[Congressional Record (Bound Edition), Volume 157 (2011), Part 11]
[House]
[Pages 16313-16316]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   WIRELESS TAX FAIRNESS ACT OF 2011

  Mr. FRANKS of Arizona. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 1002) to restrict any State or local jurisdiction 
from imposing a new discriminatory tax on cell phone services, 
providers, or property, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1002

       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 ``Wireless Tax Fairness Act of 
     2011''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) It is appropriate to exercise congressional enforcement 
     authority under section 5 of the 14th Amendment to the 
     Constitution of the United States and Congress' plenary power 
     under article I, section 8, clause 3 of the Constitution of 
     the United States (commonly known as the ``commerce clause'') 
     in order to ensure that States and political subdivisions 
     thereof do not discriminate against providers and consumers 
     of mobile services by imposing new selective and excessive 
     taxes and other burdens on such providers and consumers.
       (2) In light of the history and pattern of discriminatory 
     taxation faced by providers and consumers of mobile services, 
     the prohibitions against and remedies to correct 
     discriminatory State and local taxation in section 306 of the 
     Railroad Revitalization and Regulatory Reform Act of 1976 (49 
     U.S.C. 11501) provide an appropriate analogy for 
     congressional action, and similar Federal legislative 
     measures are warranted that will prohibit imposing new 
     discriminatory taxes on providers and consumers of mobile 
     services and that will assure an effective, uniform remedy.

     SEC. 3. MORATORIUM.

       (a) In General.--No State or local jurisdiction shall 
     impose a new discriminatory tax on or with respect to mobile 
     services, mobile service providers, or mobile service 
     property, during the 5-year period beginning on the date of 
     enactment of this Act.
       (b) Definitions.--In this Act:
       (1) Mobile service.--The term ``mobile service'' means 
     commercial mobile radio service, as such term is defined in 
     section 20.3 of title 47, Code of Federal Regulations, as in 
     effect on the date of enactment of this Act, or any other 
     service that is primarily intended for receipt on, 
     transmission from, or use with a mobile telephone or other 
     mobile device, including but not limited to the receipt of a 
     digital good.
       (2) Mobile service property.--The term ``mobile service 
     property'' means all property used by a mobile service 
     provider in connection with its business of providing mobile 
     services, whether real, personal, tangible, or intangible 
     (including goodwill, licenses, customer lists, and other 
     similar intangible property associated with such business).
       (3) Mobile service provider.--The term ``mobile service 
     provider'' means any entity that sells or provides mobile 
     services, but only to the extent that such entity sells or 
     provides mobile services.
       (4) New discriminatory tax.--The term ``new discriminatory 
     tax'' means a tax imposed by a State or local jurisdiction 
     that is imposed on or with respect to, or is measured by, the 
     charges, receipts, or revenues from or value of--
       (A) a mobile service and is not generally imposed, or is 
     generally imposed at a lower rate, on or with respect to, or 
     measured by, the charges, receipts, or revenues from other 
     services or transactions involving tangible personal 
     property;
       (B) a mobile service provider and is not generally imposed, 
     or is generally imposed at a lower rate, on other persons 
     that are engaged in businesses other than the provision of 
     mobile services; or
       (C) a mobile service property and is not generally imposed, 
     or is generally imposed at a lower rate, on or with respect 
     to, or measured by the value of, other property that is 
     devoted to a commercial or industrial use and subject to a 
     property tax levy, except public utility property owned by a 
     public utility subject to rate of return regulation by a 
     State or Federal regulatory authority;

     unless such tax was imposed and actually enforced on mobile 
     services, mobile service providers, or mobile service 
     property prior to the date of enactment of this Act.
       (5) State or local jurisdiction.--The term ``State or local 
     jurisdiction'' means any of the several States, the District 
     of Columbia, any territory or possession of the United 
     States, a political subdivision of any State, territory, or 
     possession, or any governmental entity or person acting on 
     behalf of such State, territory, possession, or subdivision 
     that has the authority to assess, impose, levy, or collect 
     taxes or fees.
       (6) Tax.--
       (A) In general.--The term ``tax'' means a charge imposed by 
     a governmental entity for

