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WIRELESS TAX FAIRNESS ACT OF 2011 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS, COMMERCIAL 

AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

ON

H.R. 1002 

MARCH 15, 2011 

Serial No. 112–22 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM REED, New York 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON COURTS, COMMERCIAL AND ADMINISTRATIVE LAW

HOWARD COBLE, North Carolina, Chairman 

TREY GOWDY, South Carolina, Vice-Chairman 

ELTON GALLEGLY, California 

TRENT FRANKS, Arizona 

TOM REED, New York 

DENNIS ROSS, Florida 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

MELVIN L. WATT, North Carolina 

MIKE QUIGLEY, Illinois 

DANIEL FLORES, Chief Counsel 

JAMES PARK, Minority Counsel 

(III) 

C O N T E N T S 

MARCH 15, 2011 

Page 

THE BILL 

H.R. 1002, the ‘‘Wireless Tax Fairness Act of 2011’’ ............................................ 3 

OPENING STATEMENTS 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Commercial 

and Administrative Law ...................................................................................... 1 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Ranking Member, Subcommittee on Courts, Commercial 

and Administrative Law ...................................................................................... 12 

The Honorable Trent Franks, a Representative in Congress from the State 

of Arizona, and Member, Subcommittee on Courts, Commercial and Administrative Law ........................................................................................................ 17 

WITNESSES 

The Honorable Zoe Lofgren, a Representative in Congress from the State 

of California 

Oral Testimony ..................................................................................................... 13 

Prepared Statement ............................................................................................. 15 

Scott R. Mackey, Partner, KSE Partners LLP 

Oral Testimony ..................................................................................................... 18 

Prepared Statement ............................................................................................. 21 

Bernita Sims, Councilwoman, City Council of High Point, North Carolina 

Oral Testimony ..................................................................................................... 40 

Prepared Statement ............................................................................................. 42 

Harry Alford, President and CEO, National Black Chamber of Commerce 

Oral Testimony ..................................................................................................... 45 

Prepared Statement ............................................................................................. 47 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of Kurt Zellers, Speaker of the Minnesota House of 

Representatives, submitted by the Honorable Howard Coble, a Representative in Congress from the State of North Carolina, and Chairman, Subcommittee on Courts, Commercial and Administrative Law ........................... 60 

Prepared Statement of the Federation of Tax Administators, submitted by 

the Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Commercial 

and Administrative Law ...................................................................................... 65 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Article entitled ‘‘Taxing cellphones as a luxury good is outdated,’’ by Timothy 

Noah ...................................................................................................................... 72 

(1) 

WIRELESS TAX FAIRNESS ACT OF 2011 

TUESDAY, MARCH 15, 2011 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, 

COMMERCIAL AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 1:37 p.m., in room 

2141, Rayburn Office Building, the Honorable Howard Coble 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Gallegly, Franks, Reed, Ross, 

Cohen, Conyers, Johnson, Watt, and Quigley. 

Staff present: (Majority) Daniel Flores, Subcommittee Chief 

Counsel; Travis Norton, Counsel; John Hilton, Counsel; Allison 

Rose, Professional Staff Member; Ashley Lewis, Clerk; (Minority) 

James Park, Counsel; and Norberto Salinas, Counsel. 

Mr. COBLE. The Subcommittee will come to order. 

We will make our opening statements brief as we usually try to 

do because of the time frame. There will be action on the floor subsequently. 

I am pleased to be an original cosponsor of H.R. 1002, the ‘‘Wireless Tax Fairness Act of 2011’’. There are over 290 million wireless 

subscribers in the United States. Wireless service is important 

whether your car breaks down on the highway and you need to call 

for help or you are a small business with traveling salesmen who 

use e-mail and telephone to remain in contact. In recent years, 

many American families have dropped their land line and use wireless service as their primary telephone. 

With wireless service so widespread in today’s society, State and 

local taxing authorities have begun to impose higher tax rates on 

wireless service than on other goods and services. In part, this is 

a vestige of the Ma Bell era when telephone companies could impose high taxes under a regulated monopoly structure. But as 

States and localities continue to find themselves in financial distress, some have continued to single out wireless subscriptions as 

a source of additional revenue. In Nebraska, for example, a consumer pays a 19 percent tax on his wireless bill compared to the 

general sales tax rate of 7 percent. In my home State of North 

Carolina, the consumer pays almost 2 percent more in taxes on 

wireless than on other services. There is no principled reason why 

State and local taxes on wireless service should be higher than 

taxes on other services. Such high taxes are akin to so-called ‘‘sin’’ 

taxes such as those imposed on liquor and tobacco products. 

2 

The Wireless Tax Fairness Act would impose a 5-year prohibition 

on any new wireless taxes. Current wireless tax rates, even if discriminatory, would not be changed by this bill, and I think that is 

probably the right way to go. Thus, State and local revenue projections would not be affected unless a State wants to admit that it 

is planning a new discriminatory wireless tax in the near future. 

This bill would give States breathing room to reform their wireless 

tax policy at the State and local level. 

This bill would also reduce the tax burden on America’s small 

businesses, most of which rely on wireless service for employee 

communication and e-mail. It would enable small businesses to use 

the money they would have paid in taxes to create jobs and grow 

the economy. 

I am pleased to support this legislation and recognize the Ranking Member, the distinguished gentleman from Tennessee, Mr. 

Cohen. 

[The bill, H.R. 1002, follows:] 

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Mr. COHEN. Thank you, Mr. Chairman. I appreciate your scheduling this bill for a hearing. It is a very important bill. Last September, in the not too distant past in what some of my colleagues 

call the good old days when I was Chairman of this Subcommittee, 

we passed out a similar bill, H.R. 1002, the ‘‘Wireless Tax Fairness 

Act.’’ I supported the legislation similar in the 110th and 111th, 

and I am an original cosponsor of this legislation. 

If enacted, this would impose a 5-year moratorium on any new 

discriminatory State or local taxes on mobile services, mobile service providers, or mobile service property. The legislation’s nearterm goal is to protect consumers of wireless services from further 

increases in their wireless tax burden during the moratorium. 

In the long run, my hope is the moratorium will lead to a comprehensive set of principles for State and local taxation of all telecommunication services regardless of platform that all the relevant 

stakeholders can agree to voluntarily. This way Congress would not 

need to repeatedly revisit this issue on how States tax communication services. My fear is that, absent such a comprehensive solution, Congress may be compelled to impose one that leaves none of 

the stakeholders happy. Hopefully we can all get together. 

