April 26, 2004 CONGRESSIONAL RECORD — SENATE S4345 Mr. DASCHLE. I yield the floor and that the citizens of the country who have been State treasurers, who have suggest the absence of a quorum. have had a chance to understand more been local officials—the worst thing to The PRESIDING OFFICER. The clearly what we are talking about, and me is we are breaking our promise clerk will call the roll. the State and local officials who will about doing no harm to State and local The legislative clerk proceeded to see exactly what we are doing which governments, particularly on my side call the roll. might affect the future of State and of the aisle, the Republican side of the Mr. ALEXANDER. Madam President, local governments in America will sud- aisle. I ask unanimous consent the order for denly say there is a little more to this We were elected promising to do no the quorum call be rescinded. than meets the eye and that we will harm to State and local governments. I The PRESIDING OFFICER. Without come to a good conclusion. will be talking a lot about that this objection, it is so ordered. I believe it was President Harry Tru- week because I believe in that. I heard man who had on his desk a sign that it. It wasn’t just from me. f said, ‘‘The buck stops here.’’ What we are about to do today and later this In 1994, the Republican revolution CONCLUSION OF MORNING began to occur. In 1995 and 1996, we had BUSINESS week with the consideration of S. 150 is to begin a series of votes about passing Presidential elections. When the Re- Mr. ALEXANDER. Madam President, the buck. I looked on the Truman Pres- publican Party gained control of Con- what is the order of business? idential library Web site to see why gress in 1995, the first thing it did in The PRESIDING OFFICER. Morning Harry Truman, who was noted for plain this body was pass S. 1. business is closed. speaking, liked the phrase ‘‘The buck The Presiding Officer very well f stops here.’’ Here is what the Truman knows the distinguished Senator who Web site says: was the majority leader at that time. INTERNET TAX NONDISCRIMINA- His name was Senator Bob Dole of Kan- TION ACT—MOTION TO PROCEED The saying ‘‘the buck stops here’’ derives from the slang expression ‘‘pass the buck’’ sas. He carried around in his pocket The PRESIDING OFFICER. The Sen- which means passing the responsibility on to the tenth amendment. He said S. 1 ate will resume consideration of the someone else. The latter expression is said to means no more unfunded mandates. motion to proceed to S. 150, which the have originated with the game of poker, in If we vote to put into motion S. 150 which a marker or a counter, frequently in clerk will report. and the companion measure that The legislative clerk read as follows: frontier days a knife with a buckhorn han- dle, was used to indicate the person whose passed the House, we will be imposing Motion to proceed to Calendar No. 353, S. turn it was to deal. If the player wishes to a massive unfunded mandate on State 150, a bill to make permanent taxes on Inter- deal, he could pass the responsibility by and local governments. We will be net access and multiple and discriminatory passing the buck, as the counter came to be breaking our promise. taxes on electronic commerce imposed by called, on to the next player. It is rare that the Senate has had an the Internet Tax Freedom Act, and for other That would be my text today, if I purposes. opportunity to do so much harm with were preaching a sermon, because we one vote. It is very difficult to find a The PRESIDING OFFICER. The Sen- are about to vote about passing the situation where you can cast one vote ator from Tennessee. buck. By passing the buck, if we were and create permanent confusion about Mr. ALEXANDER. Madam President, to do this, we would create permanent the fastest growing technology and a I would like to address my remarks for confusion about how to regulate and permanent tax loophole for the most the next few minutes on the discussion tax the fastest growing new technology subsidized technology I can find. With that we have been having for the last 6 in America—high-speed Internet ac- that one vote, you could also impose months in this body on the question of cess. We would create a permanent tax higher taxes, local property taxes, car how to deal with the phenomenon of loophole for the high-speed Internet ac- taxes, taxes on food, and sales taxes, high-speed Internet access. It is the cess industry and the telecommuni- and break your promise to State and fastest growing new technology in cations industry, and the high-speed local governments to do no harm. America, according to a New York Internet access industry, so far as I can There is a better way to go about Times article last week. We have some tell, must already be the most heavily this. I believe that I and my colleagues differences of opinion about how to subsidized in America by Federal, have suggested that. Senator CARPER proceed in terms of the taxation and State, and local laws. We would be vot- and I and a group of nine other Sen- regulation of this phenomenon, not ing for higher taxes, not lower taxes, ators of both parties have said: Wait a only what it should be but whether the because if you order taxes to be low- minute. Let us do this a different way. Federal Government, the State govern- ered on telecommunications or high- There is a way we can vote to ban new ment, or local government should do it. speed Internet access, you are raising taxes on Internet access for 2 years. We The leader has asked all of us who taxes on local property taxes or local can provide the Senate time to con- have different opinions to work to- sales taxes on food or local corporation sider what to do about this phe- gether. We have tried that. We have taxes on manufacturing companies nomenon of high-speed Internet access worked hard. Senator MCCAIN, chair- that might be struggling to keep from growth, and we can keep our promise man of the Commerce Committee, has moving their jobs overseas. to State and local governments. been especially involved. I am grateful It is a big trick to say this is a bill to him for that. Senator ALLEN and that lowers taxes. It does create a tax Rarely has there been a chance to do Senator WYDEN, who have principled loophole for one industry. But what so much good with one vote, and that positions on this discussion, have cost does that mean? That just means would be to pass the Alexander-Carper worked hard to try to compromise on everybody else pays higher taxes. compromise, or take the original mora- the issues, as have I and my colleagues, Aren’t a lot of people going to be sur- torium of 1998 and enact it for 2 more but we simply have a difference of prised if this should be enacted and years. That would be a vote for no opinion. suddenly they find their mayor and taxes, it would be a vote for no un- Now, today, we begin debating a mo- their Governor raising local property funded mandates, and it would be a tion to proceed and to move down a taxes, raising local sales taxes on food vote for time to study it. That would track in the Senate that, I believe, is and imposing a car tax again? That is be the wise and prudent course. That the wrong track. I welcome this oppor- what happens. You lower this tax and will be the argument we will be making tunity and I thank the leader for giv- you raise that tax. today. ing us a chance to have a full debate, Then the worst thing to me as a Today, we begin a series of proce- which we will be having this week. I former Governor—and there are many dural motions—that is the way the am confident that by the time we are in this body who have been Governors, Senate works—designed to give us a finished the Senators who have had a who have been State tax commis- full opportunity to consider and dis- chance to spend more time on this, and sioners, who have been mayors, who cuss these issues.

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00009 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4346 CONGRESSIONAL RECORD — SENATE April 26, 2004 Senators ALLEN and WYDEN have of- State and local taxation of Internet ac- one tax and they raise the property fered S. 150 which will be coming up cess—which would mean my relation- tax. That is not what we are supposed this afternoon. I am under no illusions ship to the Internet service provider, to do. We promised not to do that in about the fact we will be getting to it the same as my relationship to a tele- 1995. even though I think it is moving us in phone company or a cable company or There are 62 Senators serving here the wrong direction and along the a satellite TV company—they broad- today who in 1995 voted to pass the Un- wrong track. Senator CARPER and I, ened the definition of Internet access. funded Mandates Act which said no and nine others, have offered the com- Whether intentionally or uninten- money, no mandate. If we break our promise I just suggested. I believe that tionally, this train got on the wrong promise, throw us out. I want to keep would be the best way to go—a 2-year track, running completely out of con- the promise. extension of the current ban on State trol. Maybe it was because this is a The first problem with the House bill and local taxing of international ac- very complex subject, we have a lot is $10 billion in telephone taxes. The cess. We did it in 1998. Congress did it going on here, and not many people second problem is $7 billion annually in in 2000. Congress can do it again in 2004. were paying close attention, but it got business taxes currently collected. I By voting to extend the original mor- out of control. have a source from each one of these. atorium on taxation for 2 more years, Basically, what started out as a mod- The first is the Congressional Budget Members of Congress will be casting a est benefit to consumers, a temporary Office. The source for the $7 billion is vote against taxing Internet access— timeout while we could see what was in the Multistate Tax Commission casting a vote for allowing time to con- happening, the House turned it into a memoranda and a letter from the Con- sider what the best long-term solution permanent big tax loophole for the gressional Budget Office. The third un- is and casting a vote for doing no harm Internet access industry, the tele- funded mandate in the House bill, half to State and local governments. I be- communications industry. Then, on top a billion annually in business taxes lieve, if the House were to agree with of that, they turn around and send the currently collected on the Internet us, we could get the legislative action bill to State and local governments. backbone. We will hear more about we desire in this session. We do not do that much. We debate that this week. The backbone is the in- I am prepared to move ahead, as I taxes all the time. We reduce taxes. frastructure of the Internet. The same have been all year, and I have sug- Sometimes they go up, but we do it kind of business taxes on the backbone gested for 2 years ways we could move ourselves. I did not know you could do is like business taxes on any other ahead. I am for banning taxation for this. business. Nobody likes to pay taxes, the next 2 years. I am willing to sup- I ran for the Senate the same year as but are we going to exempt them and port that. I am for no unfunded man- the Presiding Officer the Senator from make everybody else pay? Four, cost to dates and I am for time to study. Pros- North Carolina. If I knew the Senate State and local governments was $80 to pects for legislative action might have could do this, I might have run for the $120 million. On grandfathered States— been different this year, if the House of Senate promising to make a Federal that means 11 States were permitted Representatives had sent to the Senate law abolishing local property taxes as after the 1998 temporary timeout mora- a different piece of legislation to begin my way of encouraging home owner- torium; there are about 16 States al- with instead of sending legislation to ship, or I might have run for the Sen- ready taxing dial-up Internet service so extend the current moratorium. ate promising to pass a Federal law to they are permitted to keep doing Moratorium means a temporary abolish State car taxes as a way of en- that—that is $80 to $120 million out the timeout. That was the idea in 1998. Ev- couraging transportation to work, or I window, and another $40 to $75 million erybody said we have this new thing, might have run for the Senate prom- in 27 States where they are taxing the the Internet. In 1998, when the morato- ising to pass a Federal law abolishing part of the Internet access provided by rium was passed, I would wager that al- State taxes on food because there are a the telephone companies, DSL. most no one in the Congress had ever lot of hungry people. But that would Finally, the language of H.R. 49, the heard of high-speed Internet access. have been a trick on the voters. The bill that came over from the House, The only kind of Internet access we voters would have caught up with me would hurt universal service fund fees were using was AOL which hooks up to and said, Wait a minute, LAMAR, who and September 11 service fees. That is your dial telephone. But we said—and I are you trying to fool? You cut our very important in Alaska, rural North agreed with this and I supported this— sales taxes, and now we will have an in- Carolina, and Tennessee. If there is less that we don’t really understand what come tax in Tennessee. Because if sales money in the fund, there is less money this is. This is new. Let us just put in taxes go down, this must go up. for September 11 and universal service. This bill came to the Senate like a a temporary timeout. Then we will de- I suppose one could say we will close freight train. Nobody voted against it. cide what to do. The assumption, in my a few schools, raise tuition, and cut the It passed by consent order. What did it mind at least, was that as the Internet cost of Government. But it means do? It came over wearing a dress that industry grew and became mature, it lower taxes for one group of taxpayers and it means higher taxes for another. said, ‘‘I am Ms. Internet Access Tax would pay the same taxes as everyone Ban.’’ But it actually was $10 billion in else. We don’t say the Senator from That is what we have over here. Sometimes it has been said these fig- telephone taxes, $7 billion more in North Carolina and the Senator from business taxes, half a billion in busi- Tennessee will pay taxes which the ures that have been used are not accu- rate, so I have some detailed informa- ness taxes, sales taxes of a couple hun- Senator from Wyoming will not pay. dred million a year, universal service tion for the CONGRESSIONAL RECORD. We have to have an awfully good rea- fund fees, September 11 fees, all of that For example, the bill sent to the Sen- son for that. We believe in the fair and which is the responsibility of State and ate from the House of Representatives equitable distribution of taxes. local governments. We say, here, you in the name of a simple, permanent ban We are talking about whether the cannot collect. That is an unfunded Internet industry should pay the same on the little connection we make to Federal mandate of the worst sort. sales taxes and the same kind of busi- the Internet access would do this: One, Now after some discussion, the bill ness taxes that everybody else is pay- it would put at risk $10 billion col- has gotten a little better. Senator ing or whether we should lower their lected annually in telephone trans- ALLARD, to his great credit, has worked taxes permanently and create a great action taxes in the State and local gov- hard. There may be no better-humored big loophole for them, subsidize them ernments. State and local governments Member of the Senate. some more, and then have higher taxes collect more than $10 billion annually He and I joined in a debate at the for everybody else. in taxes on telephones. If we tell them Heritage Foundation on a minority of The House didn’t send us another they cannot do that, what do they do? principle. We had a good debate and temporary timeout which would have Senator FEINSTEIN has said, and I am discussed the issues. He improved the been the third on State and local tax- sure she will say later this week, she bill some. There are fewer unfunded ation of Internet access. The House has 125 cities and counties in California mandates. sent over a permanent ban. But it was that say this might interrupt 5 to 10 I will be asking unanimous consent more than that. Instead of banning percent of their local budgets. We cut at the end of my speech to have printed

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00010 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4347 in the CONGRESSIONAL RECORD the un- pay for it and not send the bill to State the rest of us will pay more? You can funded Federal mandates in his bill, S. and local governments. I think we, as barley pick up a newspaper today with- 150. Still, as far as I know, his bill Members of Congress, ought to do as out reading about some new initiative threatens $3 to $10 billion in telephone Paul Harvey says, and tell the rest of from the private sector offering high- taxes currently collected. He and I the story: If we lower your taxes on speed Internet access. have said to each other we do not in- Internet access, we are going to raise According to CBO, from 1996 to 2001, tend to do that. However, that was sev- your property taxes or your car taxes. the four largest telephone companies eral weeks ago and we have been work- Sure as the world, it is going to be our increased their investment in ing hard to write language we agreed responsibility. We can call this the broadband technologies by 64 percent. on that expressed our mutual inten- Raising the Local Property Tax Act of Cable companies increased their in- tion. We have failed so far. 2004 or the Car Tag Act of 2004 or the vestment by 68 percent in the same pe- No. 2, his legislation continues to say Sales Tax on Food Act of 2004 or the riod. to State and local governments, you Raise the Corporate Tax on Manufac- Now, sometimes this discussion cannot collect half a billion a year in turing and Send the Jobs to China Act makes my head hurt because high- business taxes that are currently col- of 2004. That is what we will be doing. speed Internet access is a subject that lected on the Internet backbone. One of the other issues I hope we talk is unfamiliar to most of us, and you al- No. 3, his legislation would phase out about this week is whether there needs most have to warm up in order to be the sales taxes State and local govern- to be an additional Government sub- able to talk about it and understand ments are currently collecting on sidy for high-speed Internet access on the complexities of what is going on. Internet access. So S. 150 continues top of the billions already provided by But, in effect, it is very simple: It is down the wrong track. It continues to Federal, State, and local governments. just faster access to the Internet. It provide a big subsidy to the fastest According to the Congressional Re- can be provided in lots of different growing technology already heavily search Service, there is already at least ways. Your cable company will sell it subsidized. $4 billion in Federal tax subsidies to to you. Your telephone company will How much does it cost the Federal encourage the use of high-speed Inter- sell it to you. There is a nice young taxpayer? Not a penny. Not a penny. net access. I have a report from the Al- woman who comes on your direct sat- We will send the bill to Governors and liance for Public Technology. I will not ellite television and she will sell you mayors and local governments and let inflict its length on the CONGRESSIONAL high-speed Internet access. them raise property taxes, let them RECORD today, but it is filled with There is another way we might get raise sales taxes on food, let them State and local programs to encourage it. There may be more. Things are worry with all the other unfunded the growth of high-speed Internet ac- changing. But your electric company mandates and add this right on top of cess—dozens and dozens of State and may sell it to you over electric wires. it. That is what we are doing. We are local subsidies, in addition to the Fed- There is a lot of talk about how we passing the buck. eral subsidy to encourage the spread of need to create more and more subsidy I ask unanimous consent at the end high-speed Internet access. so we can reach more and more Ameri- of my remarks I be allowed to have Why is there a need for more subsidy cans, that we will have people left out. printed in the RECORD the unfunded at all when the New York Times re- Well, thanks to the expansion of the Federal mandates on H.R. 49 first, and ported, last week, that high-speed rural electrification system in America unfunded Federal mandates on S. 150 Internet access is the fastest growing during World War II, almost every next. new technology in America? It is grow- American has an electric wire some- The PRESIDING OFFICER. Without ing at an astonishing rate. According where near them. Electric companies objection, it is so ordered. to a Congressional Budget Office report have begun to offer high-speed Internet (See exhibit 1) in February, the United States has the access service. Mr. ALEXANDER. Madam President, highest number of broadband sub- Madam President, I have an article there is no doubt this is an unfunded scribers—‘‘broadband’’ is another name from the Washington Times of April 5, Federal mandate. We can talk about for high-speed Internet access—at 19.8 2004. I ask unanimous consent that this that more this week. Some of my col- million. It is probably a lot higher article be printed in the RECORD, in the leagues on my side have come up and today. proper sequence, following my re- said that does not sound like an un- An April 19 story from the Associated marks. funded mandate. I thought an unfunded Press tells us that a new study by the The PRESIDING OFFICER. Without mandate was when we told you you had Pew Internet and American Life objection, it is so ordered. to do something and pay for it. But if Project has found that almost one- (See exhibit 2.) I tell you you have to stop doing some- quarter of all Americans—more than 48 Mr. ALEXANDER. According to this thing, that you cannot collect that tax, million people—have high-speed Inter- article—and we will be talking about that is a cost I have imposed on you. If net access at home. This is two out of this more this week—according to the I and the Congress say to Governor every five Web users who have it at Federal Communications Office of En- Alexander, in Tennessee, ‘‘Stop col- home. The same study showed that gineering and Technology, having an- lecting property taxes, stop collecting more than half of Americans have it at other major player—the power compa- sales taxes,’’ then I have to go think of work. CBO told us, last December, that nies—has helped to bridge the digital some other tax—lower taxes here; high- 88 percent of all ZIP codes have at least divide. The power companies have the er taxes there. Nothing makes local of- one high-speed subscriber, and 29 per- infrastructure to make broadband ficials madder than some Member of cent have access to more than five. available nationally. the U.S. Senate or Congress to come up In September of 2002, the U.S. De- There are a lot of utilities out there that here and have some big idea and pass a partment of Commerce told us con- really, really want to do this, [says the head law, and take credit for it—lower taxes sumers are adopting broadband tech- of another firm]. on the Internet—and then send the bill It is being offered today in Manassas, VA. nologies at a faster pace than CD play- The city of Manassas offers high-speed Inter- home to them and then that same ers, cell phones, color TVs, and VCRs net access through their electric company Member of Congress or Senator is usu- during the same period in their devel- for $26.95 a month. ally down to the district the next opment. CBO, the Congressional Budg- Customers typically pay $30 to $40 a month weekend making a big speech about et Office, reported, in December of last for DSL service and $40 to $50 a month for local control. Nothing gets the blood year, that cellular phones took 6 years Internet access over cable. up in a Senator or Governor or mayor from their introduction to reach 7.5 If we are really talking about taxes or county commissioner more than million subscribers; high-speed Inter- on Internet access, we are only talking that, and that is exactly what we are net access reached 7.5 million sub- about $1 to $3 a month, for most Amer- doing. scribers in half that time. icans, that they would save if we Sen- If the Congress wants to create a big, Then, why do we need additional tax- ators and our fellow Members of Con- additional tax break for high-speed payer subsidy? Why do we need to say gress go home and say: Look at us. We Internet access, then Congress should to these folks: You pay less taxes and just banned State and local taxation of

