[Congressional Record (Bound Edition), Volume 153 (2007), Part 20]
[Senate]
[Pages 28735-28737]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        INTERNET TAX MORATORIUM

  Mr. CARPER. I further ask unanimous consent that Senator Alexander 
and I be allowed to participate in a colloquy for 10 minutes apiece, up 
to 10 minutes apiece for a total of up to 20 minutes. I think what I 
would like to do initially is yield, if I could, to Senator Alexander 
for his comments and whatever he would like to say.
  While he comes to his feet to speak first, let me say, I think the 
people in the country want us to work together. We have Democrats, we 
have Republicans, we have Independents in this country, and we realize 
we are not going to agree on everything. People realize that, but when 
we can agree, they want us to do that. They want us to use common 
sense, take the opportunity to work across the aisle and make sure that 
common sense is reflected, whether it is passenger rail service or the 
interest or noninterest in providing people protection from having 
their Internet access taxed, their e-mail traffic taxed, their instant 
messaging taxed.
  I have had the great privilege of working with Senator Alexander for 
3 or 4 years--in some cases maybe longer than we would like to 
remember--on the issue of tax moratorium, but he has been a great 
partner, and I especially want to thank him for letting me be his 
partner and say to Senator Enzi of Wyoming and Senator Voinovich of 
Ohio, both former mayors, Senator Feinstein--a former mayor herself--
Senator Dorgan, former revenue director for the State of North Dakota, 
and Senator Rockefeller, a former Governor of West Virginia, all of 
whom worked together as a team to try to bring us to this day, to where 
we are today, the House has adopted legislation we passed last year, 
providing for a 7-year extension of the Internet tax moratorium.
  Let me say to Senator Alexander what a real privilege it is for me to 
have an chance to work with you on all kinds of issues, including this 
one. I thank you for that opportunity.
  The PRESIDING OFFICER. Without objection, the Senators from Tennessee 
and Delaware may engage in a colloquy.
  The Senator from Tennessee is recognized.
  Mr. ALEXANDER. Mr. President, I thank the Senator from Delaware. He 
has provided extraordinary leadership as a former chairman of the 
National Governors Association on the legislation that was passed. Let 
me be specific about what has been done.
  Last Thursday, the Senate worked out a compromise and passed 
legislation to extend for 7 more years the moratorium on the taxation 
of access to the Internet. That was called the Sununu-Carper amendment, 
the Senator from New Hampshire and the Senator from Delaware. It was an 
amendment to the 4-year extension that the House of Representatives 
passed on October 16 by a vote of 405 to 2. I was glad to be a 
cosponsor of the Sununu-Carper amendment. Hopefully, the House will 
vote on that legislation today, if it has not already, so the President 
can sign it into law before the moratorium expires on November 1, which 
is this Thursday.
  At the invitation of the Senator from Delaware, let me try to put 
this accomplishment into a little larger perspective. Above the Senator 
from Colorado, who is the Presiding Officer, is a few words that have 
been our country's national motto, ``E Pluribus Unum,'' one from many.
  How do we make this country one from many? Not by race or not by 
descent but because we agree on a few principles. We have a common 
language, and we have a common history.
  A very wise professor, Samuel P. Huntington, at Harvard, who was a 
former President of the American Political Science Association, said:

       Much of our politics is about conflicts between principles 
     with which all of us agree.

  For example, if we were debating immigration, we might say ``equal 
opportunity'' on the one hand, ``rule of law'' on the other. We all 
agree with both principles, but they conflict so we have an argument. 
That is what happened with the question of whether the Federal 
Government should pass a law to extend a moratorium that says States, 
cities, and counties cannot tax access to the Internet.
  On the one hand, if you have been a Governor, as Senator Carper and I 
have been, nothing makes you madder than for Members of Congress to 
stand up with a big idea and say let's put this into law; let's take 
credit for it and send the bill to the Governors, to the States and 
cities and the counties--because usually we find that Senator or 
Congressman back home in our States making a big speech about local 
control at the next Lincoln Day or Jackson or Jefferson Day dinner.
  That is the principle of federalism on the one side: No more unfunded 
Federal mandates, is what we Republicans like to say. In fact, a whole 
bunch of Republicans, including Newt Gingrich, stood up on the U.S. 
Capitol steps in 1994 and said: No more unfunded mandates. If we break 
our promise, throw us out. The New Republican Congress passed a law in 
1995, S. 1 it was called, no more unfunded mandates, that is the law of 
the land. If Congress wants to order States and local governments to do 
it, Congress should pay for it.
  That was the principle of federalism. But on the other hand, we had 
the principle of--let's say laissez faire, for lack of a better word. 
If you have been in business or helped to start a business, as I also 
have, you want as little taxation as possible and as much certainty as 
possible. As the Internet grows and develops, from the very beginning, 
it was thought it ought to be as free as possible from multiple 
regulations and taxes from State and local governments. So that 
produced the kind of debate that often comes to the floor of the 
Senate, those saying on the one hand: Wait a minute, let's leave the 
Internet alone. Let's let it grow. Let's keep the State and local 
governments from taxing it, or at least from taxing access to it. And 
on the other hand, the States, the Governors and the mayors and the 
city councilmen--many of us have been in those positions before--
saying: Wait a minute, it is not the job