The fact is the tax structures of many States fail to account for 

the advent of wireless communications, cultural lag. And this failure by States will inure to our constituents’ detriment. 

Wireless communication services have become exponentially 

more integral to the daily lives of Americans over the last decade. 

As of the end of 2008, more households chose wireless service over 

land line service as their sole source of voice communications and 

this trend has only continued since then. I know not too long ago, 

I looked at people that only had wireless communications and 

thought that was like Star Wars. Now I am one of those people. 

Particularly troubling is the possibility that discriminatory State 

taxation of wireless telecommunication services has a disparate impact on racial and ethnic minorities. According to the Washington 

Post, 60 percent of Latino and African Americans access the Internet using wireless services which is a rate higher than the population as a whole and ‘‘others’’ groups. Therefore, the burden of 

higher taxes on wireless services fall disproportionately on their 

shoulders. And wireless service, in general, is a regressive tax, and 

something State and local governments too often easily resort to is 

regressive taxes that hurt the most under-represented people and 

the most needy people in their jurisdictions. 

Having been a State Senator for 24 years in a State that has a 

regressive tax system and a local elected official also, I am not insensitive to the concerns of State and local governments, but I do 

believe they need to use the main tools at their disposal which is 

property taxes and income taxes and sales taxes and not necessarily find these new regressive taxes to hurt minorities and 

other folks. 

I am mindful of the resentment that local governments might 

feel when Congress intervenes, but nevertheless in this circumstance, I think we are looking out for the little fellow and that 

needs to happen and fairness. Sometimes the State governments 

are right and sometimes they are wrong, but in this one I think 

they are wrong. 

13 

Representative Lofgren has been the prime sponsor. I appreciate 

she is going to be a witness today and she has been a stalwart person on this. She probably had wireless phones way before I even 

thought about it back when I was thinking they were Star Wars. 

She is so advanced. 

At this time, H.R. 1002 is really a modest bill. It does not seek 

to override existing discriminatory State taxes on wireless services. 

It simply seeks to prohibit new discriminatory taxes for the next 

5 years. All the stakeholders, include the telecommunication industry and the State and local governments, should use the moratorium to find a long-term solution to the taxation of communication 

services fair to everyone and bring us into the 21st century. 

I thank all our witnesses but particularly Ms. Lofgren who has 

been such a leader on this issue, and I look forward to their testimony. 

Thank you, Mr. Chairman. I yield back the remainder of my 

time. 

Mr. COBLE. Thank you. 

Does the gentleman from Michigan want to be recognized, Mr. 

Conyers? 

Mr. CONYERS. No, thanks, sir. I am troubled by the bill, but I do 

not have an opening statement. 

Mr. COBLE. I thank you, sir. 

As I said in my opening statement, I think it is significant to 

note that the current rates would not be changed. I think that 

makes good sense. 

Now, there was some confusion surrounding this. I did not know 

that Ms. Lofgren was to be a witness. It was her understanding 

that she was to be a witness. So I have agreed to let her give her 

statement, and I would like for the Members probably not to question her because of the interest of time. 

I think I would also indicate that the distinguished gentleman 

from Arizona, Mr. Franks, is the lead Republican on this bill. Am 

I correct, Mr. Franks? So you and Ms. Lofgren have shared that. 

So Ms. Lofgren, why don’t you give us your statement? Then we 

will recognize the witnesses who will appear before us. 

TESTIMONY OF THE HONORABLE ZOE LOFGREN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. LOFGREN. Thank you very much, Mr. Chairman, and thank 

you for your flexibility on the miscommunication. I understand that 

my full statement will be made part of the record, so I will just 

make a few brief comments. 

This is the third Congress where I have introduced this bill, and 

I want to especially thank Mr. Franks, who is the principal cosponsor, for his cosponsorship but also for the hard work that he has 

put into this measure and getting cosponsors to the measure as we 

have introduced it. 

Mr. COBLE. Well, Ms. Lofgren, if you would yield, I appreciate 

you saying that, and after your statement, if Mr. Franks wants to 

be heard for his opening statement, we will do that as well. 

Folks, I am not trying to rush anybody. We are all on a tight 

timeframe because of floor action. So you proceed, Ms. Lofgren. 

14 

Ms. LOFGREN. Thank you very much. 

When it comes to taxes, we know that not only are taxes a source 

of revenue for government, which is necessary, but how we tax has 

an impact on what people do. And when it comes to telecommunications, the taxes are really not well aligned with what our purpose 

is for the Internet. In fact, wireless services are taxed nationwide 

at an average of rate of 16.3 percent, whereas other goods average 

7.42 percent. In New York, it is nearly 23 percent, nearly 21 percent in Illinois, 21.5 in Florida, 23.5 in Nebraska. These are jurisdictions where cell phone access to the Internet is taxed like a sin 

tax. Really you would think that we were trying to discourage people from accessing the Internet using a mobile platform which is 

far from the truth. It is at odds with the national policy to expand 

our broadband network. 

And as Mr. Cohen has mentioned, there is this aspect. These discriminatory taxes especially discriminate against low-income individuals because low-income individuals access the Internet through 

their mobile platform considerably more frequently than do more 

affluent individuals, and the reasons are obvious. Getting a DSL 

line or a cable line, an expensive laptop or desktop computer is a 

lot of cash. A cell phone can access the Internet in a very affordable 

way, and that is why communities of color, low-income communities increasingly utilize this platform for access to the Internet. 

That is a good thing not only for those communities, but it is good 

for our country and we should not discourage it. 

As the Chairman has noticed, this is a moratorium on taxes. I 

served on the board of supervisors for 14 years in Santa Clara 

County. I well understand the need that local governments have 

for revenue, but this does not decrease revenue. It just prohibits 

discriminatory taxes in the future. If you do a 1 percent tax on everything, it would not exclude this, but you can’t tax cell phone access like a sin tax if this measure passes. 

It is regressive. It is unfortunate, and it is something that we 

need to do something about on a bipartisan basis. Ordinarily I support local governments and State governments in setting their own 

taxing policies, but when the outcome is so at odds with the Nation’s policy to expand broadband access, I think we have to act, 

and I am glad that we are doing so with such support across the 

Congress and on a bipartisan basis. Again, thanks to Mr. Franks 

and to you, Mr. Chairman. 

And I would yield back my time with thanks for the opportunity 

to appear. 

[The prepared statement of Ms. Lofgren follows:] 

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Mr. COBLE. I thank you, Ms. Lofgren. 

The gentleman from Arizona who is a Member of this Subcommittee, Mr. Franks, do you want to be heard? 