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00011 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4348 CONGRESSIONAL RECORD — SENATE April 26, 2004 Internet access. Well, that will save Finally, just in case Congress should, what tax we are going to raise to pay you $1 to $3 a month. That is not what in its wisdom, decide to grant an addi- the bill, or are we going to increase the they are doing, though. They are ex- tional subsidy to high-speed Internet deficit or are we going to cut services, empting a whole industry from tax- access, the first thing we should do is because that is precisely what the ation that most industries pay. But for make sure Congress pays for it and mayors are going to have to do. That is those who worry about whether high- doesn’t send the bill to State and local what the Governors are going to have speed Internet access is going to be governments. The House bill and the to do, and the county commissioners available to every single American, it Allen-Wyden bill, S. 150, which this mo- are going to have to do. will be available from your electric tion to proceed is about, expressly vio- If everybody would go home 1 week company soon. late the Budget Act which was amend- and ask, How would you like one more Now, there is another phenomenon ed in 1995 by the Republican majority, unfunded mandate to deal with along we should talk about in terms of enthusiastically. And President Clin- with all the others, I think they would whether we need to have a subsidy. All ton signed it. Sixty-two Senators now get an earful. At least I do when I go this growth is happening, just as it serving in this body voted for it, and home. should. We have a promarket economy. 300 Republicans stood on the Capitol I look forward to this week. I hope Traditionally, we do not pick economic steps in late September, early October, this is the beginning of a constructive winners and losers. That is what they right before the election that produced debate. I hope the end result is that we do in Japan. They do it a lot more than the Contract with America and the reject the proposal we are moving to we do. Our economy is stronger and first Republican Congress in a long proceed on this afternoon. Those are better than theirs because the Govern- time, and this is what we said: Our proposals that would create permanent ment does not do as good a job, we be- party, no money, no mandate. If we confusion in this complex area of try- lieve, at picking winners and losers as break our promise, throw us out. ing to deal with the growth of high- the free market does. That is, at least, This is about the Congress keeping speed Internet access that would create what a great many of us over here on its promise. I have a great many an unwarranted additional tax loophole the Republican side traditionally say, speeches that say in words more effec- for one of the most heavily subsidized that we do not like industrial policy. tively than I how important avoiding industries in America, the high-speed We do not like picking and choosing an unfunded Federal mandate is. Most Internet access industry; that would winners and losers. of them were made by Members of this create higher taxes because when you So we asked the Congressional Budg- body. There will be an opportunity to order taxes lowered on some people, et Office, Congress did, last year, about hear those speeches again this week be- they are going up on others; and that this. CBO reported to us, Congress: cause they were good in 1995, and they would break a promise this Congress [T]he broadband market is booming. . . . are good in 2004. made to State and local governments 9 [N]othing in the performance of the residen- There is one way to provide a further years ago that we would do no harm, tial broadband market suggests that federal subsidy to encourage the use of high- that we would not pass any more un- subsidies for it will produce any economic speed Internet access, if we think it is funded Federal mandates. gains. necessary, that would make a lot more What we should be doing is what we Yet here we are, getting ready to sense than the various proposals that are doing in other parts of the Congress spend a whole week sending billions of have been offered so far. That, interest- and in the courts and in the Federal dollars more in subsidies to the high- ingly, is the Texas plan. It was the plan Communications Commission. The speed Internet access market. Why are authored by our President, George W. chairman of the Commerce Committee, we doing this? To even encourage Bush, when he was Governor of Texas. Senator MCCAIN, has already held a broader use of it? Well, I am not sure it It is very simple. It is aimed at con- hearing about high-speed Internet ac- will have that effect. sumers, not big companies. In 1999, cess, its regulation, and its taxation, This is an example from the Atlanta Governor Bush signed a law exempting and tried to sort out what to do about Constitution Journal of September of a the Texas State sales tax on Internet it since it was not envisioned by the couple years ago. It is a little old, but access up to the $25 the consumer paid Telecommunications Act of 1996. The it is good information. each month. In other words, there is no Senator from Alaska, Mr. STEVENS, has In LaGrange, GA, they give away State tax in Texas on the first $25 you said several times that he thinks we high-speed Internet access for free. So pay for Internet access. need to revisit the Telecommuni- we can ban taxation. We can keep We just heard that in Manassas, VA, cations Act and do this in a com- Gwinnett County from imposing a dol- it doesn’t cost you more than $25 to get prehensive way. lar tax on your high-speed Internet ac- Internet access from your power com- The Chairman of the Federal Com- cess in Georgia, but we won’t be able to pany. So you don’t pay any tax on munications Commission, Michael do that because they give it away for Internet access in Texas. The Governor Powell, has talked about the impor- free. And what has happened? Despite suggested to the Congress some time tance of digital migration, high-speed the fact they give it away for free, only ago that if Congress were bound and Internet access. We will be able to half the city has subscribed a year determined to give another big subsidy carry to our homes movies, e-mail, all later. A lot of people didn’t want it. to the telecommunications and high- sorts of services. It is wonderful. But This story tells why. speed Internet access industry, do it when it does that, it may have the ef- I ask unanimous consent this article this way. Use Governor Bush’s idea; use fect of wiping out 5, 10, 15 percent of from the Atlanta Constitution be the Texas plan. Then I would say we the State and local tax base. We should printed in the RECORD following my re- ought to figure out what it cost State think about that before we do that. marks. and local governments and reimburse Among all of the principles we need The PRESIDING OFFICER. Without them for it. to discuss, one of those is federalism, objection, it is so ordered. It is ironic that last year we stood the improper relationship of strong (See exhibit 3.) here and cried about the condition of State and local governments to the Mr. ALEXANDER. It is an inter- State and local governments and sent a Federal Government. We should not esting article. It is like a lot of other $20 billion welfare check to the States. slam through like a freight train a per- things. Just because we in Washington This year we are taking credit for low- manent tax loophole for this industry think everybody in America ought to ering taxes on Internet access $1 a without carefully considering the long- have high-speed Internet access tomor- month and sending the bill to State term consequences to State and local row doesn’t mean they will take it, and local governments. I suggest if we governments and the parks and the even if we give it to them. So then why really want to consider a Federal law schools and the universities and the should we give the telecommunications that affects State and local taxation of health care and other services they are industry another big subsidy to offer Internet access over the long term, we expected to provide. high-speed Internet access to people ought to look at President Bush’s idea A vote for the legislation that came who are already getting it free and when he was Governor of Texas. Then I from the House and for S. 150 or any- won’t take it? would argue it is up to us to decide thing like it is a vote for permanent

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00012 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4349 confusion, a vote for unwarranted tax tax—how important it is for us here I see the Senator from Ohio, a former loopholes, a vote for higher taxes, and not to try to tell them what taxes to chairman of the National Governors a vote to break a promise. collect and what services to provide. Association before he was a Senator. A vote for the Alexander-Carper com- Again, I ask unanimous consent that He can speak with authority about promise is a vote to ban taxes for an- that be printed in the RECORD. what happened in 1994 and 1995 because other 2 years, to extend the morato- The PRESIDING OFFICER. Without he was a national leader in the move- rium, extend the temporary timeout. It objection, it is so ordered. ment to persuade Congress to stop un- is a vote against taxes. It is a vote (See exhibit 6.) funded Federal mandates and to pass against unfunded mandates because it Mr. ALEXANDER. Finally, there are the Unfunded Mandate Reform Act, does no more harm to State and local two articles which are a little long, but which amended our Budget Act. He is a governments. And it is a vote for a rea- they are important. I know Senators principled man and I am delighted to sonable period of time, up to a couple and staff members will bring their at- be working with him on this issue and of years, for us to thoughtfully con- tention to this subject, and we know on others. sider what to do. we will be debating it for the next sev- Again, I thank the leader for setting Madam President, I am new to this eral days, and that truly we will be in motion the series of procedural steps body, but I have watched it for a long considering it for the next couple of that will give us a chance to fully de- time. I had my first opportunity to years as the Commerce Committee bate this issue this week. I thank Sen- work in it when the Senator from wades through all of the issues sur- ator ALLEN and Senator WYDEN for North Carolina and I both came to rounding digital migration and, hope- their courtesies and patience as we Washington a few years ago. I have fully, come to a comprehensive ap- worked on an issue we disagree about. great respect for the wisdom here and proach toward how we approach tax- I look forward to a full discussion and, for the rules of this body. They offer us ation and regulation—I hope minimal I hope, a temporary 2-year timeout to a chance to deliberate a little longer taxation and regulation, but appro- give us a chance to think about that than our friends in the House are able priate taxation and regulation of high- which bans taxes for 2 more years, but to, and sometimes that is important to speed Internet access, and how we di- keeps our promise and does no harm to do. I believe it is on this issue. vide that among the various govern- State and local governments. I am ready to move, ready to come to ments. These are the best two articles I yield the floor. a conclusion. There are at least a cou- I have found that help explain the his- EXHIBIT 1 ple of ideas out there that will get a tory behind the Internet access tax UNFUNDED FEDERAL MANDATES CREATED BY legislative result this week if we would moratorium bill and the issue before H.R. 49 like to do it. But I am not ready to us. 1. $10 billion annually in telephone trans- The first is by the Center on Budget actions taxes currently collected—under vote for permanent confusion, another and Policy Priorities, dated March 15, H.R. 49, the telecommunications industry big tax loophole, higher taxes, and I am 2004, entitled ‘‘ The Alexander-Carper could be exempted from the collection of not ready to break our promise to Internet Access Tax Moratorium Bill, state and local taxes on gross receipts taxes, State and local governments about un- S. 2084: a True Compromise That Sub- sales an use taxes, and other telecommuni- cations transactions taxes. As the tele- funded mandates. stantially Broadens the Original Mora- I ask unanimous consent to have communications industry offers more and torium.’’ more of its services over the Internet, more printed in sequence following my re- I point out that the leader asked us marks the following articles: and more of the industry’s revenues could be who are opposed to this to compromise, tax exempt. Cost to state and local govern- One is a November 4, 2003, editorial and we have. The Alexander-Carper leg- ments: $10 billion annually. Source: Letter from the Washington Post. The Sen- islation is broader than the original from Congressional Budget Office, February ator from Ohio, Senator VOINOVICH, moratorium, and it levels the playing 13, 2004. brought this to our attention at that field so all providers of high-speed 2. $7 billion annually in business taxes cur- time, saying this Congress should step rently collected—The taxes preempted in Internet access are treated the same— H.R. 49 go beyond taxes on access by cus- back from the brink temporarily, ex- at least so far as the Congress is con- tend the moratorium, and sort this all tomers to the Internet to include income, cerned—on the last mile between the property, and other business taxes levied on out in a way that doesn’t intrude on user of high-speed Internet access and telecommunications companies. Cost to State prerogatives. the provider. state and local governments: $7 billion annu- The PRESIDING OFFICER. Without I ask unanimous consent that the ar- ally. Source: Multistate Tax Commission objection, it is so ordered. ticle’s summary be printed in the Memorandum, September 24, 2003; Letter from Congressional Budget Office, February (See exhibit 4.) RECORD in sequence following my re- 13, 2004. Mr. ALEXANDER. Madam President, marks. I ask unanimous consent to have print- 3. $500 million annually in business taxes The PRESIDING OFFICER. Without currently collected on the Internet ‘‘back- ed in the RECORD an editorial from the objection, it is so ordered. bone’’—Under H.R. 49, states could not con- Dallas Morning News. ‘‘Congress must (See exhibit 7.) tinue to tax some business transactions such get this right,’’ it says in its last sen- Mr. ALEXANDER. Finally, I want to as business-to-business transactions between tence, ‘‘and a 2-year moratorium with offer another recent article by Harley Internet service providers and telephone all new Internet access fees will give Duncan and Matt Tomalis, from the companies. Cost to state and local govern- Congress enough time to sort through Multistate Tax Commission, entitled ments: $500 million annually. Source: Fed- the issue.’’ ‘‘The Forgotten First Sentence.’’ eration of Tax Administrators’ Memo- randum, November 10, 2003. The PRESIDING OFFICER. Without The definition of Internet access is 4. Sales taxes on Internet access currently objection, it is so ordered. what is causing a lot of the problem collected—Under H.R. 49, states that are now (See exhibit 5.) here. We hear a lot about that from the collecting taxes on Internet access could not Mr. ALEXANDER. Madam President, Senator from Ohio and those on both continue to do so immediately upon the bill I ask unanimous consent to have print- sides of the issue. The problem is, the being signed into law. Cost to state and local ed in the RECORD a letter from Com- way the bill is written, it doesn’t focus governments ‘‘grandfathered’’ by the origi- missioner Loren Chumley from the De- only on the consumer and provider of nal 1998 Act: $80–120 million per year. Cost to partment of Revenue from the State of Internet access, it goes way back up state and local governments (27 states) im- posing taxes on charges for the portion of Tennessee. She points out Tennessee is the line and bans the State and local DSL Internet access services that they do now not taxing, not imposing a sales government from collecting taxes on not consider to be ‘‘Internet access’’: $40–75 tax on Internet access because our the whole industry, and a whole vari- million per year. Source: Letter from Con- State law doesn’t permit it. In fact, the ety of services that are now part of the gressional Budget Office, November 5, 2003. direction of things has been that State and local tax. Nobody wants to 5. Universal Service Fund fees and 911 serv- States have repealed their taxes on pay taxes on anything, but if we ban ice fees—The language of H.R. 49 would pro- hibit the federal government and/or states Internet access. States do things like those taxes, we raise these taxes. This from imposing or collecting fees on tele- that. But this points out in very clear article helped us to clearly understand communications offered over the Internet. terms how important it is for our how the definition of Internet access is As telephone service migrates to the Inter- State, which doesn’t have an income the problem here. net, universal service funding and funding

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00013 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4350 CONGRESSIONAL RECORD — SENATE April 26, 2004 for the provision of 911 and E911 service will Communications Commission (FCC) pro- prices and provides access to underserved be reduced as traditional telephone sales rev- moted it as a way to offer high-speed Inter- areas, Precursor Group analyst Pat Brogan enue drops. Cost to state and local govern- net services for people in rural areas. The isn’t so sure the service will take off because ments: $3–4 billion. Source: Congressional FCC also saw broadband access from power DSL and cable Internet services have been Research Service; Letter from Congressional lines as an alternative to high-speed access around for years. Broadband over power lines Budget Office, February 13, 2004. from phone, cable and satellite companies simply might be too late to catch up, he UNFUNDED FEDERAL MANDATES ON STATES (S. that could lower consumer prices. said. 150) Since the power grid is ubiquitous, But electric companies want to make broadband over power lines could be avail- 1. $3–$10 billion annually in telephone taxes money off their power lines, and consumers able to nearly every U.S. home. currently collected—Under the moratorium, who have been relegated to using low-speed ‘‘Having another major player—the power dial-up services are interested in subscribing states may not be able to continue to tax companies—has to help bridge the digital di- telephone calls if they are made over the to broadband access over power lines, said vide. The power companies have the infra- Joseph Marsilii, president and chief execu- Internet. Cost to state and local govern- structure to make broadband available na- ments: within five years losses in tele- tive of Main.net. tionally,’’ said Ed Thomas, chief of the FCC’s ‘‘I firmly believe there is a huge market communications revenues could rise to $3 Office of Engineering and Technology. billion per year; ultimately, state and local for this,’’ he said. ‘‘I think we’re on the The FCC in February proposed rules to cusp.’’ revenue loss could be $10 billion per year. govern broadband over power lines. The rules EXHIBIT 3 Source: Letter from Congressional Budget aren’t final, but a handful of cities, utilities Office, February 13, 2004. and technology companies are pushing for- [From the Atlanta Journal-Constitution, 2. $500 million annually in business taxes ward. Sept. 2, 2004] currently collected on the Internet ‘‘back- Current Communications Group in Ger- A GEORGIA CITY DECIDED TO PROVIDE ITS bone’’—Under S. 150, states could not con- mantown, Md., is working with Ohio utility RESIDENTS WITH; A YEAR OF FREE INTER- tinue to tax some business transactions such Cinergy Corp. to market broadband service NET ACCESS. BUT ONLY HALF HAVE SIGNED as business-to-business transactions between over power lines in Cincinnati. ON. WHY LAGRANGE ISN’T MORE ‘‘WIRED’’ Internet service providers and telephone Current Communications also has a pilot (By Ernest Holsendolph) companies. Cost to state and local govern- project with Pepco in Potomac to test the ments: $500 million annually. Source: Fed- new Internet service. LAGRANGE.—A delegation of 11 Japanese eration of Tax Administrator’s Memo- ‘‘There are a lot of utilities out there that legislators came calling on the city of La- randum, November 10, 2003. really, really want to do this,’’ said Jay Grange recently to learn more about its ef- 3. Sales taxes on Internet access currently Birnbaum, vice president of Current Commu- forts to connect every household in the city collected—Under S. 150, states could not con- nications, a privately held firm founded four to the Internet free of charge for a year. tinue to collect sales taxes on Internet ac- years ago. The assemblymen for Gunma Prefecture cess after the three-year grandfather period. Main.net Powerline Communications in were here ‘‘to understand the community Cost to state and local governments ‘‘grand- Reston is working with Manassas, which strategy,’’ said Kazuo Aikyama, chairman of fathered’’ by the original 1998 Act; $80–120 owns its electric plant, to deliver Internet the delegation. million per year. Cost to state and local gov- content over the power lines. They aren’t the first to come on such a ernments imposing taxes on charges for the Main.net and Current Communications are quest. portion of DSL Internet access services that two of the primary companies in a small A well-worn path to city hall on Ridley they do not consider to be ‘‘Internet access’’: cluster of firms that market technology to Street has seen similar delegations from $40 to $75 million per year. Source: Letter send Internet data over power lines and England, Canada and Bulgaria as well as cu- from Congressional Budget Office, November make the modems that subscribers plug into rious groups from cities and towns in the 5, 2003. wall sockets. United States. Experts long have known power lines could EXHIBIT 2 At the urging of City Manager Tom Hall accommodate Internet data. Electricity and others, LaGrange set out to provide easy [From the Washington Times, Apr. 5, 2004] travels at a lower frequency than an Internet access for residents to create a ‘‘wired’’ com- ELECTRIC COMPANIES BEGIN OFFERING signal, so the two can share a power line. munity able to interact with one another— BROADBAND SERVICE Public works department employees in Ma- and do business more easily with City Hall, (By William Glanz) nassas hook up new Internet subscribers agencies and other stopping points. Sean Porter’s high-speed Internet connec- nearly every day. They would do it by connecting the homes, ‘‘They’re beating down our doors,’’ said tion doesn’t come through a cable-television for free at first, hopefully showing people John Hewa, assistant director of the city’s cord, a telephone line or from a satellite. how valuable the service was and later get electric utility. An electrical outlet powers the broadband them to pay for subscriptions. That’s because few people there have high- connection at the Manassas architect’s firm. However, Dave McGee, a LaGrange native speed Internet access, Mr. Hewa said. who is a glass worker, was unaware of the ‘‘The greatest advantage is that we only ‘‘A lot of people are telling us they can’t program. ‘‘I have heard things about this need to have an outlet to use it,’’ Mr. Porter get high-speed services where they live. Internet, but I don’t know anything about said. There are a lot of areas where it’s not avail- it,’’ said McGee, 47, as he walked along a side Manassas is the second city in the nation, able, and they’re using dial-up service,’’ he street off Lafayette Square. where broadband service over power lines be- said. And Mable Abercrombie, who gave her age came commercially available. City officials The FCC found in June 2003 that there were discreetly as ‘‘over 65,’’ said she had heard of there began marketing the service in Feb- no high-speed Internet subscribers in 9 per- the LaGrange project but was keeping her ruary. cent of U.S. zip codes, where about 1 percent distance from it. Today, only about 300 U.S. consumers pay of residents live. In another 16 percent of ‘‘I am too busy in my garden; need to spend for high-speed Internet access over power U.S. zip codes, there was just one broadband more time there,’’ she said over the counter lines, but this new method of delivering Web provider. content could jolt the market for Internet The American Public Power Association, of the Merle Norman cosmetics display service. which represents utilities, says 75 percent of where she works. Allentown, Pa., and Cincinnati are the its members serve communities with fewer McGee is an African-American, Aber- only other U.S. cities where residents are than 10,000 people, many of whom don’t have crombie a senior citizen. Each represents a paying for the new high-speed Internet serv- high-speed Internet access. group that has been a special challenge to ice, but electric companies from North Caro- About 24 million people subscribe to LaGrange’s effort to bring all its residents lina to Hawaii are testing the service or plan broadband service, according to Washington online. to begin a pilot project. Federal regulators research firm Precursor Group. ‘‘We expected that with the service offered hope broadband access over power lines be- But spokesmen for Verizon Communica- free of charge, we would have big interest in comes widely available, especially in rural tions Corp. and Comcast Corp. both say they communities where people had been unable areas. are equipped to deliver high-speed service in to afford Internet service,’’ said Joe Maltese, In Manassas, 60 homeowners and a handful Manassas. economic development director. of businesses have Internet access through The new broadband service in Manassas Instead, he said, there was an overall ac- power lines. Another 1,200 homeowners have also might be popular because the city ceptance of nearly 50 percent—with no high asked to be hooked up. That’s nearly 10 per- charges $26.95 a month, less than digital sub- interest in the southern city communities cent of the city’s 12,500 homes. scriber lines (DSL) or cable Internet pro- where the black population is heaviest. By the end of the year, broadband over viders. Current Communications charges a Interestingly, LaGrange recently was power lines could be available to all Manas- basic rate of $29.95 a month in Cincinnati. named one of the top seven ‘‘intelligent’’ sas residents. It would be the first U.S. city Customers typically pay $30 to $40 a month communities in the world by the prestigious where the new technology is available to all for DSL service and $40 to $50 a month for World Teleport Association. residents. Internet access over cable. In addition, LaGrange, about 65 miles Internet access from power lines began to Although the FCC is hopeful that southwest of downtown Atlanta, has been get attention last year, when the Federal broadband over power lines helps lower cited as ‘‘Intelligent City of the Year’’ by the

