"Predictions that the Internet
Tax Freedom Act would topple Western Civilization have not come
to pass. Since the moratorium on taxation of out of state, online
sales was first enacted in October 1998, not a single community,
county or state has come forward to prove it is being injured by
its inability to impose discriminatory taxes on electronic commerce.
There is simply no evidence that states have lost revenue by technology-driven
commerce. On the contrary, the technology sector itself has been
pounded as hard as any sector by the economic downturn.
Across the country states are facing
tremendous budget pressures. My own state of Oregon is facing a
nearly 20 percent budget shortfall, and Oregon has the highest unemployment
rate in the nation. The shift from black ink to red is the result
of this Administration's failed economic policies, not the inability
of states to impose discriminatory taxes on Internet sales.
Adding new taxes on the backs of consumers
is not the way to salvage weakened state and local economies. Sales
taxes are among the most regressive revenue measures, and imposing
new sales taxes at this time could actually make a bad economic
situation worse. A number of states seem to be arguing that their
economic future is tied to taxing technology entrepreneurs located
thousands of miles away with no physical presence in their jurisdiction.
I don't share this view. The reason States don't tax remote sellers,
as former Massachusetts Governor Celluci has testified before the
Senate, is they don't want the political heat. Few of the 45 states
that could collect a use tax on all items their residents have purchased
out of State actually do so. Most states simply chose not to enforce
their own laws, preferring to export their tax burden to out of
state businesses who get no benefit from the taxing state.
Congress will soon be asked again by
the Streamlined Sales Tax Project states to take the political heat
for new sales taxes. The U.S. Senate has voted three times in recent
years on whether to overturn Quill to require remote sellers with
no nexus to serve the states as their tax collectors. Every time
the Senate has rejected the notion. On January 19, 1995, the Senate
voted 73-25 to table the amendment; on October 2, 1998, the Senate
voted 66-29 to table the amendment; and most recently, on November
15, 2001, the Senate voted 57-43 to table the amendment.
As Congress revisits this issue again
this year, we should remember what the Supreme Court said in Quill:
"Congress is... free to decide whether, when and to what extent
the States may burden mail-order concerns with a duty to collect
use taxes." The authority the Constitution vests in Congress to
regulate interstate commerce – online or otherwise – is an enormous
power that must be exercised with great care and caution. I believe
the moratorium should be extended indefinitely, and that is what
the legislation I introduce today would do. I am pleased to be joined
once again in this effort by Representative Chris Cox, and ask unanimous
consent that my statement and a copy of the bill be printed in the
record."
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