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Mr. FRANKS. Well, thank you, Mr. Chairman. I will be very brief. 

Thank you, Ms. Lofgren. 

Mr. Chairman, I want to thank you for scheduling this hearing 

today on H.R. 1002, the ‘‘Wireless Tax Fairness Act of 2011.’’ Congresswoman Lofgren and I reintroduced H.R. 1002 last Thursday 

with the broad bipartisan support of 144 original cosponsors. 

Access to wireless networks represents a key component of millions of Americans’ livelihoods, providing the efficient communication capabilities, whether a phone or broadband or Internet or otherwise, necessary to run a successful business. 

The exorbitant taxes on wireless customers are not only unfair, 

they are counter-intuitive, yet adding another costly impediment to 

the success of so many American businesses which are already 

struggling in the midst of a prolonged recession and already a hefty 

tax burden. 

These taxes also single out low-income and senior Americans 

who frequently rely on wireless service as their sole means of telephone and Internet access. 

H.R. 1002, the ‘‘Wireless Tax Fairness Act,’’ provides a balanced 

approach, in my judgment, that protects the revenue needs of 

States and localities while allowing for a 5-year hiatus to develop 

a rational tax regime that maintains the affordability of wireless 

services. 

As Chairman of the Subcommittee on the Constitution, I am sensitive, Mr. Chairman, to the constitutional implications of any legislation that comes before us and the limits on the Federal Government’s power. However, the mobile nature of wireless services and 

the ability to use such services all across the country clearly grants 

Congress the power to, quote, regulate commerce among the States. 

Additionally, the Fourteenth Amendment provides that no State 

shall deny to any person within its jurisdiction the equal protection 

of the laws. Under section 5 of the Fourteenth Amendment, Congress shall have the power to enforce by appropriate legislation the 

provisions of this Article. 

So, Mr. Chairman, I believe that H.R. 1002, the ‘‘Wireless Tax 

Fairness Act,’’ is a constitutionally sound, pro-consumer bill, probusiness bill, and I strongly encourage this Subcommittee and the 

full Committee to mark up this bill as expeditiously as possible so 

that it can be considered by the full House. 

And I thank Ms. Lofgren and I thank you, Mr. Chairman, for 

holding this hearing. 

Mr. COBLE. I thank the gentleman. 

Ms. Lofgren, you may be excused. 

While the witnesses find their way to the table, I will give some 

background on them. 

Mr. Scott Mackey is a partner at KSE Partners LLP. Mr. Mackey 

is an expert in tax policy and wireless communications. He is 

former chief economist at the National Conference of State Legislatures. For 10 years, Mr. Mackey focused his studies on taxation of 

electronic commerce and telecommunications tax reform. He has 

testified before panels all over the country and has been quoted extensively on CNN, the New York Times, the Wall Street Journal, 

and USA Today. 

18 

Mr. Mackey is a former legislative assistant to Senator James 

Jeffords. He received his bachelor’s degree in economics from 

Middlebury College and his M.B.A. from the University of Colorado. 

Ms. Bernita Sims sits as a city council member from High Point, 

North Carolina. And I must say to my colleagues I am in a bind. 

I had a very good visit with my friends from the furniture capital 

of the world last night, and I told Ms. Sims we are on different 

sides of this issue. She said, well, I am going to bring you around 

tomorrow. 

But Councilwoman Bernita Sims, it is good to have you and 

other members of the High Point City Council with us today. 

Ms. Sims has been a member of the High Point City Council 

since December 2003 where she is the current chair of the Public 

Service Committee, a member of the Planning Committee, and liaison to the local Alcohol and Beverage Commission. She was elected 

mayor pro tem in December of 2005 by her fellow council members 

and served a 1-year term. 

She serves on the National League of Cities Committee on Finance, Administration, and Intergovernmental Relations. She is 

also the chairman of the Finance and Legislative Action Committee 

for the North Carolina League of Municipalities. Last year she received the High Point Chamber of Commerce Minority Business 

Associate of the Year Award. 

Bernita, good to have you with us. Scott, good to have you with 

us. 

Our last witness today is Mr. Harry Alford who is the President 

and CEO of the National Black Chamber of Commerce. Mr. Alford 

is a major advocate for advancing African American businesses in 

the United States and around the world. Because of his extensive 

involvement in international business, Mr. Alford was recently 

named Cultural Ambassador by the United States Department of 

State. Mr. Alford also sits on the board of directors for the National 

Newspaper Publishers Association and writes weekly business columns for their members. He is an active member of the board of 

directors of the Chamber of Commerce and a consultant to several 

corporations and publications. 

It is good to have each of you with us. 

The ground rules, folks. We try to comply with the 5-minute rule. 

We apply that rule to ourselves and to you all as well. And when 

you see the panel before you, when that light turns amber, that is 

your warning that the ice upon which you are skating is becoming 

thin, and you will give a minute, of course, to pare down. But when 

the red light appears, that is your signal that your 5 minutes have 

elapsed. 

So, Mr. Mackey, why don’t you kick us off? 

TESTIMONY OF SCOTT R. MACKEY, PARTNER, 

KSE PARTNERS LLP 

Mr. MACKEY. Thank you very much, Mr. Chairman, Mr. Cohen, 

Members of the Subcommittee. 

I am here to report on a study that I have just recently completed that is attached to my testimony. I have been doing this for 

about the last 7 years. 

19 

And basically the findings of my study, as has already been discussed, is that the average wireless consumer pays over 16 percent 

of their bill in wireless taxes and fees versus just a little over 7 

percent in the State sales tax. So there is a big disparity, as folks 

have already mentioned so far, between what wireless consumers 

pay and what you pay for things you buy over the counter at the 

store. 

Unfortunately, this disparity is growing. As I have done the 

study over time, I have found that while the disparity has always 

existed, the disparity is getting worse. And in fact, between 2007 

and 2010 when this study covers, wireless taxes and fees grew 

three times faster than the sales taxes. So there is a problem and 

the disparity is getting worse. 

And I think one of the reasons that it is important for the time 

out that is being contemplated in this bill is that if we are ever 

going to get our hands around this problem and get the States and 

localities and the stakeholders to work this out, we have got to stop 

the problem from getting worse because the worse it gets, the harder it is to solve. 

The opening statements have really covered a lot of the key 

issues, so I will be very brief in terms of why policymakers should 

care about this issue. 