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00014 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4351 association. And so, while gaining recogni- Simama’s view is corroborated by a study would take time to devise a system to pre- tion for its technological push, the distinc- of the Children’s Partnership, a Los Angeles- vent duplicative or discriminatory taxes. tion seems lost on a major share of its 26,000 based nonprofit organization that mostly fo- Now, with the tax moratorium having ex- citizens. cuses on the needs of young people. But it pired on Saturday, Congress is poised to Partly to keep plugging away with resi- also reached conclusions about reaching make the ban permanent, broaden its reach dents who remain unexcited, city officials lower-income people. and wipe out existing taxes that had been decided two weeks ago to extend the free Among the barriers to strong Internet in- grandfathered in under the previous law. offer for another year. terest in the hard-to-reach communities, the With state budgets under stress and the ‘‘We have worked hard to make service rel- study found, are literacy, language, culture Internet thriving, this is an unnecesary—and evant to people’s lives,’’ said Hall, 40, the and lifestyle, and the ‘‘lack of most urgently costly—incursion on states’ rights. city manager of LaGrange since 1994. needed local information.’’ The argument for permanently barring Under Hall and Maltese, the city has How specific might that information be? taxes on Internet services centers on two pushed to get interest and response, working One respondent said: issues. One is the argument that taxing with school officials and holding rallies in ‘‘Many of the people in the housing project Internet access, whether through phone lines public housing communities with U.S. Sen. where I work want to find out about jobs or cable modems, would amount to double Max Cleland (D–Ga.) as a speaker. They also they can do in the neighborhood. If the taxation, because the phone lines and cable have advertised in papers and on television neighborhood was more connected and service are already taxed. That’s true, but and have mailed letters directly to resi- mapped online, this kind of information purchasing Internet access provides a sepa- rate—and separately taxable—bundle of serv- dences. would really make a difference to residents.’’ ices. Terming this double taxation is like Subscribers can get the service either The study projected that some 50 million saying that a shopper who pays tax on a pair through cable modems and personal com- Americans may be inhibited by one or more of slacks should then be exempt from being puters, or they can access it via television of the barriers, with 41 million specifically taxed on a shirt bought with it. through the black set-top box. held back by lack of reading ability. Residents can use wireless keyboards, as The other argument is that taxing Internet These are the kinds of extended consider- with WebTV, to connect to the Internet, or access would worsen and prolong the digital ations the leaders in LaGrange will have to to special city networks where they can divide, the computer gap between rich and confront in the second year of effort to get learn about community activities, church poor. This may be a problem, but prohibiting more residents involved in Internet commu- events, shopping opportunities, the weather taxation is not the answer. It’s not the extra nication. few cents on a monthly bill that’s stopping and other information. Among the barriers that must be scaled, That’s all the stuff tech-savvy people now the less well-off from Googling their way to are inertia among people who see no ‘‘need’’ take for granted in the information age. But the middle class. A policy to erase the dig- as well as others who are outright sus- there’s a problem, says Greg Laudeman, a ital divide, however laudable, doesn’t justify picious. community information specialist with the no-tax solution. The federal government Abercrombie, the gardener, when asked Georgia Tech’s economic development out- wants to spur home ownership for low-in- why she would not try something that is free reach program. come familes—surely a bigger problem than There is a gap, he said, between segments of charge, replied: ‘‘Well, yes, but what hap- lack of Internet access—but that doesn’t of society who embrace computers and dig- pens after the year when it’s free?’’ lead it to tell local governments that they ital information, and other people. The LaGrange arrangement allows some- can’t impose property taxes. ‘‘Early adopters (of new ideas and tech- one to try it, then to decide what it’s worth. What’s driving this legislation is that tele- nology) and the group that comes right be- ‘‘But,’’ she said, ‘‘I am not sure I want to be communications companies and Internet hind them have different needs, desires and interested.’’ service providers see an opportunity not only interests than others,’’ he said. She was given a computer by her son, who to make the tax moratorium permanent—in ‘‘And in a curious way, the technology wanted her to trade e-mail, but she has not itself a bad idea—but to save what could companies, early adopters start coming up done that, despite prompting by grand- amount to billions in additional taxes. The with more and more that suits their inter- children and others. law frees service providers from having to ests at the same time that others ignore it Patricia Graves, who works in the city pay taxes on telephone service they use to because they do not need it, or immediately cemetery office, has been a subscriber to the provide Internet access. And as the Internet becomes a more effective medium for pro- see the usefulness of it.’’ Internet service for a year and loves it. Laudeman and others say the ‘‘digital di- Graves, who is black, said she enjoys e- viding phone service and delivering products vide,’’ when examined this way may not be mail, learning about places to vacation, and such as downloaded movies, software and racial, or even economic entirely, but more a just gathering information. music, the legislation could sweep such of- ferings within the ambit of services that different way people view developments. ‘‘I have not made a purchase yet, but I am ‘‘Many of us (early adopters) learn to value thinking about it,’’ she said. states are prohibited from taxing. The Internet shouldn’t be subject to con- information apart from what we do, or apart Asked why some of her friends had not flicting taxes, but that’s no reason to argue from the material or physical things we own shown the same enthusiasm, she was candid. that it shouldn’t be taxed at all. There or use . . . we value it as a resource,’’ ‘‘I just find many people are just afraid of should be a level playing field for taxing computers. And some people are suspicious Laudeman said, ‘‘while other people value in- Internet access, whether it comes through of the city and wonder why this interest in formation only as it relates to what they are ordinary dial-up, cable modems or high- doing.’’ putting these machines in their homes. Some speed telephone lines. The last thing Con- He added, ‘‘It’s like the world is divided be- even wonder if they are for watching them.’’ gress should do now to cash-strapped states tween those who enjoy talking and thinking State Rep. Carl von Epps, a south La- is pass a law that would not only perma- about technology, and those who simply use Grange merchant, said he does not subscribe nently put Internet access off limits for tax- it.’’ to the city service. ation but also deprive them of revenue that Hall and Maltese grapple with that dichot- ‘‘Don’t get me wrong,’’ he said. ‘‘It is fine, they now collect. Proponents of the law are omy between groups nearly every day. and it is a great way for people to get their busy demagoguing the issue, suggesting, as ‘‘Some people say the service has no rel- foot in the door and learn about the Inter- Senate sponsor RON WYDEN (D-Ore.) put it evance to their lives,’’ said Hall, ‘‘and others net, but it is not as fast as my service that the other day, that users ‘‘could be taxed are just against it because . . . well, because I’ve had for some time.’’ every time they send an e-mail, every time it is new and something they’re not accus- Von Epps, who is black, said he was aware they read their local newspaper online or tomed to.’’ of some feelings of suspicion and fear. ‘‘But check the score of a football game.’’ Con- Jabari Simama, who directed the estab- a lot of that will be overcome by working gress should step back from the brink, tem- lishment of community technology centers more with churches and community organi- porarily extend the moratorium and sort in Atlanta, said his staff noticed also that zations and people the neighbors trust,’’ he this all out in a way that doesn’t intrude on access alone is not enough to get response said. ‘‘It’s just a matter of time.’’ state prerogatives. from predominantly black, lower-income EXHIBIT 5 areas. [From the Washington Post, Nov. 4, 2003] ‘‘Income may be a barrier, but it is not the [From Dallas News.com, Mar. 30, 2004] TAX AND CLICK only one,’’ Simama said. ‘‘Other factors that INTERNET ACCESS FEES: DON’T LET REMOVAL keep people from getting involved in Inter- State and local governments have broad HAVE UNINTENDED EFFECTS net technology include lack of reading abil- power to tax as they see fit—everything from Getting rid of a bad tax isn’t as easy as one ity, and an absence of information they want clothes and food to electricity and telephone might think. or need. service. Nearly everything, that is, except Late last year, a couple of bills that would ‘‘It’s one thing to say you’ll put up infor- the Internet. Under a supposedly temporary have done away with Internet access fees mation about the city or city services, but law passed in 1998 and already extended once, began winding their way through Congress. you need to put up things about the neigh- Congress prohibited states from taxing Inter- (An Internet access fee is one of those mys- borhoods and communities where people net access fees, monthly charges imposed by terious fees you find near the bottom of your live—and that means you must use the same Internet service providers. Proponents ar- monthly phone bill.) focus-group approach cable TV and others gued that the nascent engine of the Internet The bills had gained support until law- have used to reach those audiences.’’ shouldn’t be slowed by taxing it and that it makers discovered a major problem. The

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00015 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4352 CONGRESSIONAL RECORD — SENATE April 26, 2004 bills also would have exempted virtually all Tennessee’s entire telecommunications sales S. 2084 is a significant expansion of the telecommunications activity from taxation. tax base at risk because the amendment moratorium. As enacted in 1998 (and as re- Cities and states would have been left out on sought by the telecommunications compa- newed in 2001), the Internet Tax Freedom a precarious financial limb, possibly unable nies incorporates the very broad definition of Act had excluded (carved out) from the defi- to collect traditional right-of-way and fran- ‘‘Internet access’’ under the original Inter- nition of tax-exempt ‘‘Internet access’’ all chise fees that fund city and state oper- net Tax Freedom Act. While certain con- telecommunications services—as that term ations. stituencies have questioned the states’ esti- is defined by the Federal Communications Welcome to the law of unintended con- mates of the bills’ fiscal impact, the critical Commission. Thus all states and localities sequences. problem is about the language in the bill and were allowed to continue taxing all tele- For that reason, we urge Congress to go about the policy. As long as the amendment communications services, even those used to slowly in this area and to extend a morato- sought by the telecommunications industry obtain or provide Internet access on the rium on new Internet access fees for another includes the phrase ‘‘Internet access’’ and as ‘‘last mile.’’ two years. long as the definition of ‘‘Internet access’’ The authorization of state and local gov- We aren’t thrilled about leaving in place a remains as it was under the federal law, then ernments to continue taxing telecommuni- bad tax that encumbers an emerging tech- the fiscal problem identified by the states cations was consciously and intentionally in- nology—even one that provides $45 million and local governments remains. cluded in ITFA in order to preserve state and annually in Texas. But it’s the right decision Tenness strongly supports the amendment local taxes and fees imposed on all forms of and one that buys time for a more thought- that you proposed to S. 150, the Alexander- telecommunications services used at any ful discussion of the Internet and taxes. The Carper amendment. If there is anything that point along the Internet. While some have moratorium has support from a growing I can do to assist on this matter or any other claimed that S. 2084’s grandfather provision number of lawmakers, including Sen. Kay matter concerning Tennessee taxes, please condones ‘‘illegal’’ taxes on Internet-related Bailey Hutchison, R-Texas. do not hesitate to let me know. Thank you telecommunications imposed by states and Technology breakthroughs are changing again for all of your help. localities attempting an ‘‘end run’’ around telecommunications faster than legislation Very truly yours, ITFA, the legislative history of ITFA clearly can keep pace. For years, Congress, the Fed- LOREN L. CHUMLEY, refutes those claims. eral Communications Commission and state Commissioner. Renewing ITFA in its original form would regulators have wrestled with how much to EXHIBIT 7 preserve state and local taxes on all Inter- regulate the Internet but have had less-than- THE ALEXANDER-CARPER INTERNET ACCESS net-related telecommunications. The pro- satisfying results. TAX MORATORIUM BILL, S. 2084: A TRUE posed S. 150 would prohibit all state and The Internet shouldn’t become an easy tar- COMPROMISE THAT SUBSTANTIALLY BROAD- local taxation of both ‘‘last mile’’ tele- get for revenue-hungry jurisdictions, but nei- ENS THE ORIGINAL MORATORIUM communications services and the ‘‘up- ther can it expect to be a tax-free haven for (By Michael Mazerov) stream’’ telecommunications services that commerce. Congress has a responsibility to constitute the underlying infrastructure and SUMMARY find a satisfactory middle ground, recog- ‘‘backbone’’ of the Internet. (According to Senators Lamar Alexander and Thomas nizing the revenue needs of cities and states the Federation of Tax Administrators, states Carper, with nine original cosponsors, have while also not crippling the telecommuni- and localities would lose approximately $500 introduced S. 2084, the ‘‘Internet Tax Ban cations and information services industries. million annually if ‘‘upstream’’ tele- Extension and Improvement Act.’’ This bill Congress must get this right, and a two- communications services were no longer tax- would reinstate and broaden the ‘‘morato- year moratorium on all new Internet access able.) In prohibiting new taxes on ‘‘last rium’’ on state and local taxation of Internet fees will give it enough time to sort through mile’’ telecommunications, S. 2084 rep- access services originally imposed in 1998 by the issue. resents a true compromise between these the Internet Tax Freedom Act (ITFA). S. EXHIBIT 6 two alternatives. 2084 would bar state and local governments STATE OF TENNESSEE, for two more years from taxing the typical The PRESIDING OFFICER. The Sen- DEPARTMENT OF REVENUE, NASHVILLE, $10–$50 monthly charge that households and ator from Ohio is recognized. TN, January 9, 2004. businesses pay—to an Internet access pro- Mr. VOINOVICH. Madam President, Re S. 150—the Internet Tax Moratorium. vider like America Online, or to the local first of all, I want to thank the Senator Senator LAMAR ALEXANDER, phone or cable TV company—to be able to from Tennessee for the tremendous Hart Building, access the World Wide Web and send and re- amount of time and effort he has put Washington, DC. ceive e-mail. DEAR SENATOR ALEXANDER: It was a pleas- S. 2084 would broaden the original ITFA into this issue. We all got into this to- ure to see you at the recent meeting for the moratorium substantially by newly exempt- gether last year when we saw the train National League of Cities in Nashville. Again ing from taxation all telecommunications moving very fast and we wanted to do I want to thank you for your courageous as- services ‘‘purchased, used, or sold by an what we could to slow it down. We were sistance with regard to protecting the inter- Internet access provider to connect a pur- able to accomplish that. Since that ests of the State of Tennessee on the subject chaser of Internet access to the Internet ac- time, the Senator from Tennessee and of the Internet Tax Moratorium. cess provider.’’ the Senator from Delaware have been I wanted to make you aware of a recent de- This new language in S. 2084, which velopment in this matter. Tennessee has amends ITFA’s definition of Internet access, working on a bipartisan basis to try to taxed Internet access as a ‘‘telecommuni- exempts from new state and local taxes al- spend a great deal of time with the cations service’’ under its sales and use tax most all communications services that an folks who have a different point of laws since 1996. In my presentations to Har- Internet access subscriber can use to connect view, trying to reconcile the dif- rison Fox and Joe Cwiklinski concerning the to her Internet access provider—so-called ferences. adverse impact S. 150 and the Managers’ ‘‘last mile’’ telecommunications. S. 2084 Unfortunately, those differences have Amendment would have on Tennessee’s tax would, however, grandfather existing state not been reconciled. But it certainly is base, I explained that Tennessee has been in- and local taxes on ‘‘last-mile’’ telecommuni- not based on a lack of trying. The Sen- volved in lawsuits concerning whether Inter- cations services. Grandfathering currently- net access falls within Tennessee’s definition collected taxes is consistent with the spon- ator from Tennessee now has become of ‘‘telecommunications.’’ The Court of Ap- sors’ position that Congress should not im- the expert on this. Madam President, I peals decision in Prodigy Services Corp., Inc. pose a new, expensive, ‘‘unfunded mandate’’ wish you had been at a meeting I had v. Johnson, 2003 WL 21918624 (Tenn. Ct. App., on state and local governments, especially at with him last week, where he was Aug. 12, 2003) has now become final. In this a time of severe fiscal stress. teaching the teachers on this legisla- case, the Court held that, under Tennessee The new language to be added to ITFA’s tion. I thank him so very much for all law, Internet access is not taxable as a tele- Internet access definition by S. 2084 seeks to of his hard work and dedication to this communication service in Tennessee. There- achieve ‘‘technological neutrality’’ in the fore, the Tennessee Department of Revenue tax treatment of high-speed access by ex- issue. I hope our colleagues will listen will issue a notice in the near future explain- empting from tax all the forms in which the to us today and perhaps come up with ing that Internet service providers should no ‘‘last mile’’ connection is made: cable another compromise that will allow us longer collect sales tax on sales of Internet modems, ‘‘Digital Subscriber Lines’’ (DSL), to spend more time to deal with this access to consumers. I advised your office dedicated ‘‘T–1’’ lines used by businesses, subject. This is a very complicated that the sales tax on the true Internet access wireless connections (e.g., Blackberry), and issue and we need to be careful how we component of the prior Internet Tax Free- satellite transmissions. The only exception proceed. dom Act was approximately $18 million an- to the tax exemption for ‘‘last mile’’ tele- Today we are going to consider a mo- nually for Tennessee. communications would be ordinary voice This Tennessee Court decision does not in telephone lines used for ‘‘dial-up’’ (conven- tion to proceed on S. 150, the Internet any way impact our stringent opposition to tional modem) access to the Internet; taxes Tax Nondiscrimination Act of 2003. S. 150 and the Managers’ Amendment. Both on such lines would still be allowed under S. When the Senate first considered this S. 150 and the Managers’ Amendment put 2084. legislation last November, I argued the

