January 07, 2003

Introduction Statement for the Internet Tax Non-Discrimination Act Senator Ron Wyden

"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."