The first one, obviously, as was alluded to by many of the speakers, is the disproportionate impact of these taxes, the regressive nature of these taxes, and the disproportionate impact on low-income 

people and on minority communities. Clearly, the facts are not in 

dispute. Low-income people are increasingly relying more on wireless as their sole communications link and these taxes apply much 

more heavy burdens, as a share of income, than on wealthier individuals. Particularly one of the disturbing trends of going to very 

high per-line charges, for instance, in the City of Baltimore where 

they just raised the tax to $4 per line per month—so if you have 

a family share plan with three or four lines, you are paying $4 per 

month on each one of those lines even though, in some instances, 

the actual cost of adding a line is only $5. So in the case of Baltimore, the tax burden on those individual additional lines is over 

100 percent. 

The second reason I think that this bill is very important is for 

the reason stated by Representative Lofgren at the outset of her remarks. We have government policies seemingly working at cross 

purposes here where through the stimulus programs and through 

other efforts, States are trying to encourage the deployment of better and faster wireless networks and the roll-out of those. So on the 

one hand, we are trying to promote, incentivize, and encourage it, 

and on the other hand, in some instances in some States, we are 

taxing at such high rates that it discourages the use. So you have 

got government policies working at cross purposes. And this bill 

would help to stop the problem from getting worse and give us time 

to try to sort all this out. 

And finally, as was alluded by the Chairman, the impact on business costs. Businesses, including our own small business where we 

have outfitted half of our employees with multiple mobile devices, 

are increasingly relying on this technology to increase productivity, 

profitability, and ultimately this will lead to creation of jobs. But 

20 

these taxes do impact businesses significantly. It is not just consumers that are paying them. And so by causing a time out on 

these taxes, it is going to prevent the burden from getting worse 

on the small businesses that are using wireless technology. 

So this bill, in conclusion, does not fully address the problem, but 

it does cause a pause and a time out, so hopefully collectively we 

can address the problem. And if we don’t do this, I fear that the 

disparity and the dependence on these revenues by local governments is going to get worse. It is going to increase, and therefore 

it is going to make it that much harder to solve this problem down 

the road. 

So I appreciate the opportunity to testify before you today. I look 

forward to any questions you might have. And again, I thank you 

for the opportunity. 

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Mr. COBLE. And Mr. Mackey, you beat the red light. You were 

a speed merchant. Thank you, sir. 

Ms. Sims, we would be glad to hear from you. 


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TESTIMONY OF BERNITA SIMS, COUNCILWOMAN, 

CITY COUNCIL OF HIGH POINT, NORTH CAROLINA 

Ms. SIMS. Chairman Coble and distinguished Members of the 

House Subcommittee on Courts, Commercial and Administrative 

Law, my name is Bernita Sims. I am a council member from the 

City of High Point, North Carolina. In addition, I serve on the Finance, Administration and Intergovernmental Relations Committee 

of the National League of Cities. 

I appreciate the opportunity to appear before you today on behalf 

of the National League of Cities, the United States Conference of 

Mayors, the National Association of Counties, the Government Finance Officers Association, and the National Association of Telecommunications Officers and Advisors. 

Let us be clear. This bill is not about expanding broadband technology or providing tax parity for an overtaxed industry. Rather, 

this bill is about special treatment and favoritism for wireless 

phone companies that continue to experience explosive growth and 

profits. The current tax treatment of wireless services by Federal, 

State, and local authorities has not hindered product innovation, 

service growth, or industry profitability. In fact, the wireless communications industry is a strong and successful industry with vibrant subscribership levels and revenues. 

If there is one thing all of our organizations share, it is our longstanding opposition to efforts by Congress to preempt State and 

local taxing authority. How to levy taxes fairly, how to ensure there 

is no discrimination among companies that provide different forms 

of the same service, and how to protect local government revenues 

are all appropriate debates. But these debates belong at the State 

and local levels. And this is why our associations unite in opposing 

this bill. 

Local governments exercise their taxing authority to the extent 

provided by State law. As a result, local taxing authority and practices differ from State to State. And oftentimes, taxing policy differs from county to county and city to city within the State. But 

this is good because this means that every local government taxing 

authority tailors is tax policy by taking into account the sources of 

revenue available and the needs and wants of its residents. More 

importantly, the local officials making these decisions are accountable by the ballot box to those paying the taxes that support the 

services they use. Our citizens do not need to be protected by the 

long arm of the Federal Government. They already have the power 

to change locally imposed taxes. 

In today’s difficult economic times where State aid to local governments has decreased dramatically, local taxing autonomy is crucial in helping to ensure that the needs of local citizens, our mutual 

constituents, are met. The ability to make taxing and other fiscal 

policy decisions at the local level without Federal interference enables High Point to provide the quality services my constituents expect. 

Some argue the proposed 5-year ban set forth in this bill 

wouldn’t hurt State and local governments because they can still 

continue to collect the taxes they currently impose. But this misses 

the point. What this legislation does is preempt State and local taxing authority and represents a Federal intrusion into historically 

41 

protected State and local tax classifications. Enactment of this bill 

would lead other industries to seek preferential tax treatment at 

the expense of State and local budgets and taxpayers. This slippery 

slope necessarily leads to an erosion of our system of federalism 

and a direct threat to the fiscal health of State and local governments. 

It is important to remember that State and local governments, 

unlike the Federal Government, must balance their budgets. In 

this tough financial climate, this isn’t an easy task and the impact 

of decisions made by local elected officials are felt immediately by 

constituents. Hard and oftentimes unpopular choices, like those 

made by High Point, must be made. Even my counterparts at the 

county level are leaving no stone unturned to rein in spending, as 

demonstrated in a recent survey by the National Association of 

Counties. Essential services may be cut. Public employees may be 

laid off. Infrastructure repairs and construction may be put on 

hold. And, yes, taxes may occasionally have to be raised. But what 

is important to emphasize is that when balancing the budget, all 

options must be on the table. What this bill does is takes away one 

of these options, to tax the wireless industry, at the expense of 

other taxpayers and businesses. To have the Federal Government, 

which has difficulties balancing its own budget, seek to tie the 

hands of State and local lawmakers through the misguided enactment of legislation such as this is simply wrong. 

Americans are benefitting from being able to access the mobile 

industry or make a phone call at any time and anywhere. Whether 

wireless technology is being used by other industries such as 

health care, education, transportation, or energy, these results affirm our industry is revolutionizing and improving the way we live 

and work. 

Furthermore, State and local taxes on wireless services are not 

an obstacle to wireless broadband deployment. 

The economics of the industry will not be changed by preemption 

of State or local taxes. Wireless carriers will quite rationally still 

invest their resources in the most potentially lucrative areas and 

will still set their prices at the highest aggregate rates they believe 

the market will bear. 