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00016 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4353 debate on S. 150 was not about taxing ferences between the two sides may be are taxable is interpreted, that language also e-mail or increasing taxes on Internet too deep to bridge. could result in substantial revenue losses for access. It was suggested by some mem- Madam President, I have three prob- States and local governments. It is possible lems with the definition of Internet ac- that States could lose revenue if services bers of this legislative body that we that are currently taxed are redefined as were in favor of taxing the Internet or cess: Internet access under the definition of S. 150 e-mail. In fact, I stand here today in First, it is so broad that it prevents . . . However, CBO cannot estimate the mag- opposition to taxes on Internet access State and local governments from col- nitude of these losses. and firmly opposed to any and all taxes lecting taxes on all telecommuni- In other words, at this stage of the on e-mail by any level of government— cations services used to provide Inter- game, they have no idea how large Federal, State, or local. But that is not net access over the entire broad band these losses will be to State and local what today’s debate is about. network. We are talking about the en- governments if the definition of Inter- Rather, the debate on S. 150 is about tire network, last mile, middle mile, net access in S. 150 is passed. federalism, unfunded mandates, and and backbone. States are currently col- To follow up on CBO’s assessment, I protecting the States’ ability to collect lecting between $3 billion and $10 bil- went to my own State and said: Can revenue at a time when State and local lion annually in telephone taxes. I am you examine the proposals and let me governments are struggling to make concerned that this tax base may erode know what they would cost our state? ends meet. as traditional phone service migrates Under S. 150, as reported, it would As a former State representative, to cutting edge technology called voice cost the State of Ohio $350 million a counter auditor, counter commis- over Internet protocol, VOIP. In fact, year at a time when they are trying to sioner, Lieutenant Governor, mayor of the migration is happening at a rapid balance their budget. They are making Cleveland, and Governor of Ohio, I have pace. For example, on April 9, 2004, cuts in services right now to try to bal- seen firsthand how the relationship be- Newsday reported that AT&T expects ance the State budget. The Allen- tween the Federal Government and our to add 1 million VOIP customers by the Wyden managers’ amendment we dis- State and local counterparts affect our end of 2005 and there are many other cussed in November would cost about citizens and the communities in which companies rolling out this service as $150 million for 2 years, and the Alex- they live. well. This will have a tremendous ander-Carper-Voinovich amendment My experience has fueled my passion change in the way telephone service is would cost my State about $40 million for federalism and the need to balance provided in the United States. a year. So any proposal under consider- the Federal Government’s power with As a part of our good-faith negotia- ation would cost my State money. the powers our Founding Fathers envi- tions on S. 150, Senators Allen and Logic tells me that if CBO cannot sioned for the States. This very body Alexander were working on language to calculate the potential loss in revenue was created in part to guarantee that preserve the States’ ability to collect to the States, and my State projects States have adequate and equal means taxes on VOIP, but they have not yet large revenue losses, why would we to assert their interests before the Fed- reached an agreement. In addition, the make dramatic and permanent changes eral Government, and I can assure you Federation of Tax Administrators to the Internet tax moratorium? Why that if we Senators were still elected noted that S. 150 would prohibit States would we do that to our friends in State legislators, this issue would not from continuing to tax some trans- State and local government? Last month, Senator COLLINS, chair- be before us today. actions such as business-to-business man of the Governmental Affairs Com- The relationship between the Federal transactions between Internet service mittee, confirmed in a letter to me Government and State and local gov- providers and telephone companies, that the Allen-Wyden managers’ ernments should be one of partnership. and they estimate this could cost State amendment to S. 150 also contained un- However, that is not always the case. I and local governments $500 million an- funded mandates as defined by UMRA. am concerned about the tendency of nually in lost revenues. Second, S. 150 violates the spirit of The CBO says it and the Governmental the Federal Government to preempt the original moratorium by making a Affairs Committee says it is an un- the functions of State and local gov- brand new definition of Internet access funded mandate. ernments and force on them new re- permanent. The original 1998 morato- Unlike Congress, by law States must sponsibilities, particularly without rium was 3 years in duration, and in balance their budgets. They do not also providing funding to pay for these 2001, Congress extended it for 2 more have the option of printing money like new responsibilities. Madam President, years. With technology changing so we do. Therefore, if the Senate passes that is why I fought for the passage of rapidly, we must be cautious when try- S. 150 or the managers’ amendment, unfunded mandates reform. Congress will, in effect, force States to As a matter of fact, I will never for- ing to define Internet access. Third, according to the CBO, S. 150 raise taxes or cut services in order to get the first time in my life I set foot imposes an intergovernmental man- make up the difference, which is why on the floor of the U.S. Senate was date under the Unfunded Mandates Re- each State and local government and when the unfunded mandates reform form Act. Let me repeat, CBO says it is organizations are opposed to this legis- legislation passed. Then, later at the an unfunded mandate. On page 6 of the lation with the exception of the NCSL. Rose Garden, I was there representing September 29, 2003, Commerce Commit- However, NCSL did send a strong State and local governments when tee’s report on S. 150, CBO said: message earlier this year. In fact, they President Clinton signed UMRA in 1995. were in favor of this bill last November As I said, I was representing State and By extending and expanding the morato- rium on certain types of State and local but have since removed their support local governments, and, Madam Presi- taxes, S. 150 would impose an intergovern- and are now neutral on the legislation. dent, your husband a former Senator mental mandate as defined in the Unfunded They are giving more consideration to from Kansas, Mr. Dole, was rep- Mandates Reform Act. CBO estimates that this issue. resenting the national interests. It is a the mandate would cause State and local The financial impact of S. 150 would day I will never forget. In fact, I have governments to lose revenue beginning in be devastating to our State and local the pen that was used to sign the legis- October 2006; those losses would exceed the governments, but there are other prob- lation proudly displayed in my office in threshold established in the Unfunded Man- lems with the legislation that are be- the Senate. dates Reform Act . . . by 2007. While there is some uncertainty as to the number of States yond our control. The Federal Commu- As I will explain in a moment, S. 150 affected, CBO estimates that the direct costs nications Commission classifies DSL as violates the principles of federalism. to State and local governments would prob- both an information service and tele- When S. 150 was pulled from the Senate ably total between $80 million and $120 mil- communications service. I just wonder floor last November, advocates on both lion annually, beginning in 2007. how many of our colleagues really un- sides of the issue agreed to resolve our There is no question, this is an un- derstand what this is all about. This is differences. For the past 6 months, we funded mandate. a very complex issue and we really have been engaged in meaningful dia- Furthermore—and this is the part to need to pay attention to both the lan- log, but we just cannot reach an agree- which we really need to pay attention: guage in the proposals and, now to the ment. At this point in time, I am con- Depending on how the language altering courts as well. Under the 1998 morato- cerned that the philosophical dif- the definition of what telecommunications rium, State and local governments are

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00017 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4354 CONGRESSIONAL RECORD — SENATE April 26, 2004 able to collect taxes on the tele- concern about what it would do to the that proposal, but the four principles communications portion of DSL serv- Internet. Our goal then and our goal are: Establishes a 4-year moratorium; ice. today is the same: to encourage the allows States to collect taxes on tele- The problem that supporters of S. 150 growth of the Internet as a driving phone calls made over the Internet; ex- point out is that cable modem Internet force in our economy. We want that to tends the original grandfather clause service has been classified by the FCC happen. I believe we have been success- for 3 years; initiates the 2-year grand- as an information service and, there- ful. father clause for States that are cur- fore, it is not subject to State and local In fact, I will highlight how much rently collecting taxes on DSL serv- telecommunications taxes. My col- Internet technology has grown over the ices. leagues argue that we need to bring past years. It is unbelievable. Accord- I am very concerned because the parity to the industry by enacting an ing to a study released by the Pew term of the moratorium is longer than expanded definition of Internet access. Internet and American Life Project the two grandfather clauses, which I agree with them in principle. How- last week, 55 percent of American may trigger the unfunded mandate ever, earlier this month the Ninth Cir- Internet users have access to that I have been talking about in the cuit overruled the Federal Communica- broadband either at home or at the point of order. tions Commission decision that cable workplace. The report also noted that I appreciate the attempt of the Sen- modem broadband service was a single home broadband usage is up 60 percent ator from Arizona to offer a solution. information service. The court ruling since March of 2003, with half of that But here we are here again at the last means that cable modem service now growth since November of 2003. DSL minute trying to get something done, can be classified as part information technology now has a 42-percent share and now we have a new proposal. We service and part telecommunications of the home broadband market. This have no idea of what impact it is going service, just like DSL. So under the figure is up from 28 percent in March of to have. I for one, would like my state Ninth Circuit, there is now parity be- 2003. What I would like to point out is to review the proposal. tween DSL and cable modem. that it all happened since the morato- It seems to me that at this stage the The Ninth Circuit case may be ap- rium ended. best thing we can do is to understand pealed to the Supreme Court. This I think the Chair will recall that our that we have unresolved issues, and whole area still is in flux. But it does opponents were concerned that if the that S. 150 was passed out of the Com- not end there. moratorium expired, States would rush merce Committee by voice vote. That As I mentioned, we think it will go to out and tax the Internet. That has not is the way it came out of the com- the Supreme Court, and, if so, they happened. In fact, we have just seen an mittee. If one examines S. 150 and they may not render a decision until June of exponential growth in the use of the examine the Alexander-Carper-Voino- 2005. The case, obviously, has signifi- Internet. Additionally, on April 21, a vich, et al., bill they will find both bills cant impact on the debate today. major telecommunications company, have 11 cosponsors. There are 11 for our When we have so much uncertainty, SBC released their 2004 first quarter bill and 11 for the legislation of the Congress should proceed very cau- earnings. Senator from Virginia. Six cosponsors I will read the first two sentences tiously and not run out and do some- of each bill are from the Commerce from the company’s press release be- thing that will have a tremendous im- Committee. pact on all the future decisions that cause it illustrates how fast this tech- So it is evident that even within the are made on this issue. nology is growing. Commerce Committee there are gen- I am one of 11 Members joining Sen- SBC Communications, Inc., today reported uine differences of opinion on the best first-quarter 2004 earnings of $1.9 billion as it ators ALEXANDER and CARPER on S. delivered strong progress in key growth way to proceed. I think we understand 2084, the Internet Tax Ban Extension products. In the quarter, SBC added 446,000 that given the longstanding impasse on and Improvement Act. The bill pro- DSL lines, the best ever by a U.S. telecom negotiations and the possible Supreme vides a 2-year solution that expands provider . . . Court action, there has to be an easier the definition of Internet access to the I congratulate this company for fos- way to get this done. level playing field for all Internet pro- tering the growth of DSL service in our I understand Senator ENZI will intro- viders: DSL, cable, modem, wireless, country and for building a solid busi- duce a 15-month extension of the origi- and satellite. In other words, our bill ness plan that allowed them to have nal moratorium, and perhaps that is would put them all in an equal position such a positive impact on their bottom the most reasonable solution because it and would resolve the issue with the line. Their financial outlook proves will provide all stakeholders, including Ninth Circuit Court because it would that Congress should not subsidize a the Commerce Committee, the FCC, basically say we agree with the court. growing industry at the expense of our the State and local government groups, Our legislation would make the last State and local governments. and the industry time to draft a rea- mile of Internet service from the Inter- As I mentioned earlier, not one State sonable bill. net provider to the customer tax free. has passed legislation to tax Internet If the motion to proceed to S. 150 In addition, our legislation retains the access in the absence of a Federal mor- passes this afternoon, I believe the existing grandfather clause in effect atorium. In fact, we have reports that Senate will not be able to reach an for 2 years, that is 11 States; expands a couple of States have even backed off agreement on the underlying bill, the grandfather clause by allowing from what they were doing before. which may signal the end of the Inter- States that are now collecting taxes on Therefore, the sky that was predicted net tax moratorium. If we cannot DSL service to continue to do so for 2 to fall has not. agree, that is the end of it. I do not more years, currently 16 States; and That is not to say that I am opposed want that to happen. Therefore, I im- prohibits States that are not collecting to an Internet tax moratorium. Noth- plore my colleagues to continue nego- taxes on DSL from doing so. ing could be further from the truth. tiations on the Internet tax morato- It would also prevent them from col- There is still more room to com- rium. lecting taxes on cable and other serv- promise, and I think it is fair to say Our goal should be to reach a sensible ices on the Internet. Unfortunately, that some of my colleagues agree with solution with two simple principles in our legislation was not acceptable to my assessment. mind: First and foremost, do no harm the sponsors. We thought it was very The inability of both sides to reach to the States. Second, foster the reasonable because they believed we an agreement prompted Senator growth of high-speed Internet access by needed a broader policy to promote the MCCAIN to offer a new proposal. I com- leveling the playing field for all Inter- growth of the Internet. However, re- mend my good friend from Arizona for net service providers. cent trends on the growth of broadband trying to reach a middle ground on this So a way out of the thicket may be services may suggest otherwise. complex issue and, for that matter, I to extend the moratorium for another 2 When I was chairman of the National congratulate him on trying to bring us years or for 15 months, give the Com- Governors Association back in 1998, I together. merce Committee more of an oppor- helped negotiate the first Internet tax I do not know whether the Senator tunity to work on the issue, give the moratorium because there was a big from Tennessee is going to opine on FCC more time to be involved, see

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00018 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4355 which way the court cases are going, the Presiding Officer knows, one of the on Social Security are not the only and come back with something where biggest issues we had in 1995 and 1996 means we are resorting to these days all of us can agree that makes sense. was unfunded mandates. We went right to continue to spend more than we We need a proposal that respects the across the country pointing out how take in. The other way we found to State and local governments, does not devastating these mandates coming spend without constraint or account- violate unfunded mandates, and at the out of Washington were for State and ability was to pass the buck to our same time make sure we can move for- local governments. We thought we had friends in State and local government. ward with the Internet and achieve the done something very significant about If you think about it, it is a sweet- phenomenal success that it already has it. heart deal. We order up a feast here in achieved. But to answer the question of the Washington of more spending or more I yield the floor. Senator from Delaware, from my per- special interest tax breaks and more The PRESIDING OFFICER. The Sen- spective, the passage of this bill would corporate subsidies. Then we stick the ator from Tennessee. be the most egregious unfunded man- Governors, mayors, and State and local Mr. ALEXANDER. Madam President, date we have seen since 1995, when the taxpayers with the tab. It is not sur- I have already spoken, so if the Sen- unfunded mandates relief legislation prising that we do this. In doing so, we ators from Virginia or Delaware want was passed. It seems to me we still get to take credit for helping an array to speak, I will certainly yield to them. have Members of this body who were of different groups and businesses rep- But I certainly congratulate the Sen- around when unfunded mandates relief resented here in Washington. Yet we ator from Ohio. He knows what he is legislation was passed and there was don’t have to raise a single tax or cut talking about when it comes to State great support for it. It seems to me a single program to pay for it. and local government. He has been a those who supported it at that time In government as in business, how- mayor. He rescued a major American should give some real consideration to ever, there is no such thing as a free city from bankruptcy. He chaired the the fact that we are about, if this were lunch. This policy of passing unfunded National Governors Association. The to pass, to have the biggest unfunded mandates has not been nearly as con- people of Ohio know he works in a very mandate, as I said, since that bill venient for our Governors, for our may- principled way. He understands, as I passed. ors, and State and local taxpayers as it believe I do, that this train is on the Mr. CARPER. I would say, Madam has been for us here in our Nation’s wrong track. President, Senator VOINOVICH is not a Capital. I don’t have to tell my col- I say this to the Senators from Ohio Johnny-come-lately on this subject. I leagues their States and localities are and Delaware and then I will stop and recall, early in my time as Governor, struggling to cope today with the yield to the Senator from Delaware: working through the National Gov- worst fiscal crisis—some say since How much subsidy is enough subsidy? I ernors Association, the kind of leader- World War II. Classrooms are becoming notice, in this thick list of subsidies ship he provided, encouraging the Con- even more crowded as school budgets that States give high-speed Internet gress, the House and Senate, and then are cut. Prisoners in a number of access, Texas is generating $1.5 billion President Clinton, to pass and enact an States are being released from jail as of subsidy just to encourage the growth unfunded mandates law. He played a corrections budgets are cut. Governors of high-speed Internet access. Then, in major role in getting that done. and mayors are pushing through un- It is kind of ironic that a decade or addition, it has already made exempt popular and frequently regressive tax so later, we are back again and the from taxation the first $25 you pay for increases because they have a constitu- issue is very much the same. I am high-speed Internet access. Now we are tional mandate to balance their budg- pleased to see we stand today where we talking about giving further subsidies et. stood then. I am honored to be involved to the companies that provide that ac- We all know this. Yet when it comes in this battle on the same side with cess. I don’t see the sense of that. right down to it, we proceed to act here Senator VOINOVICH and Senator ALEX- I congratulate the Senator from in Washington as if we are oblivious to Ohio, look forward to working with ANDER. We have been joined on the floor by what is going on all around us. We con- him, and now that I see the Senator the former mayor of San Francisco, tinue to treat State and local budgets from Delaware with whom I have en- almost as piggy banks that we can Senator FEINSTEIN, and I see we have joyed working, I yield the floor. been joined on the floor by another break in order to pay for our own prior- The PRESIDING OFFICER. The Sen- ities. former Governor, Governor ALLEN, who ator from Delaware. in this instance is our adversary but Just about everyone in this body sup- Mr. CARPER. Madam President, I am remains our very good friend. ports a moratorium on State and local delighted to be on the floor with you That having been said, I do have taxes on Internet access. In 1998, the and particularly pleased to be with some other comments I would like to Congress passed such a moratorium. In Senators VOINOVICH and ALEXANDER. make. Let me observe we have gotten 2001, we extended that moratorium. In I wish to ask a question of Senator into some very bad habits here in fact, I believe we did so just about VOINOVICH, if I could—I know, before he Washington. We all know we are living unanimously. was the Senator from Ohio, he was the beyond our means. We all know about Last year the Internet tax morato- Governor of Ohio. We served together our growing budget shortfall and our rium expired. There was no reason why at that time—to what other elective escalating level of indebtedness. We all that should have happened. If the bill positions Senator VOINOVICH has been know the most popular way to pay for had been brought to the floor of the elected by the people of Ohio? As I re- things around here is simply to issue Senate simply to extend that morato- call—— more and more debt on our Nation’s rium once again, it would have passed Mr. VOINOVICH. I have already list- credit card and on our taxpayers’ dime. once again by acclamation. The Amer- ed them in my formal presentation on Moreover, we all know that our budg- ican people support the moratorium. I the floor. There are so many it is hard et shortfall is actually bigger than we support the moratorium. All of us want to remember. report it to be. We all know we are to see it extended. But I did mention the fact that we all using Social Security funds to mask However, as was the case last year, worked together as members of the Na- the actual size of our Federal budget the bill we are debating this week does tional Governors Association. In fact, deficit. not simply extend the expired Internet the Senator from Delaware was vice We are using the payroll tax con- tax moratorium. I wish that it did. In- chairman of the National Governors tributions that working Americans pay stead, what this bill does is to take ad- Association when I was president of the into Social Security, and employers vantage of the need to extend that National Governors Association, and pay, to pay for other Government moratorium to attach billions of dol- we worked together and collaborated spending and to partially offset cor- lars in new subsidies for the tele- on a lot of issues. porate tax breaks and reductions in communications industry. I have been concerned about this taxes on inherited estates. Such a bill would not normally stand issue since I was president of the Na- What we do not talk about very often much of a chance of passage in the Sen- tional League of Cities back in 1985. As is that piling up more debt and drawing ate.