[[Page 16314]]

     the purpose of generating revenues for governmental purposes, 
     and excludes a fee imposed on a particular entity or class of 
     entities for a specific privilege, service, or benefit 
     conferred exclusively on such entity or class of entities.
       (B) Exclusion.--The term ``tax'' does not include any fee 
     or charge--
       (i) used to preserve and advance Federal universal service 
     or similar State programs authorized by section 254 of the 
     Communications Act of 1934 (47 U.S.C. 254); or
       (ii) specifically dedicated by a State or local 
     jurisdiction for the support of E-911 communications systems.
       (c) Rules of Construction.--
       (1) Determination.--For purposes of subsection (b)(4), all 
     taxes, tax rates, exemptions, deductions, credits, 
     incentives, exclusions, and other similar factors shall be 
     taken into account in determining whether a tax is a new 
     discriminatory tax.
       (2) Application of principles.--Except as otherwise 
     provided in this Act, in determining whether a tax on mobile 
     service property is a new discriminatory tax for purposes of 
     subsection (b)(4)(C), principles similar to those set forth 
     in section 306 of the Railroad Revitalization and Regulatory 
     Reform Act of 1976 (49 U.S.C. 11501) shall apply.
       (3) Exclusions.--Notwithstanding any other provision of 
     this Act--
       (A) the term ``generally imposed'' as used in subsection 
     (b)(4) shall not apply to any tax imposed only on--
       (i) specific services;
       (ii) specific industries or business segments; or
       (iii) specific types of property; and
       (B) the term ``new discriminatory tax'' shall not include a 
     new tax or the modification of an existing tax that either--
       (i)(I) replaces one or more taxes that had been imposed on 
     mobile services, mobile service providers, or mobile service 
     property; and
       (II) is designed so that, based on information available at 
     the time of the enactment of such new tax or such 
     modification, the amount of tax revenues generated thereby 
     with respect to such mobile services, mobile service 
     providers, or mobile service property is reasonably expected 
     to not exceed the amount of tax revenues that would have been 
     generated by the respective replaced tax or taxes with 
     respect to such mobile services, mobile service providers, or 
     mobile service property; or
       (ii) is a local jurisdiction tax that may not be imposed 
     without voter approval, provides for at least 90 days' prior 
     notice to mobile service providers, and is required by law to 
     be collected from mobile service customers.

     SEC. 4. ENFORCEMENT.

       Notwithstanding any provision of section 1341 of title 28, 
     United States Code, or the constitution or laws of any State, 
     the district courts of the United States shall have 
     jurisdiction, without regard to amount in controversy or 
     citizenship of the parties, to grant such mandatory or 
     prohibitive injunctive relief, interim equitable relief, and 
     declaratory judgments as may be necessary to prevent, 
     restrain, or terminate any acts in violation of this Act.
       (1) Jurisdiction.--Such jurisdiction shall not be exclusive 
     of the jurisdiction which any Federal or State court may have 
     in the absence of this section.
       (2) Burden of proof.--The burden of proof in any proceeding 
     brought under this Act shall be upon the party seeking relief 
     and shall be by a preponderance of the evidence on all issues 
     of fact.
       (3) Relief.--In granting relief against a tax which is 
     discriminatory or excessive under this Act with respect to 
     tax rate or amount only, the court shall prevent, restrain, 
     or terminate the imposition, levy, or collection of not more 
     than the discriminatory or excessive portion of the tax as 
     determined by the court.

     SEC. 5. GAO STUDY.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study, throughout the 5-year period beginning 
     on the date of the enactment of this Act, to determine--
       (1) how, and the extent to which, taxes imposed by local 
     and State jurisdictions on mobile services, mobile service 
     providers, or mobile property, impact the costs consumers pay 
     for mobile services; and
       (2) the extent to which the moratorium on discriminatory 
     mobile services taxes established in this Act has any impact 
     on the costs consumers pay for mobile services.
       (b) Report.--Not later than 6 years after the date of the 
     enactment of this Act, the Comptroller General shall submit, 
     to the Committee on the Judiciary of the House of 
     Representatives and Committee on the Judiciary of the Senate, 
     a report containing the results of the study required 
     subsection (a) and shall include in such report 
     recommendations for any changes to laws and regulations 
     relating to such results.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Arizona (Mr. Franks) and the gentlewoman from California (Ms. Chu) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Arizona.