Finally, let me say this. Our associations support the need for 

State and local governments to stand on their own and use all tools 

and resources available to them to balance their budgets, while 

continuing to provide essential services. Not always, but in some 

cases, taxation of the wireless industry, even at higher rates than 

other industries, might be one of those tools. It is incumbent for all 

Members of Congress to support their hometown leaders. 

I urge you to oppose this bill. 

Thank you. 

[The prepared statement of Ms. Sims follows:] 

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Sims-1.eps
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Sims-2.eps
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Sims-3.eps
45 

Thank you, Bernita Sims. I appreciate your testimony. 

Mr. Alford, we would be glad to hear from you. 

TESTIMONY OF HARRY ALFORD, PRESIDENT AND CEO, 

NATIONAL BLACK CHAMBER OF COMMERCE 

Mr. ALFORD. Chairman Coble, Ranking Member Cohen, distinguished Members of the Subcommittee, thank you for allowing the 

National Black Chamber of Commerce to provide testimony concerning the Wireless Tax Fairness Act of 2011. 

When the National Black Chamber of Commerce was incorporated in 1993, the U.S. Census Bureau was reporting 300,000 

Black-owned businesses with annual revenues of $30 billion. As of 

2007, it now reports 1.9 million Black-owned businesses with annual revenues of $137 billion. We are the fastest growing segment 


Sims-4.eps
46 

of the American economy. The future seems to be bright as African 

Americans have nearly $1 trillion in disposable income, according 

to Selig School of Business, and our businesses have yet to capture 

that majority of the market. 

Still, our economic status is fragile. Unemployment in Black communities soars over the national average and it is currently at 16 

percent. The recession is taking its toll. The saying ‘‘when most 

people catch a cold, Blacks will catch pneumonia’’ still applies. We 

can look at what the subprime mortgage debacle did to our communities. African Americans literally lost over 35 percent of their net 

worth from this malicious scandal. Our life spans make our Social 

Security contributions more or less a transfer of income. Sometimes 

our economic future seems to be very tenuous. 

Yes, we have a smaller pie to cut from when it comes to the cost 

of living. This is why we support the Wireless Tax Fairness Act of 

2011 because new discriminatory taxes and fees on wireless services are regressive and significantly increase consumers’ and businesses’ costs of services. State and local tax increases fall disproportionately on African Americans, minority small businesses, 

and the elderly. 

As the economic status of the African Americans is at the bottom 

rung of the American economy, they will suffer the most from these 

discriminatory taxes. Our Black-owned businesses will suffer from 

a consumer base that is weakening and that will greatly lessen the 

opportunity to create more jobs. Hence, the staggering 16 percent 

unemployment level may even increase. That chance of making 

education affordable will also lessen. Unfair taxation is a problem 

for our communities. 

We should concentrate on further deployment of broadband as it 

is a greater factor in doing business and provide security. Cell 

phones are no longer a luxury item. They are a necessity to our 

daily living. Minority-owned businesses and small businesses that 

are leading the U.S. out of the recession are dependent on access 

to wireless products and services. It enhances communication, information, education, and creates many opportunities for employment and wealth building. Current tax levels on mobile devices resemble luxury taxes such as liquor, cigarettes, and jewelry. 

Local communities should consider ways to increase employment 

via entrepreneurship. This will increase the payroll tax base and 

that will offset budget challenges. 

Finally, the Wireless Tax Fairness Act of 2011 will help stabilize 

taxes as stakeholders work to determine what is best for consumers, businesses, the economy, and the further deployment of 

wireless services in rural and urban areas. 

Your consideration of supporting this legislation is indeed appreciated. I look forward to it passing through Congress and being 

signed by our President. Thank you very much. 

[The prepared statement of Mr. Alford follows:] 

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Mr. COBLE. Thank you, Mr. Alford. 

We will now examine the witnesses. 

Ms. Sims, let me ask you this question. How does the City of 

High Point currently tax wireless subscription? 


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Ms. SIMS. We currently do not tax wireless subscription. It is 

done at the State level. It comes back to the city in the form of 

taxes and user fees from the State. 

Mr. COBLE. Now, it has been said by some, Ms. Sims, that a high 

wireless tax is regressive and therefore burdens low- and middleincome subscribers with a higher effective tax rate as opposed to 

higher-income subscribers. What do you say to that? 

Ms. SIMS. Well, Congressman Coble, I say that whenever it 

comes down to an issue where we are talking about taxes, quite 

naturally the conversation shifts to how it impacts individuals in 

the community who least have the ability to pay. But I must say 

that in my community, I have not seen one individual—I don’t 

know of anybody who doesn’t own a cell phone, and none of them 

have ever complained about the taxes that are associated with the 

use of that phone. They complain about the rate that they are 

charged for the use of the phone, but nothing regarding taxes. 

I don’t necessarily subscribe to the notion that it imposes an unfair tax burden on those individuals who are least able to pay. I 

don’t subscribe to that. 

Mr. COBLE. I thank you for that. 

Mr. Mackey, State and local governments seem to agree that 

wireless tax reform is needed. So why have they made such little 

progress in reducing wireless taxes on their own accord? 

Mr. MACKEY. That is a great question. As I listened to one of the 

other witnesses say that we ought to be sorting this out at the 

State and local level, some of us have been working on this issue 

for 10 or 12 years. We tried—and I work a lot on State tax policy 

with legislatures—through the Governors Association, the National 

Conference of State Legislatures to raise the issue. They have encouraged reforms. But at the end of the day in that whole 10-year 

period, there has only really been one significant tax reform and 

that was in the State of Virginia which was successfully able to 

broaden the base, lower the rates down to the sales tax rate. Actually, I am just about to publish another study that shows that local 

governments in Virginia are better off under the reform than they 

were under the old high-rate tax system. 

So in terms of why that hasn’t happened, I think the reason is 

it is a very difficult conversation to have particularly in the States 

where because wireless used to be a monopoly and so there were 

all these monopoly local taxes that were imposed, they are reliant 

on those taxes and it is a very difficult conversation to have to try 

to figure out a path toward getting off the reliance of those wireless 

revenues. So the reason it hasn’t happened is because there hasn’t 

been the political will at the State level to force those conversations. 

One more quick point is that I think the conversations are going 

to have to happen because we are at the point now where consumers who are pretty savvy are starting to realize that they have 

different options for purchasing communication services and other 

entertainment services, and we are starting to see migration toward Netflix and other forms. So there is going to be a conversation that is going to have to happen at the State and local level 

because the current system where you load certain services with 

high taxes and other services don’t have any at all, it is just going 

52 

to collapse. And those revenue losses are going to occur anyway. 