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00019 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4356 CONGRESSIONAL RECORD — SENATE April 26, 2004 The simple truth of the matter is we difficult decision. But in reality, that Nation’s State houses and our Nation’s don’t have the money at this time of is not the decision with which we are city halls. We are not going to stand by budget deficits at home and war abroad faced. We can extend the Internet tax as yet another unfunded mandate gets to pay for billions of dollars in new moratorium. Nobody I have talked to passed down and wreaks havoc on the subsidies for what is already a highly is opposed to that. States and localities operations of State and local govern- profitable industry. But the proponents have been living under the Internet tax ments. of this legislation have discovered an moratorium for more than 5 years now. We don’t think it is constructive to easy solution to their problem. Why None of them are counting on revenues try to write this bill on the floor. Fur- pay when we can send the bill back from taxes prohibited under the Inter- thermore, we believe we should only home to our Governors and to our may- net tax moratorium. proceed to consideration of a bill that ors? Just think of it as political wel- Extending the Internet tax morato- adheres to the principles of doing no fare. We spend and they pay. rium is not what creates a large, new, harm. Passing the buck in this way is bad unfunded mandate. What creates a If our colleagues want to attach in- enough, but it gets worse. Believe it or large, new, unfunded mandate is using dustry subsidies to an Internet tax not, we can’t actually say what this the occasion of the Internet tax mora- moratorium, they should offer an legislation will cost our friends in torium renewal to create new industry amendment to do so, and that amend- State and local governments. We know subsidies and then emptying State and ment should be debated openly here on it will not cost us a dime here in Wash- local treasuries to pay for those sub- the floor of the Senate. ington, but the truth is we do not know sidies. If the majority leader wants to try to how much it will cost in Dover, DE, in This bill departs from the original in- write this bill on the floor despite our Raleigh, NC, in Richmond, VA, in Co- tent of the previous moratorium which reservations, then we are prepared to lumbus, OH, in Nashville, TN, or in was to ensure the monthly bills our go through that exercise. Sacramento, CA. constituents receive from their Inter- We have many specific concerns with The Congressional Budget Office tells net service providers remain tax free. the bill that has been called up. We us this legislation is written in a way Instead, this legislation picks the have a number of amendments we will that is extremely broad and vague. In pockets of State and local taxpayers offer for our colleagues’ consideration, fact, the Congressional Budget Office who have already suffered their fair including amendments to return to the cannot even give us a rough estimate share of tax increases over the past 3 original intent of the moratorium and of what the effect will be on State and years. to require any new subsidies be di- local budgets except to say this: Senator ALEXANDER and I are Sen- rectly passed on to consumers in the We believe it could grow to be large. ators. Like all of our colleagues, we form of reduced rates. Here is what we are saying in effect have constituents who use the Internet We will also offer our colleagues an to our Governors and to our mayors: and who want the Internet tax morato- opportunity to pay for the billions of We are extending to you the great rium to remain in place. Like most dollars of subsidies that have been honor of picking up our dinner tab to- others in this body, we want to extend added to this bill. night. We can’t tell you exactly how the Internet tax moratorium. But Sen- If this body does not believe the re- much we have ordered or what the final ator ALEXANDER and I are also former sources exist at the Federal level to bill will be, but we believe it could Governors. We know what it is like to pay for these subsidies, we will raise a grow to be large. be on the receiving end of unfunded point of order against the bill. At times like these when property Federal mandates, as do my colleagues As the Congressional Budget Office taxes are being raised, when sales taxes Senator FEINSTEIN, former mayor of has already indicated, this bill violates are being raised, when school budgets San Francisco, and Senator HUTCHISON, the promise Congress made in 1995 that are being cut, when prisoners are being a former State treasurer from Texas. we would not continue to pass large, released prematurely, our first respon- Senator ALEXANDER and I, together unfunded mandates. The Senate has sibility in dealing with our partners in with Senator VOINOVICH, Senator GRA- the power to waive the point of order State and local government should be HAM, Senator HUTCHISON, Senator FEIN- that is supposed to prevent Congress to do as Senator VOINOVICH has already STEIN and others, have offered what we from passing large, unfunded Federal said—no harm. Indeed, that is the believe is a straightforward, common- mandates. If we are going to do so, pledge our Senate majority leader, sense alternative. As we did in 2001, let however, Senator ALEXANDER and I be- Senator FRIST, made to our Nation’s us examine the Internet tax morato- lieve the Senate ought to be put on Governors when he spoke to them back rium for another 2 years. If we need to record as acknowledging our continued in February, a couple of months ago, expand the moratorium slightly to en- reliance on unfunded mandates as a when they were here in town. As a doc- sure all consumers can access the chosen means to avoid our fiscal re- tor—and a good one—the majority Internet tax free, regardless of whether sponsibility, and it should not have to leader said his approach to legislation they choose cable or DSL, then let us come to that. Our hope is it will not would be, ‘‘First, do no harm.’’ This, it do that. But beyond that, let us do no come to that. seems to me, at least is a sensible ap- harm. We believe the negotiations we have proach. My hope is that rather than Let us do no harm because doing had with our friends on the other side, wasting time with an unproductive harm is not necessary to ensure con- though they have been limited, have fight here on the floor, we will return sumers can access the Internet tax been productive, and we have tried as to the negotiating table and work out free. Doing harm is only necessary if fully as we can consistent with our a compromise that keeps faith with we believe the telecommunications in- principles to address industries’ de- this Hippocratic pledge to do no harm. dustry needs billions of dollars in new mands. Unfortunately, the way it stands, we subsidies. Beyond that, doing harm is We believe we have come a long way are choosing the way of lawyers around only necessary if we believe Congress since this debate began early last year. here rather than the way of the doc- cannot or should not pay for such sub- We are committed to continuing that tors. The Congressional Budget Office sidies it decides to create. process. If that process is short says the language of the legislation we Senator ALEXANDER and I, together circuited, however, as it seems it will are proceeding to here in the Senate is with Senators VOINOVICH, FEINSTEIN, be, at least for now, we will insist upon so confusing lawyers will ultimately HUTCHISON, GRAHAM and others, have a serious and informed debate in the have to get involved and we will not been working in good faith with our Senate this week. know what the implications for State colleagues on the other side of this This is the body that our Founding and local budgets will be until it all issue. We are committed to reaching a Fathers created to represent the inter- gets sorted out in the courts. reasonable compromise. We are willing est of States. This is the body that If we had to choose between extend- to meet every day if necessary to work must defend our Federal system of gov- ing the Internet tax moratorium and out such a compromise. However, what ernment and stand against the trend of keeping faith with our pledge to do no we are not going to do is turn our passing more and more unfunded Fed- harm, we would truly be faced with a backs on our former colleagues in our eral mandates.

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00020 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4357 Win or lose, Senator ALEXANDER and all Americans. We ought to, as leaders, of taxes included—usually multiple I are committed to ensuring that this be advancing ideas that help create local taxes, State taxes, as well as Fed- is one unfunded mandate that will not more investment, creating, thereby, eral taxes. be passed silently in the dead of night. more jobs and more prosperity rather In effect, the opponents of our meas- I yield the floor. than more burdens of taxation and reg- ure would have our monthly Internet The PRESIDING OFFICER. The Sen- ulation. service provider bill be loaded down ator from Virginia. Senator WYDEN from Oregon and I with all those taxes, as on our tele- Mr. ALLEN. Madam President, I rise joined together early last year with phone bill. this afternoon to urge my colleagues to this bill. We want to make sure there is Mr. WYDEN. Would the distinguished support the motion for cloture to pro- equal access to the Internet for all con- Senator from Virginia yield for a ques- ceed to S. 150, the Internet Tax Non- sumers and also protect e-commerce tion? discrimination Act. This bill does have transactions from discriminatory taxes Mr. ALLEN. I yield. strong bipartisan support. or multiple taxes. The Internet is one The PRESIDING OFFICER. The Sen- Let me say a few things in response of the greatest tools invented by this ator from Oregon. to my good friend, the junior Senator country. It is a symbol and an actual Mr. WYDEN. I thank my colleague from Delaware, Mr. CARPER. If those tool of innovation and individual em- for an excellent presentation. who oppose this measure want to ex- powerment. Accordingly, I would think Is it not correct that in the late 1990s tend the moratorium, why are we hav- everyone in the Senate would want to we heard the same kind of arguments ing this debate tonight? Why are we help the Internet continue to grow and we are hearing today, that the States going to have to have a motion for clo- flourish as a valuable tool for com- and localities would be bereft of rev- ture on moving to proceed on the bill? merce, for information, for education. enue, and there would be financial ca- I agree that we should do no harm. However, as of November 1 of last lamity? Is it not correct in 1997, 1998, Those who are for this measure want to year, the Federal moratorium, which the National Governors Association prevent harm to consumers so that was originally enacted in 1998—and said the State and local revenue sys- they are not loaded up with taxes from Senator WYDEN was a key sponsor of tem would collapse, and that very next State and local governments. I will get that measure—expired, leaving con- year revenue went up something like $7 into the details of that in my remarks. sumers vulnerable to harmful regres- billion? Was that not the history all The cost, the so-called unfunded sive and discriminatory taxes for the through this debate over the last 6 or 7 mandate aspect of this is a very small first time in 6 years. years, that we have had the projections amount in the scheme of things, $80 to If the Senate does not act now and from State and local officials that $120 million, then another $40 million move to consider S. 150, it is unlikely there would be disastrous financial for the taxing of DSL. Updates in the we will get another chance in this elec- consequences, and then you and I and new technologies need to be made in tion year. If we do not invoke cloture, Senator SUNUNU would look a short the definition of Internet access to the Senate will be known as a Senate time later, and every single time rev- make sure DSL and digital subscriber that favors new taxes on the Internet; enue went up; is that correct? lines using telephone lines get high- the Senate that turned a blind eye; and Mr. ALLEN. I say to my friend, the speed Internet access or broadband. We a Senate that limited individual oppor- Senator from Oregon, he is exactly cor- need to have that changed to make tunity while enabling harmful, regres- rect. sure the folks at the State and local sive taxation of access to the Internet. I recollect back in 1997, I was Gov- level recognize that there has been an When Senator WYDEN and I intro- ernor of the Commonwealth of Virginia update and upgrade, there have been duced this legislation over a year ago, when Senator WYDEN and Congressman advancements in technology in the it was consistent with the founding CHRIS COX of California introduced this transport of the Internet, particularly principles of the original moratorium measure. I was one of four Governors broadband, but DSL lines should not be that the Internet ought to remain as who believed this was clearly inter- subject to taxation. accessible as possible to all people in state commerce. If there is anything The intent of the first Internet tax all parts of the country forever. Unfor- that is interstate in nature by its ar- moratorium was to make sure the tunately, in the last year of debate, the chitecture, design, and engineering, it Internet was free of taxation. The focus has shifted away from that prin- is the Internet. I thought we ought to Internet is a freeway. If you want ac- ciple, causing unnecessary confusion have a national policy, that it be more cess to information, you click on. Now and delay. ubiquitous or more available, under- that transport is being taxed. Who Let me be clear, this legislation is standing that taxation harms it. pays? The consumer pays. not about tax breaks for telecommuni- I believed, as did the Senator from I will use an analogy. Now we have a cations companies. It is not about Oregon and Senator SUNUNU, this freeway. You are going to Charlotte, mayors and Governors. It is certainly would be a great engine for innovation, NC, from Washington, DC, you get on not about the 1994 Republican revolu- growth, investment, and jobs. That is Interstate 95 and switch over to Inter- tion that has absolutely nothing to do exactly what happened. state 85. It is a freeway. Then you get with traditional telephone calls mi- The amount of revenues lost by those off on an exit to wherever you want to grating to the Internet. Rather, our first, most avaricious, those desiring to get in the city of Charlotte, NC. legislation has everything to do with go in and start taxing at the local and The advocates of taxing the Internet consumers and the impact of taxation State level, is very small. and those who oppose S. 150 would like on real people and our American econ- But if you look at the economic to turn that freeway into the New Jer- omy. growth led by the Internet, and the sey Turnpike, a toll road. All of the protax arguments and mis- revenues that came after it—and it Clearly, the consumer getting that leading accusations presented by the does not have to be a technology busi- information on the backbone of the opposition are unrelated distractions ness; it could be a mom-and-pop start- Internet is going to have to pay for it, aimed at confusing Senators and stall- up business; it could be a major cor- increasing their costs. ing consideration of this very impor- poration; it could be somebody working Companion legislation was passed by tant measure. In fact, the issue is not from their home on eBay—you see the the House 8 months ago. My colleagues about telephone services migrating to revenue growth, you see more jobs and, have heard me say on many occasions, the Internet. Rather, it is the ongoing therefore, more revenue for the Gov- I believe what we ought to be advo- campaign by State and local tax lobby- ernment. cating in the Senate, in the Congress, ists to make sure telephone taxes, So when you look at the effect of the at the Federal level, and every level of which average 15 to 18 percent, migrate localities and States not being able to government in the United States of to the Internet. tax this interstate commerce, you find America, are policies that allow people I ask my colleagues and anyone else that it actually has been beneficial for to compete and succeed. That means who might be listening to think of the economy. The lost revenues are tax policy, regulatory policies that their telephone bill. Think of the bill very small. In fact, there were about 10 promote freedom and opportunity for you receive each month with all sorts States, I believe it was, that were

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00021 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4358 CONGRESSIONAL RECORD — SENATE April 26, 2004 grandfathered in that had already all air commerce. In 1985, Senator Bob broadband and high-speed access. You started taxing prior to 1998. About Dole led a measure affecting food see a disparity, one based on income. three-quarters of those States are still stamp purchases. States were putting Every study and anybody with a scin- taxing Internet access. sales taxes on food stamp purchases, tilla of common sense will understand, Six years later, you would figure and Senator Dole introduced a bill, and if you tax something, fewer people can they would wean themselves off of it. it passed in 1985, prohibiting States afford it. Those who are lower income But there were about a quarter of these from imposing sales taxes on food or lower middle income cannot afford States—South Carolina, Connecticut, stamp purchases. it. Every study—by Pew and others— Iowa and the District of Columbia, and Most recently as we were passing the shows that the cost of Internet access others—that have said: Gosh, this is Medicare drug bill this last winter, just is the reason for them not being online. harmful. This makes our jurisdiction, a few months ago, Congress prohibited For broadband, if you want to get our State less attractive for invest- States from imposing insurance pre- broadband deployed and available in ment and jobs, and it is bad for our mium taxes on drug insurance policies. rural areas, and have competition and citizens, and they voluntarily stopped The fiscal impact of that was approxi- choice for customers, clearly DSL will taxing the Internet. mately $60 million. be an approach, wireless will be an ap- The reality is, all of these fiscal im- Now, in the last 10 years, of course, proach, maybe satellites. Most cannot pacts that we hear of are so farfetched. the Internet has grown, with the policy use a cable modem because there is In fact, the CBO confirmed that our op- of our country that we would not tax just a lot of dirt to dig to get to many ponents and the State tax agencies it. We wanted it to flourish, to grow, rural areas that are sparsely populated. have overstated the revenue impact of and provide opportunities for individ- The fact is, the most recent studies this clarification to make sure that uals. What our opponents will have us show there is a disparity not only in DSL and broadband is not taxed. They do, though, is—again, remember, they the economic digital divide, which overstated it by 100 times. The fiscal want to have unelected tax administra- manifests itself with Hispanic Ameri- impact, if you throw them all together, tors or local and State governments to cans and African Americans, but also at best, would be $200 million. Across tax the Internet backbone or, for that rural versus city areas. City areas have the whole country, our opponents are matter, high-speed or broadband tele- almost three times as much utilization saying it is going to cost $20 billion. phone service. and use of broadband in their homes Mr. SUNUNU. Madam President, will Let me speak about everyone’s tele- than out in the country in rural areas. the Senator from Virginia yield for a phone bill. Look at all those taxes on Broadband deployment is only 10 per- question? it. This is why the moratorium is so es- cent in rural areas while it is over 28 Mr. ALLEN. I am happy to yield to sential, that we stop them from taxing percent in city or suburban-city areas. my friend from New Hampshire. anymore than they are now, and wean For rural areas to be able to com- Mr. SUNUNU. The Senator from Vir- them off. pete, and for the vitality of their fu- ginia has mentioned those 10 or 12 Realize it is nearly impossible to re- ture, adding a 15- to 18-percent tax— States that were grandfathered under peal taxes because—do you know these are the telecommunications the original Internet tax moratorium. I what?—on your telephone bill, for taxes that our opponents would im- think it is important to understand— every single citizen, every single per- pose—will diminish the availability of because the opponents have claimed son in America who has telephone serv- the Internet. That 15- to 18-percent tax there is an unfunded mandate—isn’t ice, part of those taxes that you are means it is going to take more money the only reason the Congressional paying is a luxury tax that was put on to get broadband access to those peo- Budget Office will score an unfunded 105 years ago as a luxury tax on tele- ple, and fewer people will be able to ac- mandate because those 10 or 12 States phone service to finance the Spanish cess it. Therefore, the investors will were grandfathered in the first place? American War. Guess what? We are not invest the money to get into that In other words, if we had not made any still paying it. That war has been over community. effort to allow those States to continue for over 100 years and we won. Yet we Mr. SUNUNU. Madam President, will to collect some taxes on Internet ac- are still paying that tax. the Senator from Virginia yield for one cess, there would be no unfunded man- That is why it is important, number additional question? date because those taxes would have one, to wean the few States and local- Mr. ALLEN. I am happy to yield to been eliminated, as one might argue ities off of this negative, burdensome my friend from New Hampshire. they should have been in the first tax on opportunity and freedom but Mr. SUNUNU. Madam President, the place? But isn’t that the only reason also to stop it from happening in the Senator from Virginia is talking about there is a so-called unfunded mandate future. the kind of Internet access-specific in the first place? The President of the United States, taxes that the opponents of this bill Mr. ALLEN. I say to my friend, the on numerous occasions—recently, in would like to apply. There are a num- Senator from New Hampshire, he is ex- New Mexico, in Michigan, in Min- ber of States that are taxing Internet actly correct. The unfunded mandate nesota—has stated a goal for this coun- access today. There are a handful of aspect of this is a kind of perverse rea- try, in the year 2007—which is also the others that have begun to tax DSL and soning because the States that were 400th anniversary of the founding of other forms of broadband. These are all grandfathered back in 1998 have yet to Jamestown by the Virginia Company— taxes that are unique to Internet ac- wean themselves off of this tax on he wants to have everyone in this cess. Yet the opponents continue to Internet access. We are actually giving country having access to broadband. suggest that there is a subsidy involved them, in our measure, 3 more years, Broadband is essential for rural here. and that is a loss of revenue to them? areas. I know in southwestern Virginia, I want to ask the Senator from Vir- Then there are those in the last couple in Southside Virginia, in any rural ginia to clarify this point because I years that have made rulings that are areas in this country, they look at hav- can’t think of any taxes that are ap- taxing the backbone or the transport, ing broadband, high-speed Internet ac- plied broadly from which this bill more importantly, the high speed cess as key to their young people hav- would exempt Internet access pro- transport or broadband. That is about ing opportunities—whether it is edu- viders. Isn’t it true that if you are an $40 million. So the point is, they have cational opportunities or health care Internet access provider, you would had plenty of time to wean themselves with telemedicine, or for small busi- still have to have pay State payroll off of this tax, and we are actually nesses to be able to be competing inter- taxes? going to give them even more time. nationally, as opposed to young people Mr. ALLEN. Yes, you would still Also, it is not unprecedented for Con- having to leave their home and their have to pay corporate taxes, State pay- gress to recognize the importance of a roots and their heritage to find jobs roll taxes. coherent national policy regarding elsewhere. Mr. SUNUNU. Would they be subject matters of interstate commerce. In It is the President’s view that we are to capital gains taxes in those States 1973, States were prohibited from im- falling behind—and we are falling be- where it was applicable? posing a tax, a fee, or a head charge on hind—other countries as far as Mr. ALLEN. Yes, they would.