                             General Leave

  Mr. FRANKS of Arizona. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days within which to revise and extend their 
remarks and include extraneous material on H.R. 1002, as amended, 
currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Arizona?
  There was no objection.
  Mr. FRANKS of Arizona. Mr. Speaker, I yield myself such time as I may 
consume.
  Congresswoman Lofgren and I introduced H.R. 1002 with the broad 
bipartisan support of 144 original cosponsors. We now have 236 
cosponsors, and I want to thank Ms. Lofgren for her hard work on this 
issue.
  Mr. Speaker, access to wireless networks represents a key component 
of millions of Americans' livelihoods, providing the efficient 
communication capabilities, whether by phone, broadband Internet or 
otherwise, necessary to run a successful business.
  The exorbitant discriminatory taxes on wireless customers are not 
only unfair, they are counterintuitive, adding yet another costly 
impediment to the success of so many American businesses who are 
struggling in the midst of a prolonged recession and an already hefty 
tax burden. Low-income and senior Americans who frequently rely on 
wireless service as their sole means of telephone and Internet access 
also bear the brunt of this discriminatory tax's impact.
  H.R. 1002, the Wireless Tax Fairness Act, provides a balanced 
approach that protects the revenue needs of States and localities, 
while allowing for a 5-year hiatus on new discriminatory wireless 
taxes, encouraging States and localities to develop a national tax 
regime that maintains the affordability of a wireless service.
  Mr. Speaker, I strongly encourage my colleagues to support this 
constitutionally sound, pro-consumer bill.
  I reserve the balance of my time.
  Ms. CHU. Mr. Speaker, I yield myself such time as I may consume.
  H.R. 1002, the Wireless Tax Fairness Act of 2011, will impose on 
States a 5-year moratorium on any new tax on mobile services, mobile 
service providers, and mobile service property. This will deny States 
the flexibility to respond to economic downturns during the moratorium 
and, therefore, undermine the ability of States to pay for essential 
services such as public health and safety, education and maintenance of 
State highways.
  The legislation is based on faulty information and will benefit the 
wireless services industry. Further, the legislation contains vague 
language which will lead to increased litigation for both State and 
local governments and the wireless industry. Because of these and other 
concerns presented by the bill, many organizations are opposed, 
including the League of Cities, National Governors Association, the 
American Federation of State, County and Municipal Employees, the AFL-
CIO, AFT and NEA, amongst others.
  Why are they opposed?
  Because, first, this bill will force States to cut services and 
increase taxes on nonwireless taxpayers.

                              {time}  1730

  In order for States and local communities to continue to recover from 
this recession, they need all tools at their disposal to balance their 
budgets, to preserve and create jobs, and to provide essential services 
like police, fire, and education.
  In fact, demand for many of the essential services, such as 
unemployment payments and other social programs, has increased during 
the economic downturn. Yet this bill takes away one of the tools to tax 
the wireless industry at the expense of other taxpayers and businesses. 
The moratorium will exclude from possible State taxation millions, if 
not billions of dollars, in future revenue from wireless service taxes. 
Thus, to balance their budgets, States will be forced to cut even more 
services and shift more of the tax burden on to other local taxpayers.
  As a former member of the California Board of Equalization, the 
Nation's duly elected statewide tax board, I understand the unique 
fiscal challenges

[[Page 16315]]