And we think this legislation will help us begin those conversations 

and stop the problem from getting worse. 

Mr. COBLE. Let me try to get one more question in before my 5 

minutes expire. 

Mr. Alford, the National Black Caucus of State Legislators and 

the National Hispanic Caucus of State Legislators have supported 

this legislation in the past because presumably of the effect of high 

wireless taxes on their constituent communities. Can you elaborate, 

sir, on how these communities are particularly affected by high 

wireless taxes? 

Mr. ALFORD. Yes, sir. There is a growing dependence and a growing necessity on the use of wireless and mobile devices. I think 

there is a misperception by some that we are taxing wireless phone 

companies. We are not taxing the companies. We are taxing families and individuals. They are the ones who are paying the bill. 

And I think the wireless phone companies are American heroes in 

leading the way for us to be globally competitive. 

So it is pretty simple. If you have got $5 and you have to give 

up $2 and the guy next to you has $10 and he has to give up $2, 

I think the guy with the $10 is less angry or less hurt—it is simple 

math—than the guy who has $5. 

Mr. COBLE. Thank you, sir. 

Mr. Cohen, I beat the red light. I want you to take notice of it. 

I yield to you. 

Mr. COHEN. Thank you, Mr. Chairman. 

Mr. Mackey, in a previous life, what organization did you represent? 

Mr. MACKEY. The National Conference of State Legislatures. 

Mr. COHEN. And how many years were you with the National 

Conference of State Legislatures? 

Mr. MACKEY. Almost 10. 

Mr. COHEN. And what was your position there? 

Mr. MACKEY. When I left, I was the chief economist and staffed 

the telecommunications tax task force which I believe you served 

on. 

Mr. COHEN. And based on those 10 years of experience with 

State legislatures, how would you rate overall State legislatures 

taxing authority compared to the Federal Government? Is it more 

progressive or more regressive? 

Mr. MACKEY. I think it is more regressive due to the higher reliance on consumption and property taxes, whereas the Feds tend to 

rely more on income-based taxes. So it is more regressive. 

Mr. COHEN. Do you remember a Senator from Tennessee named 

Leonard Donovan? 

Mr. MACKEY. Yes. 

Mr. COHEN. He said—and I don’t think he coined this. I know he 

didn’t. But somebody said don’t tax me, don’t tax thee, tax that 

many behind that tree. Is that not more or less the mantra of most 

State legislators? Some State legislators. 

Mr. MACKEY. I would say some, yes. 

Mr. COHEN. And is the wireless tax something that would fall 

into that category? People don’t really think about it. It is just a 

53 

doodad here and a dabble there. Like Everett Dirksen said, eventually it adds up to real money. 

Mr. MACKEY. I think that is right. I mean, one of the issues is 

that unlike many goods and services that are sold, either historically or by grants of authority, legislatures have allowed local governments, municipalities primarily, more tax options on this service. And so what you see are multiple taxes from multiple governments appearing on the same bill. And so I do think, in a given 

State, the one municipality might not see the totality of all the 

taxes. They only see their piece. And because of that, what ends 

up happening is the aggregation of all these taxes ends up putting 

a significant burden on the consumer. 

Mr. COHEN. In your recent special report, you indicate State and 

local and Federal taxes and fees combine to an average of over 16 

percent nationally for wireless subscribers. How much of that percentage is based on national taxes and fees? 

Mr. MACKEY. 5 percent of that is the Federal, the Universal 

Service Fund. 

Mr. COHEN. And what impact will H.R. 1002 have on those taxes 

and fees? 

Mr. MACKEY. It would not affect the Federal Universal Service 

Fund. 

Mr. COHEN. Right, and that is 5 percent. And the 11 percent is 

what is put on there. 

Thank you, sir. 

Is it Councilman or Commissioner Sims? 

Ms. SIMS. Councilwoman. 

Mr. COHEN. Councilmember Sims. I appreciate your service in 

local government and representing your group. 

But let me ask you this. H.R. 1002 simply imposes a 5-year moratorium on new discriminatory taxes on wireless services. State 

and local government will still be able to tax wireless service and 

providers as long as they are not discriminatorily applied, you 

know, a general tax, not specifically picking out just one service. 

Why should Congress not impose such a simple moratorium 

when it is not banning all taxes on wireless services, simply discriminatory taxes? 

Ms. SIMS. Well, based on the fundamental principle of how we 

operate as local municipalities, we don’t think that you all should 

be in the business of banning it at all, and that is the core principle 

of where we are coming from, that we should be allowed at the 

State and local level to impose those taxes and make those decisions on our own. So the moratorium, regardless of whether it is 

only for 5 years—we don’t think it should be there at all, that we 

should still be given the authority to work and to do what we have 

to do to balance our budgets. 

Of course, we all know from an economic perspective we are all 

challenged. Everybody is trying to figure out how to make this 

thing work, and the more that we start to get into the issues 

around technology services—and that is what this all falls into is 

the whole technology realm—to say that it is sacrosanct and you 

can’t do what you need to do at the local level to generate revenues 

we think is just wrong. 

54 

Mr. COHEN. Mr. Mackey, is taxing of wireless services kind of a 

new kid in town and starting to be a source of funding for State 

and locals? Wireless has only been around—what? How many 

years? 

Mr. MACKEY. 15 or so. 

Mr. COHEN. And they started taxing it when? 

Mr. MACKEY. A lot of the taxes that apply to local land line service were applied to wireless in the late 1990’s in the beginning of 

the year 2000. Back then it was viewed as sort of a luxury tax and 

it is only the rich that could afford it. So let’s apply these taxes. 

But obviously, things have changed since then. 

Mr. COHEN. And they are starting to be discriminatory taxes applied since? 

Mr. MACKEY. Pretty much since. And then what we have seen is 

just sort of a gradual adding of new taxes, increasing of existing 

discriminatory taxes over the years as we moved forward. 

Mr. COHEN. Thank you, sir. 

I am going to beat the red light, be in the yellow light, and be 

better than my Chairman. And I yield back the balance of my time. 

Mr. COBLE. I will say to the distinguished gentleman from Michigan, Mr. Cohen and I have beaten the red light, John. So I don’t 

want to put a lot of pressure on you, but I recognize the gentleman 

from Michigan. 

Mr. CONYERS. Thank you, Chairman Coble. 

I am trying to decide. I have opposed this bill in the past, and 

I really think I still do but I am going to look at it more carefully. 