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00022 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4359 Mr. SUNUNU. Would they have to Mrs. FEINSTEIN. I would be happy There are several aspects that will ac- pay property taxes in those States to speak after the vote. commodate State and local govern- where they owned property and oper- Mr. MCCAIN. I thank the Senator ments, but the legislation also con- ated facilities? from California. I appreciate her pa- tains components that are favored by Mr. ALLEN. Absolutely, they would tience and hope she is able to speak, as industry and ultimately benefit con- have to pay those taxes. I know she has strong beliefs on this sumers. So there continue to be dis- Mr. SUNUNU. If there were an Inter- issue. agreements. net transaction that was selling a good Over 5 years ago, Congress took ap- The Members who sit on the edges of within a State that had a sales tax, propriate action to pass the Internet this debate bell curve will continue to just like a mail order product, wouldn’t Tax Freedom Act which encouraged oppose anything that falls short of they be responsible for the applicable the growth and adoption of the Inter- their desired outcome. However, any sales taxes in those States? net by exempting Internet access from practical person who reads the amend- Mr. ALLEN. Sales and use taxes, if State and local taxation and by pro- ment objectively will have to agree. they have a physical presence in that tecting e-commerce transactions from What we are offering constitutes a rea- State, yes, they would have to collect multiple or discriminatory taxes. As sonable middle ground in the debate and remit those taxes. my colleagues know, since then the between those who want to make the Mr. SUNUNU. Would the Senator Internet has grown from a tool used by Internet tax moratorium permanent agree that there are no taxes that are a relatively small percentage of our and broad and those who want to make being applied uniformly or broadly in population to a broadly utilized com- the moratorium brief and narrow. States that these Internet access pro- munications, information, entertain- Throughout the negotiation process, viders would be exempted from? This is ment, and commercial medium as well State and local groups asked for a tem- a bill that simply avoids discrimina- as an important vehicle for political porary extension to the Internet tax tory taxes that single out Internet ac- participation. moratorium. Specifically, they have cess or multiple taxation where you To keep promoting the growth of the asked for a 2-year extension of the can have taxes levied at the State level Internet, many of my colleagues have moratorium. The substitute amend- and the county level and the city level; made efforts to extend the Internet tax ment would extend the moratorium for isn’t that the ultimate goal of the bill? moratorium. Regrettably these efforts Mr. ALLEN. I would say to the Sen- 4 years from November 1, 2003. This have stalled. Six months ago, we left ator from New Hampshire, he has it ex- alone is an extraordinary concession, unfinished business before the Senate. actly correct, as well as protecting especially considering the fact that the At the time, many of us were prepared consumers from access taxes. The Sen- House of Representatives, in a strongly to vote to extend the Internet tax mor- ator from New Hampshire understands bipartisan effort, passed a permanent atorium. Unfortunately, a vote never this issue very well. Maybe the oppo- extension of the moratorium last year, took place because of disagreement nents would like to stop these delay-of- and there remains significant support over what components of Internet ac- game tactics so we can actually get to in the Senate for such a measure. cess should be free from taxation and protecting the people. President Bush has expressed his I find it interesting—and as I said, how long the moratorium should last. strong support for a permanent exten- this has nothing to do with subsidies of As a result, the moratorium expired sion of the moratorium. Nevertheless, I telecommunications companies—that and State and local governments are hope my colleagues who favor a perma- virtually every Senator will say, let’s now free to impose new taxes on the nent moratorium will support this pro- figure out subsidies; let’s figure out tax Internet. posal in an effort to reach an accept- breaks to get broadband to rural areas. Today, we return to the consider- able compromise between industry and Why would you want to have subsidies ation of S. 150, the Internet Tax Non- consumers and State and local govern- and expenditures and then on the other discrimination Act, which would per- ments. hand say, let’s tax it, when you are try- manently extend the moratorium on Another concern we have heard from ing to get more people utilizing and the taxation of Internet access. After State and local governments is that ex- having access to broadband for a vari- 10 months of negotiations, there is still tending the Internet tax moratorium ety of reasons? no clear consensus in the Senate over would somehow impact traditional I see the chairman of the Commerce what types of Internet access services telephone services. That certainly was Committee has arrived. I will simply should be tax free, nor is there any never the intent of the original legisla- say, the United States has been a lead- clear consensus over how long the mor- tion, as has been made clear by the er for freedom. We are falling behind atorium should last. One thing is clear, Commerce Committee’s report accom- other countries in broadband, its de- though: There is broad agreement that panying the bill. ployment, and its use to Asian and Eu- the Internet tax moratorium should be The report reads: ropean countries. Simply put, taxes on reinstated. It is also clear that the The modified definition [of Internet access] access to the Internet reduce the num- Members who have been involved in would not affect the taxability of voice te- ber of consumers who can afford to pur- this long negotiation process have lis- lephony over the public switched telephone chase this service, thereby limiting op- tened closely to the concerns of State network (so-called ‘‘plain old telephone serv- portunities for millions of Americans. and local governments. ice’’ or ‘‘POTS’’). Reduction of demand will stifle invest- For example, to address issues raised The matter is further clarified in this ment in rural and underserved areas. It by opponents of S. 150, Senators ALLEN, amendment. Simply put, this legisla- will slow the deployment of the next- WYDEN, SUNUNU, ENSIGN, WARNER, tion would not impact in any way, generation broadband technologies. SMITH, LEAHY, GRASSLEY, BAUCUS, shape, or form the revenue generated I urge, most respectfully, my col- HATCH, BOXER, CHAMBLISS, LINCOLN and by State and local governments from leagues to stand on the side of freedom, I—a strongly bipartisan effort—offered traditional phone services. Again, a embrace innovation and improvement, a substitute amendment that would concern of State and local governments and not tax this tool for individual em- have narrowed the scope of the morato- was accommodated to the full satisfac- powerment and opportunity. I urge my rium and clarified its effects on State tion of State and local authorities. colleagues to support cloture on the and local revenues. This time around, State and local governments have motion to proceed. It is a motion to we will go a significant step further by also expressed worry that this bill proceed for opportunity and for free- offering a compromise amendment would hamper their ability to tax voice dom. written to address the core concerns services and other services that run I yield the floor. expressed by State and local govern- over the Internet. The PRESIDING OFFICER (Mr. COR- ments over the extension of the Inter- For example, the National Governors NYN). The Senator from Arizona. net tax moratorium. Association has stated that one of its Mr. MCCAIN. Mr. President, may I Before I get into the details of the main concerns is that this legislation ask the Senator from California if she amendment, let me be crystal clear will prohibit states and localities from would like to take 5 minutes. I know about one thing: This compromise will taxing telephone services as they mi- she has been patiently waiting. not make everyone 100 percent happy. grate to the Internet. The Senators

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00023 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4360 CONGRESSIONAL RECORD — SENATE April 26, 2004 from Tennessee and Ohio today have adopt the State and local governments’ Mr. LOTT. Will the Senator yield also emphasized that this is one of position wholesale. briefly? their three core concerns in this de- For that reason, the legislation Mr. MCCAIN. I am glad to. bate. In an attempt to respond to the would make Internet access 100 percent Mr. LOTT. Mr. President, I want to concern about the migration of tele- tax-free for all States in its fourth commend the Senator for his tenacity. phone services to the Internet, Sen- year. Typically, he wants to work to find a ators ALLEN and ALEXANDER agreed in Some question whether it’s wise for compromise that can satisfy both principle to carve voice over Internet Congress to make Internet access tax sides. I think he has done that. I am Protocol, VOIP, telephon services out free, but this body has a long history of sure there are those on both sides of of the scope of the Internet tax mora- giving tax incentives and other eco- the issue and the aisle who may not torium. Unfortunately, their negotia- nomic support to industries and com- feel this is perfect, but they will have tions over the precise definition of mercial activities that we believe help an opportunity, when we get on the VOIP telephone services were not suc- our society. The Internet is clearly a legislation—the substance of it, as this cessful. technology that also merits strongly is a vote on the motion to invoke clo- The amendment that I offer bridges the support of Government, as it is a ture on the motion to proceed—they the gap in this matter by setting forth source of and vehicle for significant will be able to offer amendments. a broad definition of services—includ- economic benefits to our country. I thank the Senator from Arizona for Contrary to statements that have ing voice services—that are provided what he has done. I urge my colleagues been made on the floor, yes, the rail- over the Internet that would not be to certainly support this motion on roads were assisted; yes, highways are considered Internet access and would cloture and allow us to get to the sub- assisted; yes, our airlines continue to therefore not be subject to the Internet stance of the bill and to be able to be subsidized; and yes, we need to as- tax moratorium. My compromise would reach conclusion on this important sist this new incredible technology further narrow the definition of Inter- issue. So I recognize the Senator’s ef- that is changing America and the net access, while ensuring that services forts. world. incidental to Internet access—such as Mr. MCCAIN. Mr. President, I thank e-mail and instant messaging—would In the case of the Internet tax mora- torium, however, we are not talking the Senator from Mississippi. I thank remain tax-free. Once again, this provi- him for his involvement in this issue. sion fully addresses the concerns of about subsidies. We are merely talking about a national policy of taking a As everyone knows, he is a genius at state and local governments. working his way through difficult and Mr. President, the list of com- hands-off approach to the continued growth of the Internet. The Internet is thorny issues. I appreciate his involve- promises goes on and on. For example, ment in seeking to try to resolve dif- my amendment would clarify that the now accessed at home by 75 percent of the population—an estimated 204 mil- ferences between the two sides—at Internet tax moratorium does not least to a point where we can move for- apply to nontransactional taxes such lion people in the U.S.—up from 64 per- cent in 2002, and 26 percent in 1998 when ward. I look forward to his continued as taxes on net income, net worth, or assistance as we address this issue. property value. Congress rightly decided to implement Mr. LOTT. I thank the Senator for My amendment would clarify that the ban on taxes on Internet access. yielding. otherwise taxable services would not That’s an impressive 3 times what the become tax-free solely because they Internet use rate was just over 5 years Mr. MCCAIN. Wider adoption of are offered as a package with Internet ago. And though the Internet tax mor- broadband services could also translate access. atorium has obviously had its intended into economic growth and greater job The amendment would grandfather effect of contributing to the growth of creation for our country. I would sug- for three years from November 1, 2003, the Internet, our job is not yet done. gest then that, as States and localities the States that were taxing Internet Today, the Internet offers the prom- are shoring up their budgets and in- access in October 1998. ise of broadband access services, which creasing their tax revenues after a few My amendment would grandfather provide higher bandwidth connections years of budget shortfalls, we should for two years from November 1, 2003, that permit faster data transmissions not move to stifle economic growth by the States that began to tax—accord- and thus facilitate and enhance serv- taxing the Internet. ing to many, improperly—Internet ac- ices such as streaming audio and video. But this debate isn’t just about the cess after October 1998. Nevertheless, many of the households economic benefits of affordable Inter- The amendment would ensure that with Internet access have only basic net access. During my presidential can- universal service would not be affected dial-up access, and have not migrated didacy, one of the many rewarding ex- by the moratorium. to broadband services. In fact, the Pew periences I had was seeing how the And finally, my amendment would Internet Project estimates that only 24 Internet served as a medium for polit- ensure that 911 and E–911 services percent of American households have ical participation. Hundreds of thou- would not be affected by the morato- broadband access, while most homes sands of people logged on to my cam- rium. still connect through dial-up modem paign Web site where they were able to Each of the compromise provisions is connections. In fact, the United States access information and organize. For included in direct response to State is falling behind many other developed me, keeping Internet access tax-free is and local government concerns about countries such as Japan, South Korea, about protecting consumers’ wallets S. 150. And so my amendment will en- and Canada in our deployment of and about helping our Nation’s econ- sure that the $20 billion in tele- broadband services—and many experts omy, but it also is about improving our communications taxes that is collected even call the broadband services that political process and the right and abil- annually by State and local govern- we have ‘‘broadband on training ity of our citizens to participate fully ments will largely remain protected. wheels’’ because they do not provide in that process. Any statement to the contrary would the speeds provided by the broadband Because my amendment is not one- be patently false. networks of other nations. sided, I know that a few of my col- Mr. President, my amendment goes a Clearly, there remains a strong need leagues who have been firmly on one long way to meeting the concerns of to ensure that taxes on Internet access side of this debate or the other will not the States and localities. However, be- will not pose a hurdle to the continued join us in this compromise. Some of my fore those on the other side of this de- adoption of basic dial-up access or to colleagues, for example, believe that bate start to protest, I would remind the migration from basic Internet ac- Internet access should receive little—if them that what I am proposing is truly cess to broadband Internet access. any—protection from taxation. We a compromise between the interests of Keeping the Internet tax-free trans- have heard statements from some on State and local governments on the lates into lower costs for consumers, that side that my amendment is not a one side and industry and consumers and lower costs give our citizens freer true compromise, which both boggles on the other. This legislation therefore access to important online services the mind and indicates that for some in doesn’t—and, as a compromise, can’t— like telemedicine and e-learning. this debate the attitude is ‘‘my way or

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00024 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4361 the highway.’’ Others I’m sure con- merce imposed by the Internet Tax Freedom Landrieu Mikulski Sarbanes tinue to believe that all data trans- Act. Lautenberg Miller Specter missions over the Internet—including Bill Frist, George Allen, Jon Kyl, Orrin The PRESIDING OFFICER. (Ms. VoIP services—should be tax-free. But Hatch, James Inhofe, Elizabeth Dole, MURKOWSKI.) On this vote, the yeas are Larry Craig, John Ensign, Gordon 74, the nays are 11. Three-fifths of the I ask those Members who see merits to Smith, Mitch McConnell, Norm Cole- both sides of this debate to join me in man, Sam Brownback, Trent Lott, Senators duly chosen and sworn having this effort to break the deadlock that Conrad Burns, Jim Talent, John E. voted in the affirmative, the motion is has delayed action on this matter for Sununu, Mike Crapo. agreed to. Mr. MCCAIN. Madam President, I far too long. Doing so will not only The PRESIDING OFFICER. By unan- thank all of my colleagues for their strike a fair balance in this debate, but imous consent, the mandatory quorum vote. It is certainly a signal that a ma- it will also clarify the confusion that call has been waived. jority of Senators want to move for- has been hanging over the tax treat- The question is, Is it the sense of the ward and address this issue. I believe ment of Internet access for several Senate that debate on the motion to many believe they would like to get in- months. proceed to S. 150, the Internet Tax volved as well. Mr. President, for all of the reasons Nondiscrimination Act, shall be If the opponents are going to talk for stated, I urge my colleagues to vote in brought to a close? The yeas and nays a while, after that is over, since we are support of cloture on the motion to are mandatory under the rule. The in 30 hours of postcloture debate, if it proceed to S. 150 and in favor of the clerk will call the roll. is sought to be used, it is my intention Internet tax compromise that I will The legislative clerk called the roll. offer. I trust that we will add this to propose tomorrow the amendment Mr. MCCONNELL. I announce that measure to the long line of pro-con- which I described earlier. I hope we can the Senator from Rhode Island (Mr. sumer legislation we have passed dur- then move forward with amendments CHAFEE), the Senator from Wyoming ing this Congress—including the Do- and debate and votes. (Mr. ENZI), the Senator from Illinois Not-Call registry legislation. I hope I yield the floor. (Mr. FITZGERALD), the Senator from that we will again join together to give The PRESIDING OFFICER. The Sen- Nebraska (Mr. HAGEL), and the Senator American consumers affordable access ator from Florida. from Pennsylvania (Mr. SPECTER) are to the Internet, which we all agree is a Mr. NELSON of Florida. Madam necessarily absent. crucial medium of communications, President, I defer to the leadership. I Mr. REID. I announce that the Sen- education, commerce, and political have some remarks to make on another ator from Delaware (Mr. BIDEN), the participation in America. subject as in morning business, to Senator from North Carolina (Mr. Again, I will summarize. This pro- come out of my hour with regard to the EDWARDS), the Senator from Hawaii posal is a temporary 4-year morato- motion to proceed. (Mr. INOUYE), the Senator from Massa- rium, which makes the Internet access Mr. REID. I know the Senators who chusetts (Mr. KERRY), the Senator from 100 percent tax free, but narrows the are concerned about this legislation Wisconsin (Mr. KOHL), the Senator definition of ‘‘Internet access’’ by ex- are trying to make a decision as to from Louisiana (Ms. LANDRIEU), the cluding traditional telephone service, what is going to happen next, what Senator from New Jersey (Mr. LAUTEN- and it further narrows the definition of they are going to do next. It would be BERG), the Senator from Maryland (Ms. Internet access by carving out voice to everyone’s best interests if we had MIKULSKI), the Senator from Georgia and other services provided over the some time when we could go to the bill (Mr. MILLER), the Senator from Mary- Internet, while ensuring that services tomorrow. land (Mr. SARBANES), are necessarily incidental to Internet access, such as e- I direct this question through the absent. mail and instant messaging, remain Chair to the Senator from Tennessee: free. The PRESIDING OFFICER (Ms. MUR- When do you think you will be in a po- My amendment grandfathers States KOWSKI). Are there any other Senators sition to decide whether we can have a that were taxing Internet access in 1998 in the Chamber desiring to vote? time certain to go to the bill or wheth- for a 3-year period. It grandfathers The yeas and nays resulted—yeas 74, er we will work off the 30 hours States that currently tax Internet ac- nays 11, as follows: postcloture? cess, including those that tax the last [Rollcall Vote No. 71 Leg.] The PRESIDING OFFICER. The Sen- mile that were not protected by the YEAS—74 ator from Tennessee. Mr. ALEXANDER. Madam President, 1998 grandfather clause, for a 2-year pe- Allard Dayton McCain riod, and it incorporates all other com- Allen DeWine McConnell I thank the assistant Democratic lead- ponents of the substitute amendment Baucus Dodd Murkowski er. I thank Senator MCCAIN for his ef- Bayh Dole to S. 150 and the Alexander Internet Murray forts over the weekend to develop a Bennett Domenici Nelson (FL) substitute amendment which we re- tax bill, the accounting rule to address Bingaman Dorgan Nelson (NE) bundling, and the explicit inclusion of Bond Ensign Nickles ceived this afternoon and which we are Boxer Feingold Pryor studying. nontransitional taxes from the Inter- Breaux Frist net tax moratorium and savings Reed My hope is we have a constructive Brownback Graham (SC) Reid Bunning Grassley movement toward a result this week clauses addressing the regulation of Roberts Burns Gregg Internet access, universal service, and Santorum that does no harm to States, that bans Byrd Harkin Schumer State and local taxes for a short period e-911. Campbell Hatch Mr. President, I yield the floor. Cantwell Hutchison Sessions of time, and that gives Congress time Chambliss Inhofe Shelby through the Commerce Committee to CLOTURE MOTION Cochran Johnson Smith create a comprehensive approach. The PRESIDING OFFICER. The hour Snowe Coleman Kennedy The leadership has asked us to try to of 5:30 p.m. having arrived, under the Collins Kyl Stabenow do this in an orderly way. I want to do previous order, pursuant to rule XXII, Conrad Leahy Stevens Cornyn Levin Sununu that. I have two or three Senators to the Chair lays before the Senate the Corzine Lieberman Talent discuss that with in the next 30 min- pending cloture motion, which the Craig Lincoln Thomas utes or hour. The Senator from Cali- clerk will report. Crapo Lott Warner fornia has remarks she would like to The legislative clerk read as follows: Daschle Lugar Wyden make, so I say to the assistant Demo- NAYS—11 CLOTURE MOTION cratic leader, within the next 30 min- We the undersigned Senators, in accord- Akaka Durbin Jeffords utes or hour I will have a response to Alexander Feinstein Rockefeller ance with the provisions of Rule XXII of the him and the majority leader about how Standing Rules of the Senate, do hereby Carper Graham (FL) Voinovich Clinton Hollings move to bring to a close debate on the mo- we would like to proceed. tion to proceed to Calendar No. 353, S. 150, a NOT VOTING—15 The PRESIDING OFFICER. The Sen- ator from Florida still has the floor. bill to make permanent the moratorium on Biden Enzi Inouye taxes on Internet access and multiple and Chafee Fitzgerald Kerry Mr. NELSON of Florida. I yield to discriminatory taxes on electronic com- Edwards Hagel Kohl the Senator from North Dakota.