facing our Nation today and believe we should leave local taxes in the 
hands of local officials and residents.
  Finally, State legislators and local officials who are elected by 
their constituents and accountable to them have decided to impose these 
taxes. By passing this legislation, Congress impedes upon local 
elections and is telling local governments how to run their budgets.
  A second reason for opposition is that this bill is a special 
interest bill for the wireless industry. It benefits the wireless 
services industry at the expense of other industries. Despite industry 
claims, this bill will not lead to more broadband development and 
competitiveness. Current State and local taxes on wireless services and 
providers have not diminished adoption rates, nor have they inhibited 
broadband expansion.
  In fact, the wireless industry has not yet presented any data 
indicating that State and local wireless taxes have had adverse effect 
on wireless subscribership, revenue, or investment. Instead, the 
wireless industry continues to grow and profits remain high.
  If this bill becomes law, it would set up a dual tax system on 
telephone services by giving preferential treatment to cell phone 
customers but continue to allow taxes on traditional wire-line phones. 
This will put a higher burden on those without cell phones.
  Finally, vague definitions within this bill will lead to increased 
litigation. H.R. 1002 will increase litigation costs for wireless 
service providers and State and local governments. Courts will have to 
interpret the many vague terms that are contained within the bill.
  I reserve the balance of my time.
  Mr. FRANKS of Arizona. Mr. Speaker, I yield 3 minutes to the 
distinguished gentleman from North Carolina, the chairman of the 
Courts, Commercial and Administrative Law Subcommittee, Mr. Coble.
  Mr. COBLE. I thank the gentleman from Arizona for yielding.
  Mr. Speaker, wireless communications have become a mainstay of modern 
day Americana. There are now over 290 million wireless subscribers in 
the United States. As mobile phones become more common and available, 
they have also become more critical to their users. You don't have to 
look far in Washington to find someone talking or texting on a mobile 
device, or, for that matter, in my home in Greensboro, North Carolina. 
They're everywhere. They are ubiquitous. While most of this is the 
result of sheer demand, the Federal Government has taken important 
steps to ensure that we have quality mobile service that is accessible 
to everyone.
  Unfortunately, some State and local taxing authorities have begun to 
impose higher taxes on wireless services than on other goods and 
services. Often times, these taxes are arbitrary and go unnoticed 
because they're passed on to consumers as another line item at the 
bottom of their monthly wireless phone bill.
  Although States and local governments should not be prohibited from 
taxing wireless services, they also should not use wireless as a 
revenue cow. The Wireless Tax Fairness Act would impose a 5-year 
moratorium on any new discriminatory wireless taxes. Current wireless 
tax rates, even if higher than taxes on other services, would not be 
changed or affected by this bill. Thus, State and local revenue 
projections from wireless taxes will not be affected.
  This bill would give States breathing room to reform their wireless 
tax policies at the State and local level, which they have admitted 
they need to do.
  I'm pleased to support this legislation and again thank the gentleman 
from Arizona for having yielded.
  Ms. CHU. I yield such time as she may consume to the gentlewoman from 
California (Ms. Zoe Lofgren).
  Ms. ZOE LOFGREN of California. I thank the gentlelady for yielding 
and thank the gentleman from Arizona for his kind comments.
  Mr. Speaker, I have introduced the Wireless Tax Fairness Act for 
three successive Congresses, and I am gratified that it is being 
considered by the full House here today.
  Nearly everyone agrees that expanding broadband Internet access and 
adoption is critical to the economic future of our country. As the FCC 
put it in the National Broadband Plan, the U.S. must lead the world in 
broadband innovation and investment and take all appropriate steps to 
ensure that Americans have access to modern high-performance broadband 
and the benefits it enables.
  I introduced the Wireless Tax Fairness Act because discriminatory 
taxes on wireless services are not consistent with this top national 
priority. Cell phone bills are on average taxed at a far higher rate 
than other goods and services. In many jurisdictions, the taxation of 
wireless approaches or even exceeds the rates of so-called sin taxes on 
goods like alcohol and tobacco. These disproportionate taxes discourage 
investment and adoption of wireless services, including advanced 
wireless broadband.
  Before he was the President's chief economist, Austan Goolsbee, 
published a peer-reviewed study finding deadweight losses to society of 
up to $5 for every $1 in taxes on broadband service, including 
wireless.
  Now, these taxes fall particularly hard on working-class and lower-
income Americans who are most likely to rely on their cell phone for 
all of their communications, including access to the Internet. And in 
fact, the Pew study and the CDC have indicated that usage of cell 
phones for Internet access among Latinos and African Americans in the 
United States was far higher than that among other Americans. And so, 
this regressive tax burden troubles me, especially in these economic 
times.
  Now, for 14 years before I was a Member of Congress, I served on the 
board of supervisors of Santa Clara County. So I really do understand 
the need of local governments to balance their budgets every year and 
to get revenue. But this bill would not affect any existing revenues. 
In fact, it wouldn't prevent raising taxes on all goods. If you're 
going to have a half-cent sales tax on everything, include wireless. 
What this would do is prevent you from singling out wireless services 
for disproportionate taxation.
  Ultimately, the moratorium for 5 years should yield to modernization 
of State and local telecommunication taxes. Separate higher taxes on 
wireless services are an outdated legacy of the days when telephone 
service was a regulated monopoly. A timeout from discriminatory tax 
increases will encourage States and localities to focus on enacting 
reforms that work for all stakeholders.
  In general, I do believe that State and local governments should have 
the autonomy to set tax rates as they see fit. And, in fact, during the 
committee markup we added an amendment that allows voter-approved 
discriminatory taxes if that's what the voters of a jurisdiction wish 
to do.
  But beyond that there are exceptions when Congress recognizes the 
need to protect in advance a national imperative. And that's one of 
these instances. As the national broadband plan said, wireless 
broadband is poised to become a key platform for innovation in the 
United States over the next decade.
  We should not let discriminatory taxes on wireless service disrupt 
this potential. Several years ago, we adopted a prohibition on 
discriminatory taxes on Internet access. At the time, I don't think we 
fully realized that wireless was going to be the onramp for so many of 
our citizens to the Internet. And so we did not include it at that 
time. This is to correct that omission.
  I thank the gentleman from Arizona for working with me and all of the 
236 cosponsors who are part of this effort.
  Mr. FRANKS of Arizona. Mr. Speaker, I have no further requests for 
time, and I reserve the balance of my time.
  Ms. CHU. In conclusion, H.R. 1002 is irresponsible legislation that 
will restrict State flexibility to raise much-needed revenues, which 
will force State governments to eliminate essential government programs 
and services and shift burdens to other taxpayers.
  For all of these reasons, I oppose this legislation and urge my 
colleagues to vote ``no.''

