment, extend 
the moratorium. When we do that, I will be willing to join him in 
extending it retroactively until October 22, 2001, to say to State and 
local governments: Beware, if you are thinking of messing around with 
public policy and taking advantage of a window when we extend this--and 
we will, in my judgment--Congress will intend to extend it 
retroactively to October 22. It is not unprecedented. I would be happy 
to join the Senator in sending that message if that is the message he 
would like to send. That resolves the issue he has just discussed.
  Mr. ALLEN. I say to the Senator from North Dakota, I join with him. 
Although we have a contentious issue on some parts, we are in agreement 
there. I hope that message goes out to States and localities. Just 
because this has lapsed, please do not rush to tax the Internet access 
or impose discriminatory taxes.
  I yield the floor.

                          ____________________