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00025 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4362 CONGRESSIONAL RECORD — SENATE April 26, 2004 The PRESIDING OFFICER. The Sen- know the President of Venezuela, enough time to verify them all. That is ator from North Dakota. President Chavez, is right now the sub- another concern, that the process is Mr. DORGAN. Madam President, I ject of a petition drive aimed at hold- being drug out purposely, so as to was simply going to observe now that ing a referendum on a recall of his avoid the timeframes involved. But we have had the cloture vote on a mo- Presidency. That is provided for under even worse, there is so little trust tion to proceed, there is a 30-hour pe- section 72 of the Venezuelan Constitu- being expressed that the Chavez gov- riod postcloture. My expectation is we tion. What is also well known is Presi- ernment is going to conduct the proc- would go on this bill at some point to- dent Chavez and his allies have done ess fairly that the effort may be morrow. My hope is it would be at 2:15, everything in their power to make it doomed even before it starts. for example, following the caucus impossible to hold a legitimate ref- This political crisis, which has been meetings tomorrow. However, that is a erendum. going on in one form or another in decision those who oppose the cloture A week ago I was in Venezuela. I Venezuela for 3 or 4 years, leaves me motion will want to address. spoke to numerous officials of the Cha- deeply concerned about the direction of The bill we are going to be consid- vez government, including the Foreign Venezuela and the prospects for its de- ering in the Senate is a piece of legisla- Minister, the Energy Minister, the Vice mocracy. It is a tragedy that a country tion that came out of the Commerce President of the National Assembly. I of such enormous promise, with vast Committee. When it came out of the also spoke to leaders of the opposition natural resources, and a vibrant entre- Commerce Committee, it had one area who have been leading the drive to hold preneurial population and well-mod- that was not resolved. We understood a recall referendum under the provi- ernized, could find itself in such a dire when we voted it out it was not re- sions of the Venezuela Constitution. circumstance. solved. It could have some very signifi- This is a recall on whether the Presi- I am afraid that the United States is cant ramifications on State and local dent will continue in office. not doing enough to make clear how revenue base and other issues. We de- In addition, I met with numerous much we have at stake in the protec- cided to try to resolve it on the way to business leaders from American compa- tion of democracy in Venezuela. With a the floor. It is not yet resolved. As a nies, many in the energy sector, to recent United Nations report indi- result, it will require substantial hear their views on what is likely to cating that a majority of the people in work—amendments, debate, some com- happen to Venezuela, what is going to Latin America have their doubts about promise here and there—to see if we happen to Venezuela-United States re- the value of democracy, we cannot af- cannot get a piece of legislation that lations, and what our policy should be ford to leave any doubt about where does what all of us want it to do; that there. we, the United States, stand and what is, to have a moratorium on the tax- Everyone I spoke with recommended our policy is. I think we also have rea- ation of access to the Internet but done the United States must strongly sup- son to worry about the impact on the in a way with respect to definitions port a negotiation led by the OAS and economy in our hemisphere of a major that is not going to have loopholes big the Carter Center aimed at resolving oil supplier to the United States, the enough to drive trucks through. disputes related to holding the ref- fourth largest supplier to the United There have been circumstances in erendum. Typically, this would not be States; we have to be concerned. What which if you have a definition that is a dispute. They have many more signa- about the interests of the United not appropriate and not carefully craft- tures than is required for the ref- States if suddenly Venezuela were de- ed, the moratorium on taxing the erendum. However, an objection has stabilized? Internet itself could be a moratorium been raised that signatures are not ac- That is why I was so impressed with on taxing a wide range of products that curate as to the people. That is easy to the impact that a statement by Sen- are already taxed. We are going to have check. ator JOHN KERRY had on both the Gov- to work through this in the coming I met with one of the mediators at ernment and the opposition in Ven- days. the Carter Center who described to me ezuela. Senator KERRY’s call for strong I would like to see us work in a coop- the proposals his team and the OAS U.S. support for the Organization of erative way and get on the bill and find team had made to try to bridge the gap American States and the Carter Center a way to find some middle ground that between the Chavez government and process genuinely shook up the Chavez accomplishes the objectives we all the opposition. When I asked if anyone government, and it gave renewed hope have. Speaking for myself, I supported outside of the government, any of the to the opposition. the moratorium previously. I support a opposition in the business leaders actu- Without a sustained push by the moratorium now. But it must be done ally think the Chavez government, and United States at its highest levels, I in a manner that is consistent with specifically President Chavez, will have grave doubts that President Cha- definitions we all understand and one allow the continuation of this ref- vez will ever permit the referendum. that accomplishes the objectives we all erendum to go forward, I got the same Senator KERRY made this statement, set when we wanted to pass this legis- answer from all quarters. It was, ‘‘No.’’ much to the delight of the opposition lation in the first instance. Because of the way President Chavez in Venezuela, on March 19 of this year. I appreciate very much the Senator has governed, because of the way he It is a very strong statement on reform from Florida yielding. has tried to silence opponents, it is that is needed, and how the Chavez Mrs. FEINSTEIN. Madam President, widely believed he will never allow the government needs to get behind democ- we are not on the bill, is that correct? recall referendum to go forward. I hope racy and stop the kind of direct at- The PRESIDING OFFICER. We are he will hear this chorus of concern tacks on the United States in which it on the motion to proceed. being expressed now from the Senate is engaging. The Senator from Florida. that under section 72 of the Venezuelan Now, other nations to which the VENEZUELA Constitution he should allow the proc- United States should be reaching out, Mr. NELSON of Florida. Madam ess of democracy to work. to use their influence as well: Brazil, President, while we are getting all of Just last week, the Venezuelan Na- Chile, Spain, and France, are all, in our ducks in order with regard to the tional Election Commission announced some respects, better positioned than procedure and there is this momentary procedures for conducting the the United States to try to influence lull in the consideration of the instant reparos—the verification of over 1 mil- the Venezuelan Government. But those legislation, I rise to discuss conditions lion disputed signatures on the original states need to see sustained leadership facing the United States with regard to recall petitions. For a few days at the from the United States. an important neighbor of ours in this end of May, those who signed the peti- The threat to democracy in Ven- hemisphere; that is, Venezuela. tions will have the opportunity to ezuela is not, by any means, the only Venezuela is a country in deep crisis. come forward and present evidence reason for our concern. President Cha- I worry, as has been the case with so that verifies their signature. vez has caused us a number of other many of our neighbors to the south, It is a cumbersome process. Even if it headaches recently. He struck up a that it is not getting enough attention works perfectly, and even if the signa- close alliance with Fidel Castro. He has in relation to this crisis. We all should tures are legitimate, there may not be started to strike up an alliance with a

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00026 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4363 gentleman named Morales in Bolivia U.S. Government wants. In the interest Before I do, I compliment the Sen- who is trying to expand the drug trade of fostering free and fair elections and ator from Florida on his comments on in Bolivia. And there is extensive evi- democracy in all of Latin America, Venezuela. He may not know this, but dence of cooperation between Cuban that certainly is not what we want, I had the pleasure of spending some and Venezuelan intelligence services. that is not what the Organization of time in Venezuela when I was mayor, There is also the employment of a American States wants, but that seams leading a delegation. We had a sister great number of Cuban nationals in the direction in which we are headed. city relationship with Caracas. I saw Venezuela. That is one of the reasons for me mak- the vibrancy of that democracy at that Venezuela has provided assistance or, ing this statement to my colleagues in time. This was in the mid-1980s. All the at a minimum, safe haven to even the Senate. progress that had been made in the Bo- those who are drug runners, such as the If those deteriorating relations be- livar nations and the closeness that ex- FARC, a group that basically is in- tween our governments continue, that isted between Venezuela and our coun- volved in the drug trade, fighting the would be a tragedy for a longtime ally, try, it was something very special to legitimate Government of Colombia. and it would represent a reversal of the see. You could say, I think, that Ven- And the FARC continues to conduct a longstanding good relationship the ezuela led all the nations in terms of terrorist campaign against the Govern- United States and Venezuela have had. its relationship to us. So the deteriora- ment and the people of Colombia. At a At this stage we cannot be anything tion of that relationship is very much time when Colombia is making slow but clear with the Venezuelan Govern- regretted by me. I associate myself but steady gains in its long struggle ment about the direction this relation- with the comments of the Senator from against the FARC, the last thing it ship is headed. If Venezuela’s democ- Florida and thank him very much for needs is to have a neighboring power; racy continues to be undermined by its making them. namely, Venezuela, give assistance to Government, if President Chavez con- I wish to speak about a bill that I am this brutal adversary, as they would go tinues to side with those who are try- not sure everybody understands very across the line into Venezuela. ing to be adversaries to the United well, let alone exactly what it is. There President Chavez has also made some States, and if Venezuela does not prove are essentially three bills floating truly outrageous statements, such as itself to be a reliable ally in the war on around. One of them is S. 150. This is a praising Iraqi insurgents who attack terrorism, if Venezuela does not con- permanent measure. It includes a 3- American soldiers. He has also tried to tinue to abide by its own constitution, year grandfather on Internet access if use his oil supply relationship to have then we will scarcely be able to draw the taxes existed in 1998. That is the a lever on the small nations in the Car- any other conclusion from these ac- Allen-Wyden bill. ibbean to get them to oppose U.S. poli- tions. There is a McCain proposal that may cies. And President Chavez has threat- For this reason, I commend Senator be brought forward. And, as I under- ened to cut off oil exports to the KERRY for making crystal clear, in his stand it, in would last for 4 years. It in- United States. statement of March 19 of this year, cludes a 3-year grandfather on Internet Venezuela also suffers from a potent what the stakes are. He has made cer- access taxes that existed in 1998 and a market in false documentation, such as tain that no Venezuelan official can 2-year grandfather on Digital Sub- passports and other identity cards. I doubt that if the present course con- scriber Lines (DSL) taxes. am becoming increasingly concerned at tinues, things will get no easier for And there is the Alexander-Carper the ease, by paying $800 or $900, of get- them in a future Kerry administration. bill, of which I am a cosponsor. This is ting full documentation of everything My hope is this knowledge will cause a 2 year temporary moratorium that from a passport to a driver’s license, the current American administration includes a 2-year grandfather on Inter- all of which is legitimate, simply by to make clear to President Chavez that net access taxes that were in place in buying off officials. I am certainly con- our Government places a high priority 1998 and a 2-year grandfather on DSL cerned that international terrorist on democracy, the rule of law, and re- service. groups will discover their ability to ac- sponsible conduct in international re- What all that means is very difficult. quire and make use of forged Venezuela lations, and that the Government of The last time this bill was on the floor documents to conduct terrorist at- the United States will come down hard was November 6 and 7 of last year. I re- tacks. on the words and the deeds of the Cha- member coming to the floor and saying We may have a net set up to try to vez government and that Chavez’ fail- I had been approached by more than a protect people from coming into our ure in these areas—it will be made hundred California cities to oppose the borders, but Venezuelans can travel on clear—will have consequences, not only bill. It was a deluge. I had never had their documents to European coun- in his relations with us but in his rela- that kind of opposition from California tries. And that begins to start the proc- tions around the world. cities before in my 12 years in the Sen- ess of mischief. The Venezuelan Gov- This is a matter of grave importance ate. That deluge has only increased. ernment is not doing nearly enough to when you consider how dependent we Interestingly enough, I have not re- put a stop to this practice. are on foreign oil. That is one reason. ceived a single letter from a telephone I had a friendly meeting with the We have always relied on that oil com- company in support of any of these Foreign Minister, and I raised all of ing out of Venezuela. So many of our bills, which is very interesting. these concerns with him. He said, with refineries on the gulf coast of the The most dominant voice has been regard to the forged documents that United States are established to handle the League of California Cities, fire- are legion in Venezuela, that he was the kind of oil with its content to be fighters, labor. The League in par- not aware of the problem. But 3 days able to refine it into American fuel. ticular represents over 470 California after I left, the Government announced Many other refineries in the world cities. These cities believe this bill, S. the arrest of nine people for trafficking don’t have that capability. So it is 150, will cost billions of dollars nation- in forged documents. I hope that is the clearly in Venezuela’s interest that wide, and in California it will cost beginning of a crackdown. If that is the they continue that commerce and con- local jurisdictions as much as $836 mil- case, I thank the Foreign Minister of tinue good relations with the United lion once it really gets started. Venezuela for taking my comments to States. Cities and counties across the Nation heart. I hope and pray our relations will im- are facing budget crises. These cuts You can see that the whole picture prove and that we will get back into only make the situation worse. There adds up to a very disturbing conclu- the longstanding friendship we have would be less money to pay for police sion. If things do not improve soon, I had for years and years. officers, firefighters, libraries, and worry that we may eventually reach I yield the floor. parks. Passing this bill, which essen- the point where we have to treat this The PRESIDING OFFICER. The Sen- tially would end revenue streams Venezuelan Government as an un- ator from California. which cities have counted on for years friendly government that is hostile to Mrs. FEINSTEIN. Madam President, to fund vital services, is something I U.S. interests. That is not what I want. I rise to claim an hour under the mo- can’t do. That is why you have Senator And I do not think that is what the tion to proceed to speak on the bill. CARPER, a Governor, Senator

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00027 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4364 CONGRESSIONAL RECORD — SENATE April 26, 2004 VOINOVICH, a former mayor and Gov- cer for the city of Los Angeles. He And, it would grandfather access taxes ernor, Senator ALEXANDER, a Governor, points out that: in place in 1998—again for 2 years. It is and myself, a mayor, all saying, please In California, the utility user tax has been hoped that this will ensure that the don’t do this. applied to telecommunications services on a Internet could continue to mature. I support legislation sponsored by technology-neutral basis for over 30 years. I must say, also, it is my under- Senators ALEXANDER and CARPER With 150 cities receiving over $830 million—I standing that Senator ENZI is going to which would extend the recently ex- have been over that. introduce a bill that will be a simple pired moratorium on Internet access He goes on to say: extension of the 2-year moratorium, by 2 years, and make the moratorium For the city of Los Angeles, our tele- which expired a few months ago. If the technology neutral. communication’s utility user tax covers Alexander-Carper bill isn’t successful, I The Allen-Wyden bill changes the local exchange service, long distance, and will support this solution. definition of Internet access signifi- wireless, which total $260 million. S. 150 I really believe that is the solution— cantly. That is the problem. Simply places all of these revenues in jeopardy. The that we should simply extend it, let the loss would come from: 1, the migration of put, the definition included in the bill Ninth Circuit case go up to the Su- traditional telephone services to Internet- preme Court, and let the Supreme before us is far too broad. The bill says based telephone services, or Voice over that telecommunications are taxable, Internet Protocol; and 2, the application of Court speak. Or we should add an and then it adds this: S. 150 to local exchange and wireless services amendment to S. 150 that says that all . . . except to the extent such services are that also provide voice and Internet access present taxes remain unaffected, so used to provide Internet access. (in the same manner as DSL and cable that cities, counties, and States, But what does the phrase ‘‘to provide modem), which would prevent the city of Los through your State, Madam President, Angeles from taxing these services. Internet access’’ actually mean? Cities, and my State, as well as every other counties, and States believe it means He then goes on to point out: State, can know with certainty that they won’t be able to tax telecommuni- The migration of telecommunication serv- the revenues they have counted on cations services, which they currently ices to the Internet is not just speculation. they can continue to count on. can, to the tune of $2 to $9 billion an- AT&T, SBC, Verizon, and Time-Warner have If you ask people whether they want all announced their intent to introduce nually all across the United States. So police and fire, the answer is yes. If Internet telephone service in California this you ask them whether they want local that is really what is at stake. year. Let me read what the Center on services, the answer is clearly yes. To It is important to note that cur- Budget and Policy Priorities says pass a bill that ends the method of rev- rently, DSL and cable modem are not about the definition contained in enue collection and funds up to 15 per- subject to the Federal excise tax, or Allen-Wyden: cent of these local services in many ju- UUT, utility user tax, because until re- risdictions, I think, is an unconscion- The ban on State and local taxation of cently these broadband communication telecommunications services used to provide able thing to do. Internet access would effectively eliminate services were not used for voice and Much like the tax cuts, they explode billions of dollars’ worth of taxes on voice were properly deemed private commu- in outer years. So while Members that telephone service as the provision of that nication services. vote for that may be popular for a service is migrated to the Internet, a process Now, the Ninth Circuit Court of Ap- short period of time, to be able to go that is well underway. peals has changed even that and is es- home and say they are assuring their Then it goes on and it says there will sentially saying that both cable and local jurisdiction that they are pro- be substantial revenue losses for State DSL can be taxed. That just came out. tecting their revenue sources, they and local governments. It points out I am told that it will take another 18 cannot do that by voting for S. 150. that 11 States would lose between $80 months to 2 years just to straighten Just too much is unknown. million to $120 million: Colorado, Ha- that out and to see if there is an appeal Fifteen percent means layoffs, and it waii, New Hampshire, New Mexico, on a writ of certiorari to the U.S. Su- could mean major cuts in service. It North Dakota, South Dakota, Ohio, preme Court. could mean higher local taxes. Tennessee, Texas, Washington, and So this whole area is in flux and it The cities that have contacted me, Wisconsin. It says 28 States and the could change dramatically. It makes large and small, are like San Fran- District of Columbia would lose $70 no sense to do a permanent piece of cisco, Los Angeles, Sacramento, La- million annually. Let me quickly men- legislation at this point in time, in my Verne, San Leandro, and Santo Rosa. tion which ones they are: Alabama, view, particularly with this Ninth Cir- Let me quote from the comptroller of Alaska, Arizona, Colorado, Con- cuit case recently coming down. the city of San Francisco, Ed Har- necticut, DC, Florida, Hawaii, Illinois, If Allen-Wyden is approved, phone rington. Again, this is a technical per- Indiana, Kansas, Kentucky, Louisiana, services, which are currently taxable, son writing: Minnesota, Mississippi, Missouri, New will become tax exempt. This means For the city of San Francisco, our tele- Hampshire, New Jersey, New Mexico, local jurisdictions will lose revenues communications UUT—utility users tax— they can collect today. In turn, this covers local exchange service, long distance, New York, North Carolina, Ohio, Rhode and wireless, which totals $32 million a year. Island, South Carolina, Tennessee, means less revenue to pay for local pri- S. 150—that is Allen-Wyden—places all of Texas, Washington, and Wisconsin. orities. these revenues in jeopardy. A lot of States stand to lose. It goes I support making business and resi- The loss would come, again, from the mi- on to say many more State and local dential access to the Internet tax free. gration of traditional telephone services to governments would lose their ability to There are primarily three ways to ac- the Internet-based telephone services or tax telecommunications services pur- cess the Internet today: dial-up service; Voice Over Internet Protocol; and, 2, the ap- cable modem; and DSL, digital sub- plication of S. 150 to local exchange and chased by Internet access providers, wireless services that also provide voice and such as the high-speed lines providers scriber lines. Under the recently ex- Internet access, which would prevent the use to link to the backbone of the pired moratorium, two of these meth- city of San Francisco from taxing these serv- Internet. ods—dial-up service providers and ices. A lot of States stand to lose. Now, cable modem—were exempted from That is the same as Los Angeles. you can talk to authors of the bill and taxation. The third, DSL, could be So you have two of the major cities they will say, oh, no, that really is not taxed, though many jurisdictions, in- in the State and their technical and fi- true. But the fact is that even CBO cluding California, didn’t tax that. But, nancial people both saying the same cannot give you a real estimate be- as I have just told you the Ninth Cir- thing. cause companies don’t maintain cuit has just made a change by saying The League of Cities, which rep- records; but cities, interestingly that you can now tax cable modem. resents all of California’s 478 cities, its enough, have retained specialists to es- Alexander-Carper—the bill I sup- county administrators, its police offi- timate for them. port—would level the playing field and cer associations, its firefighter associa- Let me read from one of those spe- make DSL tax exempt, except in those tions, all oppose this bill. cialists. His name is William T. jurisdictions which already taxed it. In the city I served as mayor for 9 Fujioka. He is the administrative offi- This grandfather would last for 2 years. years, the current definition of telecom