[[Page 28736]]

of Congress to say to Colorado or Delaware or Tennessee: You must have 
this service or you can't tax food or you can't tax income or you can't 
put a sales tax on Internet access.
  In 2003 and 2004, we had a huge debate about the last extension of 
the Internet access tax moratorium and came to a conclusion. At that 
time, Senator Carper and I asked the industry, the companies, to sit 
down with the National Governors Association, the National Conference 
of Mayors, the National Association of Counties and take these 
principles--federalism on the one side, laissez faire on the other--and 
suggest to us some ways we could craft legislation that recognized we 
all agree with both principles. We need to find a way to put the 
principles together. That is what this compromise did.
  I will let the Senator from Delaware explain a little more about the 
details of it, but if he doesn't mind, I will go ahead a few more 
minutes and give a couple of examples of why the compromise is a good 
idea. Fundamentally, it is a good idea because it achieves these three 
objectives:
  No. 1, it updates the definition of what we mean by access to the 
Internet. It updates that definition.
  No. 2, it avoids most unfunded Federal mandates. In other words, 
States that are now collecting--in effect, a sales tax on access to the 
Internet or, in some States, a gross receipts tax--in general may 
continue to do that during the next 7 years. It is a limited number of 
States, but it is still important to those States.
  No. 3, it provides, after a reasonable period of time, that we come 
back and take a look at the whole issue. We finally decided on 7 years 
in the Senate so we can make sure the definition of Internet access has 
not changed so the law doesn't apply correctly. If anything is likely 
to change, it probably is the Internet.
  At the time the Telecommunications Act was last written, in the 
middle of the 1990s, I doubt, with all respect, that most Members of 
the Senate even knew what the Internet did, much less used it. In 1998, 
when the first moratorium and the definition of Internet access tax was 
written, all we knew about was a telephone dial-up Internet. Yet, by 
2004, we had to refashion a definition of access to the Internet to 
take into account that suddenly telephone calls were being made over 
the Internet, and States and local governments currently collect 
billions of dollars in local taxes from telephone services.
  If the Federal Government banned that, then States would either have 
to raise tuition or raise some other taxes or cut services. So we 
decided, in 2004, that we didn't mean to keep States from making the 
decisions about services and taxation that they had already made, 
except for the connection of access to the Internet. That didn't just 
favor States and local governments, for us to figure that out and be 
accurate in our definition. It also was of great benefit to the 
industry because, for example, some States were taxing what is called 
the backbone of the Internet, which was not intended to be left out of 
the moratorium.
  This compromise, which Senator Carper, Senator Sununu and many others 
have worked out, I think, in the spirit of our country, takes two very 
important principles--laissez faire and federalism--and notices that 
they conflict in this question but comes to a reasonable compromise end 
result. So what we have is an updating of the definition of what we 
mean by access to the Internet. What we have is avoiding, for the most 
part, unfunded Federal mandates. And what we have is a reasonable 
period of time in which we can come back and revisit the issue, to make 
sure that what was happening in 2007 is still what we mean by the 
Internet in 2014.
  I am glad to have been a part of this discussion. It went much better 
this year than it did in 2004, when we couldn't come to an agreement 
for about a year. The reason was because those affected by it--the 
entrepreneurs of America and the mayors, the cities, the Governors and 
county officials--helped us a lot by getting together, resolving their 
differences, and understanding each side has a legitimate point.
  I am glad to be a part of it. I am glad to engage in this colloquy 
with Senator Carper and I salute him for his consistent leadership and 
for, once again, demonstrating his ability to work well with people 
from many different walks of life and for being willing to work across 
the aisle, when that was necessary, to produce a result.
  Mr. CARPER. Mr. President, if I could reply to the comments of my 
friend, he mentioned the fact that we do things over the Internet today 
that frankly we didn't think of about 10 years ago. Initially, we would 
do dial-up. Eventually, later on, we would have other ways to access 
the Internet to send our e-mail or instant messaging. I never imagined 
6 years ago we would ever be able to do telephone calls over the 
Internet. In my State and other States as well, those States and local 
government depend on revenues they raise from telephone services to 
help pay for schools, to help pay for police, paramedics, fire service.
  Now we have moved along. Folks are actually able to send TV, 
apparently, over the Internet. In a bunch of jurisdictions, not so much 
States but local governments, they actually derived some of their 
revenues, not inconsiderable, over the years from cable services and a 
tax on cable services they collect.
  My dad used to say different things. Probably everybody can remember 
much of what your mom and dad said in your lifetime. One of the main 
things I remember my dad saying to my sister and me is there are two 
things certain in life: One of them is death, the other is taxes.
  One of the other things that is certain in life is change, 
particularly change with respect to technology and change with respect 
to how we use the Internet. One of the beauties of the compromise we 
have hammered out here with a lot of hard work and support from Senator 
Alexander and his staff member sitting right beside him, Lindsey, and 
on our side I especially thank Bill Ghent and Chris Prendergast for all 
their hard work and particularly our committee staffs who did a great 
job--but one of the beauties of the compromise we worked out is we have 
to come back and revisit this issue somewhere down the line 7 years 
from now.
  The reason why that is important is because this is going to change. 
This technology is going to change. Our ability to use the technology 
and what we do with the Internet will change. It will be different 7 
years from now. It is important for us to have the ability to come 
back.
  I certainly lend a strong ``amen'' to what Senator Alexander said. As 
Governor, he was Chairman of the National Governors Association--so was 
Senator Voinovich. We have three Members of the Senate who previously 
were Governors and led the National Governors Association. We fought 
hard as Governors in order to convince the Congress to pass the law 
that President Clinton signed in 1995: No unfunded mandates.
  We worked hard in 1998 to make sure that as the Federal Government 
came in, we kind of stepped on that 1995 law, and said: Well, we want 
to change it a little bit, what you can collect in terms of revenues. 
We passed the 1998 legislation, the moratorium on Internet tax access.
  They grandfathered in about nine States and said: If you are already 
collecting, you can continue to collect, but watch yourself there, and 
we said to the other 41 States, the other jurisdictions, if you are not 
collecting, you cannot start. But the thing I like about the 
legislation, we are respectful of the grandfathers, the nine States; 
they can continue to collect taxes as they have in the last 8 or 9 
years. But they can not do something new or different.
  By the same token, if they are collecting tax revenues on traditional 
services such as telephone and cable, they are going to be able to 
continue to do that. I do not know about the rest of you, but I was 
reminded of this--my boys have grown up in public schools in Delaware. 
It is important that my State have the ability to collect taxes to help 
educate our children in my State and other States, every other State.