I have not had that opportunity. 

Ms. Sims, could you take a moment and build up my opposition 

to the bill? I mean, what is our best case against this measure that 

is before us today? 

Ms. SIMS. I believe, Mr. Conyers, that basically we go back to 

States rights, and I know that sometimes that issue, depending on 

what side of the coin you are on, is a good thing, and sometimes 

it is a bad thing. But I believe that fundamentally this whole issue 

around the ability for us to tax goes back to States rights. 

And I think that we look at this and I have heard in this conversation where individuals have said, you know, there is more of 

a reliance on cell phone services in our neighborhoods and this is 

the only source of communication that lots of people have and that 

it is going to unfairly impact these individuals. And I say to that 

I don’t believe that that is so. I think that we tend to pull poor people out in an argument because that grabs at the heart strings, but 

I know for a fact that individuals who probably should not even 

have cell phones in their budgets do. And no one has ever gone to 

any place to purchase a phone and said how much are the taxes 

on this phone. That has never been the source of the conversation. 

When they purchase phones, they look at how many minutes I am 

going to get, what the package is going to give me, does it have 

Internet access, and what is all of this going to cost me. 

So I look at this and say, to be fair to States, we still should have 

the right to be able to impose this tax, and I don’t think that at 

any level Congress needs to get into that fray. I think that it 

should be left with States and local municipalities to determine 

55 

what their needs are and to be able to use this as a revenue-generating resource in their communities. 

Mr. CONYERS. Isn’t the tax in this bill regressive? 

Ms. SIMS. Is it regressive? I don’t believe so, no. Again, that is 

part of the argument, and I don’t believe that that is so. 

Mr. CONYERS. Well, do you not normally oppose regressive taxes? 

Ms. SIMS. I sometimes oppose taxes. It just depends on what that 

tax is. I don’t oppose necessarily—when we look at this, it is not 

so much about the tax itself as it is our ability to do it. Now, we 

may decide at our local level that this is not something we want 

to do, but that decision needs to be made locally. It does not need 

to be made at this level. And that is the entire argument that we 

have at this point. This is not going to unnecessarily impact these 

companies, and I don’t believe, depending on a municipality’s or locality’s decision to impose the tax, that is a decision that they need 

to make. I don’t believe it needs to be made at this level. 

Mr. CONYERS. Mr. Chairman, can the time that I have remaining 

be added to the next Committee hearing when we have some more 

time? [Laughter.] 

Because I have never ended my time with this much remaining 

before. 

Mr. COBLE. This is a case of first impression for me, John. 

[Laughter.] 

I don’t know how to handle that. 

Thank you, Mr. Chairman. I appreciate that. 

The Chair now recognizes the distinguished gentleman from 

Georgia, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. I will gladly accept 

Chairman Conyers’ offer of yielding his remaining time. 

Mr. COBLE. I figured you might. 

Mr. JOHNSON. And you had about 10 seconds left on yours also. 

I would like to have that. 

Mr. Mackey, your credibility has been bolstered I think when you 

were asked about your former employment which was with the National Conference of State Legislatures? 

Mr. MACKEY. Yes. 

Mr. JOHNSON. And you said you had been there for about 10 

years? But now you are partner with KSE Partners where, according to your statement, over the past 11 years I have worked with 

major wireless telecommunications providers to reduce or eliminate 

excessive discriminatory taxes on wireless services at the State and 

local level. You look too young to have worked for 11 years and before that 10 years with the State legislatures. 

Mr. MACKEY. Thank you. 

Mr. JOHNSON. I mean, what was your position with the State legislatures? 

Mr. MACKEY. I started with them in 1990 and finished in 2000, 

and I was the chief economist. 

Mr. JOHNSON. So, yes, you had a job and then you left that job. 

Now you are with a lobbying group and you lobby for the wireless 

cell phone industry. Correct? 

Mr. MACKEY. Correct. 

Mr. JOHNSON. I just wanted to clear the table of any unfairness 

that may have existed. 

56 

But, listen, now Mr. Alford, you heard Mr. Franks who is the cosponsor of this bill talk about the fact that Congress has the ability 

to regulate commerce between the States. You heard that. Correct? 

Mr. ALFORD. Yes, sir. 

Mr. JOHNSON. And you agree with that. 

Mr. ALFORD. This is interstate commerce, if not international 

commerce. 

Mr. JOHNSON. So you agree with the notion that it is constitutional to have a health care reform bill that requires people to purchase insurance. Correct? 

Mr. ALFORD. I don’t tie those two together. 

Mr. JOHNSON. Do you understand the issue that exists between 

the two, one central issue and that is the Federal Government’s 

ability to regulate commerce? You say that it can in this context, 

and I will accept that. Can it also do so in the health care context? 

Mr. ALFORD. If I see that it can, I would agree with—— 

Mr. JOHNSON. Well, have you agreed with it or have you disagreed with it? 

Mr. ALFORD. I don’t accept the concept. We are talking about mobile devices, and now you are talking about health care which is 

a totally different animal. 

Mr. JOHNSON. I am just talking philosophically because Ms. Sims 

makes a great point about Federal intrusion into the affairs of 

State and local governments. 

Now, State and local governments—local government in particular needs every funding source that it can get to provide the 

people who lack resources and who live in communities racked with 

crime. They need that money to support their police departments. 

Don’t they? 

Mr. ALFORD. They need less crime and that is done through—— 

Mr. JOHNSON. Well, I mean, how are you going to do that without having a strong police department? 

Mr. ALFORD. It is pretty simple, sir. It is just good management 

skills. 

Mr. JOHNSON. Good management skills will keep people from 

committing crimes. 

Mr. ALFORD. You don’t tax people to death to lower crime. 

Mr. JOHNSON. But what about people who need to call an ambulance and perhaps the local government has a surcharge on cell 

phone use to supplement the 911 set-up so that people can call and 

ambulances can come in? Do you think that is a legitimate use of 

funds by government? 

Mr. ALFORD. Absolutely. 

Mr. JOHNSON. Well, why shouldn’t the local governments have 

the ability to utilize that revenue stream to perform that particular 

obligation to its citizens? 

Mr. ALFORD. I have no problem with 911 being assessed on mobile devices, as it is. 

Mr. JOHNSON. But you would support and you would also, Mr. 

Mackey, a 5-year moratorium on raising revenues in that way. 

Mr. ALFORD. Yes, sir. 

Mr. MACKEY. I would just point out that the legislation does permit 911 fees that are used for 911 purposes to be outside of the 

moratorium. 