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00028 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4365 services could lead to a loss of $32 mil- appeal, hopefully for the Supreme invented, somebody got excited about lion annually. This translates into 300 Court to take it up, or else to leave in it, but we did not say in order to en- police and firefighters. place the appellate court opinion which courage them, there may be no taxes I want to also cite the city of Pasa- makes very clear that States will be by State and local governments on dena. Mayor Bill Bogarrd wrote my of- able to tax cable modem service since these great new inventions. Whenever fice to protest that his city would lose the 1996 act allows States to tax tele- we decide something is worth a sub- $11.4 million under Allen-Wyden, and communications services. sidy, we do it ourselves, or we should he writes: One of the most disturbing aspects do it ourselves. That is the great irony By using vague language to include about the bill is some people think here. broadband Internet under the moratorium, that it imposes Internet sales taxes Here we have one of the most sub- we fear that the bill will allow telephone and when this is not true at all. These sidized technologies in America and cable companies to use that protection to taxes are all at the point where the the fastest growing technology in avoid paying local franchise or utility fees. Internet comes in to the home, and yet America. There is nothing to indicate Which is exactly what is going to they reach back in the chain as various anything is stopping it from growing. happen. services come together substantially Yet we are piling on more subsidies and He goes on to state: before the Internet reaches the house. I giving the bill to State and local gov- It is our understanding that it was not the think if that currently taxable aspect ernments. intent of the bill sponsors to endanger local of the service is made unavailable to I thank the Senator from California franchising authority, but the legislation local communities that have very few for her leadership, her directness, and has yet to be changed to correct these unin- revenue sources, it is going to present tended consequences. her consistency. I look forward to a substantial hardship for the quality working with her tomorrow. Virtually every technical person who of life of the people we care about in looks at this bill—the Center for Budg- our cities and in our States. I think we have achieved tonight et and Policy Priorities, as well as I will oppose S. 150. I will vote for the some of what we had hoped. The Senate every controller, technical professional Alexander-Carper bill and will also has rules that permit a small group of employee of cities and counties—says vote for Senator ENZI’s bill should he Senators to make a point. I think the the same thing: The definition is make that available. point we made tonight by insisting on flawed, it is vague, and under that defi- I reserve the remainder of my time a cloture vote on a procedural motion, nition, any number of things can hap- and yield the floor. on the motion to proceed, was to speed pen. The PRESIDING OFFICER. The Sen- along some new compromises. Madam President, 150 cities in my ator from Tennessee. I am glad to see the Senator from Ar- State levy a utility user tax. That in- Mr. ALEXANDER. Madam President, izona with a new compromise proposal. cludes telephone and cable television I congratulate the Senator from Cali- I have been working on one for 6 services. These taxes provide the con- fornia. She represents a State that has months with the Senator from Vir- tribution that I mentioned of approxi- 12 to 13 percent of all the people in our ginia. mately 15 percent in general purpose country with lots of cities and coun- We even made some progress, but not revenues. So they make a utility user’s ties. She has been a leader as a mayor, enough. Perhaps the proposal of the tax vital in helping fund critical city as I have been a Governor. Once you Senator from Arizona is even a step services. get to the Senate, you are not supposed further. We received it this afternoon I know why telephone companies do to forget what you learned as a mayor and I have not had a chance to analyze not want this. They do not want to be or a Governor, and what you know for it, which is why we need time to do bothered by local taxes. But on the sure is that if Congress comes along that. We will move toward that objec- other hand, why not say that present and says, You can’t tax property in San tive the leadership wants and we all taxes are excepted, present taxes would Francisco, for example, then you are want, which is to create a consensus in not be covered? Cities can continue going to have to raise taxes on some- this body about what we should do for those taxes where they are. thing else. Or, on the other hand, if the time being about State and local I believe that because of the deter- they said, You can’t tax automobiles in taxation of Internet access. mination that this bill is an unfunded California, then you will have to raise What I believe and the Senator from mandate and other reasons, S. 150 is taxes on something else. subject to a point of order when it is When Congress comes along and says California believes and many other under consideration, and I fully expect to California, to 118, 122, or however Senators believe is these should be our that this point of order will be raised. many, we are going to take $260 million principles: No. 1, we should take the For this Senate to pass a bill that fur- potentially from Los Angeles, $32 mil- time to give the Senate Commerce ther ties the hands of local government lion potentially from San Francisco, Committee and the House of Rep- I think will be unfortunate just at a that is not lowering anybody’s taxes. resentatives time to think carefully time when so many States face budget You just raise other taxes. If you say, about this new technology, high-speed Internet access, which has the poten- deficits and so many cities have the Senator ALEXANDER, we think you are same situation. special, you don’t have to pay taxes, tial to deliver to our homes and our of- In short, the problem with Allen- the Senator from California is going to fices so many services. We should think Wyden is that it changes the definition have to make up what I have not paid, carefully about that and not deal with of Internet access in the recently ex- or someone is. If you say, We will just it in any piecemeal fashion. That is pired Internet tax moratorium in such cut Government, we will cut services, why a short-term extension of the ban a way that cities lose billions nation- good, maybe we should do that, but on State and local taxation of Internet ally, that this escalates over time, and still I would be paying lower taxes and access is much wiser than anything that this will lead to reduced prepared- you would be paying higher taxes. permanent, and I am glad to see us ness of our cities, to fewer firefighters, What we are talking about is a very moving away—not far enough yet, but and to fewer police officers. simple idea: Should the Congress, in its away from the notion of permanent Anyone who has ever done a city wisdom, decide to give yet one more confusion, which is what would happen. budget knows you cannot lose up to 15 subsidy to the high-speed Internet ac- Why in the world, when the Com- percent of your revenue and keep serv- cess industry and then send the bill to merce Committee, when Senator STE- ices at the same level. mayors and Governors? I can see us VENS, Senator MCCAIN, and others have I am hopeful that as the days go on having a big debate and getting all ex- said they want to look into this, would and as we consider amendments to the cited about high-speed Internet access. we short-circuit that by making a deci- bill, there will be a straight amend- When the internal combustion engine sion about a little bit of the growth of ment that will just simply extend a 2- was invented, somebody in the Senate high-speed Internet access? year moratorium to give the Supreme got excited about it, or when the tele- We ought to carefully look at wheth- Court case Brand X Internet Services phone was invented, somebody got ex- er there is a need for an additional sub- v. the FCC the opportunity to go up on cited about it, or when the railroad was sidy to high-speed Internet access. I

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00029 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY S4366 CONGRESSIONAL RECORD — SENATE April 26, 2004 will be talking about that some tomor- It is a great surprise to me to come So why is it? Why are we suddenly row. There is $4 billion of Federal sub- to the Senate and find one of the first running a railroad train through the sidy already. I have a study by the Al- things we do in my first 2 years is Congress saying we are going to pick liance for Public Technology about all break the promise the Republican Con- out this one industry? This is a coun- of the State and local subsidies to gress made in 1995, ‘‘No money, no try where we have had many great in- high-speed Internet access. They may mandate. If we break our promise, ventions before. This is not the first in- all be good things, but we should know throw us out.’’ vention we have ever had, high-speed they are there. I mentioned this ear- I would rather not be thrown out. I Internet access. It is a great thing. But lier, that in 1995 the Texas tele- would rather we keep our promise. Ev- so was the telephone. So was the rail- communications infrastructure fund eryone knows this is an unfunded man- road. So was the internal combustion put in motion raising taxes to generate date. To say we passed some unfunded engine. Now we are saying more sub- $1.5 billion over 10 years, to basically mandates is like asking, why are you sidies—4 billion in Federal dollars is put in high-speed Internet access ev- arresting me for this one? I robbed not enough. A whole book full of State erywhere. That is true in virtually some other stores last week and you and local subsidies is not enough. The every State. did not catch me. fact that it is the fastest growing tech- I mentioned earlier today, in La- We do enact unfunded mandates on nology in America, that is not fast Grange, GA, they are giving it away for occasion, but the Congress has done it enough. We want to pour more money free and still only about half the people a lot less since 1995, and it has had to in here, and it is not really going to want it. We cannot force-feed it to peo- stand up and be counted. the consumers; it is going to the com- ple, and giving a big new subsidy to the I want to make sure everyone knows panies; it is going to the industries. high-speed Internet access companies what we are talking about this week is My friend from Virginia will say that is not going to make people who can an unfunded Federal mandate and that is passed on to the consumer. Maybe it get it for free in LaGrange, GA, use it every Democrat or Republican Senator is. But if we are going to pass cor- if they do not want it. who made a speech on the floor in porate taxes on to consumers, why not While my distinguished colleagues, 1995—and I have those speeches—or do it for all corporations? We have a who have a different point of view, say who goes back to a Lincoln Day dinner lot of manufacturing companies get- it does not cost much, well, the House or a Jefferson-Jackson Day dinner and ting ready to move jobs overseas. Let’s bill costs a lot. Up to $10 billion in starts off by making a great big speech lower their taxes. Let’s lower State and local taxes on telephones are about local control is overlooking sup- everybody’s taxes. at risk. Up to $7 billion in business port for S. 150 because it is about add- I am disappointed, to tell you the taxes the States collect today are at ing a new cost on State and local gov- truth, that this bill is even being con- risk. Half a billion dollars in business ernments and not paying the bill. sidered in this way. I am surprised. If I taxes collected on the Internet back- The Senator from California says it were still the Governor of Tennessee— bone would be wiped out. Sales taxes is 5 to 15 percent of the revenue base of which maybe some in the Senate wish on Internet access being collected now many of her cities. The Governor of I still were—I would be roaring and in 27 States, gone. Universal service Tennessee told me it is up to 5 percent screaming about this. I would be call- fund fees and 9–1–1 service fees threat- of the revenue base of Tennessee. In ing my Governors on the telephone ened. Now people may be listening to our State, if we take out 5 percent of saying, What are these men and women that and saying, great, no more taxes. the sales tax base, there will be an in- in Washington, DC doing? If they want That is the big trick. Do not let your- come tax. We do not have a State in- to decide what the taxes ought to be in self be tricked by that, because if I run come tax because the people of Ten- Tennessee and California and Iowa, let for the Senate and promise to abolish nessee make a choice. We thought the them come home and run for Governor local property tax, do not people know Governor and the legislature were or mayor. If they want to give a sub- the mayor and the Governor are going elected to decide what taxes we could sidy to some company, let them pay for to have to raise sales tax on food to impose. it; don’t send the bill to us. Let them make up for it? Or if I run for the Sen- Then finally, if we insist on this addi- come down and figure how to keep ate and say I have this great idea, I am tional subsidy to encourage high-speed State university tuitions from going up going to abolish the car tax in Cali- Internet access, why do we not follow and how we keep from raising State fornia, Virginia, Tennessee, and all President George W. Bush’s example? and local property taxes to deal with a around the country, hooray, that Let’s put in the Texas plan. It is very Federal law that requires more State sounds good, does it not? But they are simple. It avoids all of this discussion aid to children with disabilities but going to come up with another tax. we are having about definitions, all doesn’t fund it. That is what I would be They will raise sales tax on food or on this argument we are having about doing. business. whether it costs anything. What they I would have them on the phone to- So this is real money we are talking did in Texas from 1999 when President night on a conference call and asking about, and that is the second point we Bush was Governor Bush was the fol- them to call every single Senator say- should be discussing in this com- lowing: They said you do not have to ing, What are you doing up there? We promise, that we do not need any more pay any State tax on the first $25 of have a war in Iraq. We have a national subsidy. your monthly bill for high-speed Inter- economy. We have plenty of national The third point is we should not net access. issues without you trying to be the break our promise to do no harm to Twenty-five dollars is all one has to Governor of the home State at the State and local governments. That pay for high-speed Internet access in same time, and if you want to be the simply means this: If Congress in its Manassas, VA, where they deliver it mayor of Knoxville or Nashville or wisdom concludes high-speed Internet through the power company, and peo- Memphis, come on home. We will share access needs one more subsidy, then we ple can also get it through the phone all our problems with you and you can ought to be big enough men and women company, the cable company, and from decide what to spend and how high the to stand up and say, okay, we will pay the sky through the satellite. It can be property taxes ought to be. for it. But what are we doing? We are gotten from everywhere. One cannot When we take hundreds of millions sending the bill to State and local gov- walk down the street without some- and potentially billions of dollars out ernments. At least that is the way the body selling people high-speed Internet of State and local governments, we are Governors, the mayors, and everyone I access. It is the fastest growing tech- raising local taxes, not cutting local have talked to, who has carefully read nology in America. The Congressional taxes. We are creating permanent con- the bill from that perspective, reads it. Budget Office and the Department of fusion, and we are breaking our prom- Maybe the compromise of the Sen- Commerce have told us we do not need ise. ator from Arizona moves in that direc- to intervene. It does not need a sub- So I am glad we had this vote to- tion. I hope it does. I am studying it sidy. There is no economic benefit to night. I hope by coming in here and tonight, and I will study it in the paying more taxpayers’ money for this voting we encouraged some work over morning. one industry. the weekend, and late last week. I

VerDate Mar 15 2010 22:25 Jan 29, 2014 Jkt 081600 PO 00000 Frm 00030 Fmt 4624 Sfmt 0634 E:\2004SENATE\S26AP4.REC S26AP4 mmaher on DSKCGSP4G1 with SOCIALSECURITY April 26, 2004 CONGRESSIONAL RECORD — SENATE S4367 know Senator MCCAIN was working, control of Senator ALEXANDER or his interfaces among 57 percent of the Na- Senator ALLEN was working, Senators designee, with 20 minutes under the tion’s county and State correctional CARPER and FEINSTEIN and I were control of the chairman of the com- facilities, and monitors 14 million of- working, and I hope we have made mittee and 20 minutes under the con- fender transactions each month. With- some progress. trol of Senator DORGAN; provided fur- in moments of an offender’s status Tomorrow when we come in here ther that at the use or yielding back of change, such as escape, transfer, or re- after our lunch and begin to move to that time the motion to proceed be lease, high-speed notification is acti- the bill at hand, I think we will have agreed to. vated to reach out and provide infor- on our side—I mean those of us who op- The PRESIDING OFFICER. Without mation to victims. pose S. 150—that we will have upheld objection, it is so ordered. The VINE Communications Center our part of the responsibility of keep- f provides a staff of live operators 24- ing this Senate moving toward a con- hours a day to assist victims in using MORNING BUSINESS clusion. We want a result, but we want the service. This national victim noti- a good result. Mr. ALEXANDER. Mr. President, I fication center has made over 22 mil- May I say one more time what I be- ask unanimous consent that the Sen- lion calls, resulting in more than one lieve a good result is. A good result is ate proceed to a period of morning million notification events and saving a 2-year ban on State and local tax- business with Senators permitted to countless lives. ation of Internet access so the U.S. speak for up to 10 minutes each. VINE technology is also being used Congress can think carefully about the The PRESIDING OFFICER. Without in Federal correctional facilities. In migration of digital services to the objection, it is so ordered. 1999, the U.S. Department of Justice Internet because of high-speed Internet f launched its Federal Victim Notifica- access. So that is No. 1—2 years or less. SCOTT CAMPBELL, STEPHANIE tion Service with the core VINE soft- No. 2, no big subsidy to a heavily sub- ROPER, WENDY PRESTON, ware. I am proud to note that DOJ’s sidized industry already. LOUARNA GILLIS, AND NILA Federal Victim Notification Service No. 3, let’s keep our promise and do LYNN CRIME VICTIMS’ RIGHTS also utilizes the Louisville-based com- no harm to State and local govern- ACT munications center that provides vic- ments. Let’s show the people of this tim notification services for the county country that when we make a promise, Mr. MCCONNELL. Mr. President, I jails and State prisons in 36 States. as we did in 1995 when we said no more rise today as a proud cosponsor of this It is now time to make this life-sav- unfunded Federal mandates, when 300 victims’ rights legislation, which has ing service available to every crime Republicans stood on the Capitol steps special significance for my State and victim in America. And this legislation and said, If we break our promise my hometown. On December 6, 1993, helps make that a reality. The lack of throw us out, let’s show that we mean Mary Byron was murdered in Louis- victims’ rights, including notification that and not engage in rhetoric that ville on her 21st birthday as she left about the status of an offender, is a na- tries to confuse the issue. her place of work. Mary was killed by tional criminal justice problem that If we meet those three tests, then we her ex-boyfriend who, unknown to requires national leadership to solve. can have a result. We can have one Mary, had recently been released from This legislation recognizes the national quickly tomorrow, or Wednesday, or the county jail where he had been held problem, and I am proud to say this Thursday. But if we insist on legisla- since being arrested for stalking, as- bill includes a component to help com- tion here like the legislation that saulting, and raping Mary. The Byron plete the job of providing safety to vic- passed the House, that creates perma- family had been assured that they tims of domestic violence and other nent confusion instead of careful study, would be notified when Mary’s violent crimes. an unwarranted expensive subsidy to a attacker was released from custody. I commend the Senator from Arizona heavily subsidized fast-growing tech- But unfortunately, they were not. and the Senator from California for nology, and that does harm to State Following this tragedy, the Louis- their tireless work on this issue. and local governments, which breaks ville metro criminal justice commu- This legislation not only states that our promises, then I am going to con- nity quickly realized that victims of each victim of violent crime has a tinue to oppose that and so are a great violent crime needed a better system of right to be notified of the release or many of the Democrats and Repub- notification when offenders are ar- the escape of the accused, but it also licans who joined us in the Alexander- rested, released, or scheduled to appear authorizes adequate funding to see that Carper legislation. in court. The community committed the crime victim notification network I think this has been a successful itself to solving this critical problem that currently protects many of the day. I appreciate the time we have been and ensuring victims’ safety. In De- Nation’s crime victims is extended to given to debate the issue. I know Sen- cember 1994, one year after Mary By- cover all of the Nation’s crime victims. ator ENZI and others will be here to- ron’s death, Jefferson County, KY in- In an effort to prevent any family morrow morning to continue that dis- troduced the Nation’s first automated from having to suffer the tragedy that cussion, and I look forward to moving victim notification service. befell hers, Mary Byron’s mother, Pat, in an orderly way to the legislation at That system is called VINE, which has dedicated the last ten years of her hand, S. 150, sometime tomorrow after- stands for Victim Information and No- life to raising awareness and support noon, based upon the decision of the tification Everyday. This program for innovative programs, such as VINE, leadership. assures crime victims access to rapid, that help to break the cycle of vio- I suggest the absence of a quorum. automated notification by telephone, lence. The Mary Byron Foundation, The PRESIDING OFFICER (Mr. TAL- pager, or e-mail when an offender’s sta- along with the National Center for ENT). The clerk will call the roll. tus changes. The system also allows Missing and Exploited Children, are The assistant legislative clerk pro- victims to call 24-hours a day to obtain strong supporters of completing the ceeded to call the roll. the current status of an offender—giv- VINE Network, and I ask my col- Mr. ALEXANDER. Mr. President, I ing victims peace of mind and a sense leagues to join with us in supporting ask unanimous consent that the order of control over their lives. this critical piece of legislation. for the quorum call be dispensed with. What began in Louisville 9 years ago f The PRESIDING OFFICER. Without has now spread to more than 1,400 com- objection, it is so ordered. munities in 36 States. In fact, in 19 HONORING OUR ARMED FORCES Mr. ALEXANDER. Mr. President, on States every county jail and State pris- CORPORAL MICHAEL SPEER behalf of the majority leader, I ask on is connected to the VINE network. Mr. GRASSLEY. Mr. President, I rise unanimous consent that when the Sen- Each of these facilities and commu- today to pay tribute to CPL Michael R. ate resumes the motion to proceed to nities are connected through the VINE Speer of Davenport, IA, who coura- S. 150, the Internet tax access bill, Communications Center located in geously gave his life for his country in there be 2 hours and 40 minutes for de- Louisville. This central hub collects Operation Iraqi Freedom. He is the 12th bate remaining with 2 hours under the data from and manages automated Iowan to be killed in Iraq. My deepest

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