[[Page 16316]]

  I yield back the balance of my time.

                              {time}  1740

  Mr. FRANKS of Arizona. Mr. Speaker, many points have been made about 
discriminatory taxes and their impact on businesses and individuals. 
For all the reasons that were so eloquently put forth by the gentlelady 
from California, we would urge the support of this legislation, and I 
would again thank the gentlelady for her tremendous effort in this area 
and on this bill.
  I yield back the balance of my time.
  Mr. CONYERS. Mr. Speaker, H.R. 1002, the Wireless Tax Fairness Act, 
which aims to help consumers and cell phone companies, unfortunately 
ignores the interests of state and local governments. The bill prevents 
states from determining what and how much to tax certain activities 
within their borders.
  True, increased taxes and fees on wireless services ultimately hurt 
consumers. Every penny matters and every tax increase can impact 
consumers' pocketbooks and their choices to spend on other goods and 
services.
  Rather than taking up this bill, we should consider ways how Congress 
can help our state and local governments, many of which are barely 
staying afloat financially during the current economic climate.
  These states and municipalities must balance their budgets while 
still providing essential police and fire services, assisting those in 
need, maintaining our roads and bridges, and ensuring an education for 
our children. Because of severely reduced revenues, many of our states 
are cutting their budgets and reducing funding for such essential 
services as law enforcement and education.
  This bill will only reduce more future state and local government 
revenues. For that reason, state and local governments and employee 
unions oppose this legislation.
  Instead, Congress can and should help our state and local 
governments. We could pass H.R. 2701, the ``Main Street Fairness Act,'' 
which I introduced earlier this Congress or similar legislation.
  H.R. 2701 would ensure fairness in the marketplace between remote 
retailers and their brick and mortar counterparts. It would level the 
playing field for retailers by requiring remote sellers to collect the 
same sales tax that local retailers have to collect. Thus, mom-and-pop 
retailers would no longer be at a competitive disadvantage against 
online retailers. And, it would support our states by providing them 
the authority to collect very much needed sales taxes which they have 
not been able to collect from remote sellers.
  I cannot support H.R. 1002 because it will prevent states from 
exercising their authority within their own borders.
  Instead, we should support more balanced measures, such as the Main 
Street Fairness Act.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Arizona (Mr. Franks) that the House suspend the rules 
and pass the bill, H.R. 1002, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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