57 

Mr. JOHNSON. So you think that it is okay for the Federal Government to micro-manage the affairs of State and local governments to that degree. 

Mr. MACKEY. I was just pointing out that 911 fees would be permitted even if the bill passed because they are excluded from the 

moratorium if they are used—— 

Mr. JOHNSON. But what about police and fire? What about if the 

money goes for police and fire? Would they be grandfathered in, if 

you will, under this legislation? 

Mr. MACKEY. Only the 911 fee purpose. 

Mr. JOHNSON. Only the 911 fee. 

And do you think that this bill, Ms. Sims, would become—though 

it is a 5-year moratorium, do you think it would pretty much become a permanent ban on the raising of cell phone taxes by State 

and local governments? 

Ms. SIMS. I think it has the potential to do so, yes. 

Mr. JOHNSON. All right. I have no further questions, Mr. Chairman. Thank you. 

Mr. COBLE. I thank the gentleman. 

The Chair will now recognize the distinguished gentleman from 

North Carolina, Mr. Watt, for 5 minutes. 

Mr. WATT. Thank you, Mr. Chairman. I confess the primary reason I came back was to welcome my constituent, Ms. Bernita Sims, 

to our Committee. 

Mr. COBLE. If the gentleman would yield, I owe you an apology 

because I claimed sole possession of Bernita and I apologize for 

that. 

Mr. WATT. You stole her from me. You stole my constituent. 

[Laughter.] 

I will have you know that she is the Chairman of the 12th Congressional District of North Carolina. 

Mr. COBLE. And I reiterate my apologies, Mr. Watt. [Laughter.] 

Mr. WATT. So you all can see we steal constituents too around 

here. 

I don’t want to get into the global philosophical debate about taxation or non-taxation or what is covered under the Commerce 

Clause or not covered under the Commerce Clause. 

As I have expressed to my colleague, Ms. Lofgren, who is the primary proponent of this bill, below the philosophical level, there are 

some real serious problems with the legislation: some of the definitions of what a discriminatory tax is; the fact that it covers something called ‘‘mobile service property’’ which means all property 

used by a mobile service provider in connection with the business 

of providing mobile services ‘‘whether real, personal, tangible, or intangible (including goodwill licenses, customers lists, and other 

similar intangible property associated with such business).’’ 

It is hard to have that global philosophical discussion about the 

Commerce Clause when you are down talking about taxes on real 

property, tangible property, which has generally been the provenance of local communities. And for us to be saying to local communities that they can’t exercise their discretion in this area anymore 

is troublesome to me, not just because Ms. Sims is my constituent 

and some of her city council people are sitting in the audience with 

58 

her. And I just left, when I went out, to go up and meet with the 

city council people from western Salem. But that is troublesome. 

It is troublesome to me that a new discriminatory tax is defined 

based on ‘‘measured by the charges, receipts, or revenues from or 

value of’’ various different things. So you have got a static formula 

here in this bill that kind of freezes us at current levels and disregards any kind of activity going forward into the future. And I 

think that is troublesome. 

Those are not global issues about whether this is covered by the 

Commerce Clause or whether—you know, some of my colleagues, 

as Mr. Johnson has pointed out, try to have it both ways. When 

it is convenient for them to say something is under the Commerce 

Clause, as it is here, then they say it is under the Commerce 

Clause. When it is not convenient for them to say it is under the 

Commerce Clause, such as they don’t want any intrusion into 

health care reform by the Federal Government, then it is not under 

the Commerce Clause. You know, I don’t know whether it is or is 

not under their philosophy. 

It is hard for me to evaluate these things on this kind of global 

perspective. I have to look at the wording in the bill that is before 

us, and this bill has a lot of work to be done on it before I can support it. Ms. Lofgren knows that. I have had this conversation with 

her last year. I wish I had been here for her testimony. I understood she testified earlier. 

But I don’t really have any questions. I mean, we have had this 

discussion—what is this? About the third or fourth or fifth year in 

a row? We have had a bill of this kind trying to do this. And before 

that, then there was no taxes on the Internet and no taxes on rental cars and no taxes on something else. At some point, you have 

to draw the line and let local governments have some authority to 

tax something, otherwise the claim that the Big Brother Federal 

Government is a big, big, big brother becomes a self-fulfilling 

prophecy because you have left nothing for State and local governments to tax and gobbled it all up under the jurisdiction of the 

Commerce Clause. And there has to be some kind of limit to that 

even in the tort reform area, even in the taxation area. 

So we are struggling here to figure out what that limitation is. 

I think I heard everybody’s testimony except part of Mr. Mackey’s. 

I never really heard anybody deal with the exact content of the bill. 

It was all kind of a philosophical discussion about this, and I don’t 

think we can really evaluate a piece of legislation on a philosophical level. You have got to get down into the nitty-gritty guts 

of the language, and that is where my troubles are very heavy. 

Mr. JOHNSON. Will the gentleman yield? 

Mr. WATT. I don’t think I have any more time to yield to the gentleman. My red light—— 

Mr. COBLE. The time has expired, and I am told there is going 

to be a scheduled floor vote imminently. 

Let me say this before I recognize the gentleman from Illinois. 

Thank you, Mr. Watt. 

Mr. Quigley, did you want to be heard? 

Mr. QUIGLEY. No. Thank you, Mr. Chairman. 

Mr. COBLE. Thank you for coming. 

I thank you all for coming. 

59 

Let me say this. I came here enthusiastically supportive. I am 

still supportive, but Bernita, maybe you may have brought me 

around a little bit. But I appreciate very much the testimony of all 

three witnesses. As Mr. Watt said, there clearly are two sides to 

this. 

And in closing, I want to thank the High Point City Council 

members and the distinguished city manager for you all being here 

and other local elected officials, if there are others in the audience, 

for the service that you all do each day. 

I have two statements I want to present, without objection, into 

the record. One is for the bill. One is against it. One is from the 

Speaker of the Minnesota House of Representatives. 

[The information referred to follows:] 

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Mr. COBLE. The second is a statement from the Federation of 

Tax Administrators. I would like to introduce these into evidence, 

without objection. 

[The information referred to follows:] 


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Mr. COBLE. Let me thank all of you for being here and particularly our witnesses. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses, 

which we will forward and ask the witnesses to respond as promptly as they can so that their answers may also be made a part of 

the record. 

Without objection, all Members will have 5 legislative days to 

submit any additional materials for inclusion into the record. 

With that, again I thank the witnesses and those others in attendance, and this hearing is adjourned. 

[Whereupon, at 2:37 p.m., the Subcommittee was adjourned.] 

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