[[Page 28737]]

  We have paramedic service in our State, statewide paramedics. We have 
fire and police. It is important to me that the city of Wilmington, in 
which I live, has revenues that they need to make sure we are safe; 
that if we pick up the phone for 911, somebody is going to come if we 
need them; if we have a fire in our house or in our neighborhood, that 
someone is going to come and put it out. I want to make sure our city 
and other communities have the revenue they need to do that.
  The last thing I would say here--and this goes back to something my 
dad used to say to my sister and me, when we would pull some boneheaded 
stunt. I must have done it a lot, because he used to say: Use some 
common sense. He must have said that 1,000 times during the time I was 
a little boy to the time I left and went off to college: Use some 
common sense.
  I think what we have here, as my colleague said last week, a victory, 
a victory for common sense, a victory for bipartisanship, a victory 
that protects the rights and interests and obligations of State and 
local governments, a victory for those of us who want to have access to 
the Internet and not be encumbered by additional taxes. It is a victory 
in all of those areas.
  It has been a pleasure working with Senator Alexander and our 
colleagues on this one. We can set this one aside for a while--I am 
sure we are both pleased to do that--and go on and maybe work on clean 
air issues, try to figure out how to protect the health of folks who 
are breathing sulfur dioxide and nitrogen oxide, and try to figure out 
how to do something with respect to climate change and maybe figure out 
how to use nuclear energy more effectively, to make all of that 
possible.
  This has been a good--not a day's work but many months' work. I am 
delighted with the outcome. I thank my colleague and our colleagues who 
have worked with us and our staffs for getting us to this point.
  The House of Representatives voted this afternoon. They took this up 
under suspension of the rules, the legislation we passed here last 
week. They passed the 7-year extension of the moratorium on Internet 
access unanimously, over 400-some votes to none. So we can feel good 
about that when we go home today.
  Think about it. We have passed a good Amtrak bill, good passenger 
rail bill, worked across the aisle, thought outside the box. We did the 
same kind of thing with respect to protecting the rights of consumers, 
without stepping on the rights of State and local governments. I think 
we can be proud of that. I am, and I know my friend Senator Alexander 
is as well.
  I yield to him for any last comments he wants to make.
  Mr. ALEXANDER. I thank the Senator and the Presiding Officer.
  Maybe the next thing we can do as a Senate is take up the Senator 
from Colorado's legislation that I cosponsored, and a number of others 
have, on an honorable conclusion to the war in Iraq, and pass that. And 
then the American people might notice that with public transportation, 
with the Internet, and with the war in Iraq, the Congress was actually 
working together on issues that make a difference to them and is acting 
like grownups and achieving results.
  This has been a good several months' work. I thank you for the 
privilege of working with you.
  I yield the floor.
  Mr. CARPER. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mrs. McCASKILL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Menendez). Without objection, it is so 
ordered.
  Mrs. McCASKILL. Mr. President, I ask unanimous consent to speak in 
morning business for a few minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Missouri is recognized.

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