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END DISCRIMINATORY STATE TAXES FOR 

AUTOMOBILE RENTERS ACT OF 2009 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

ON

H.R. 4175 

JUNE 15, 2010 

Serial No. 111–122 

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 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DANIEL MAFFEI, New York 

JARED POLIS, Colorado 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

STEVE COHEN, Tennessee, Chairman 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

DANIEL MAFFEI, New York 

ZOE LOFGREN, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

JOHN CONYERS, JR., Michigan 

JUDY CHU, California 

TRENT FRANKS, Arizona 

JIM JORDAN, Ohio 

HOWARD COBLE, North Carolina 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

JUNE 15, 2010 

Page 

THE BILL 

H.R. 4175, the ‘‘End Discriminatory State Taxes for Automobile Renters Act 

of 2009’’ ................................................................................................................. 3 

OPENING STATEMENTS 

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

of Tennessee, and Chairman, Subcommittee on Commercial and Administrative Law ........................................................................................................... 1 

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

of Arizona, and Ranking Member, Subcommittee on Commercial and Administrative Law .................................................................................................. 12 

WITNESSES 

The Honorable Rick Boucher, a Representative in Congress from the State 

of Virginia 

Oral Testimony ..................................................................................................... 14 

Prepared Statement ............................................................................................. 16 

Mr. Raymond T. Wagner, Jr., Vice President, Government and Public Affairs, 

Enterprise Holdings, Inc. 

Oral Testimony ..................................................................................................... 20 

Prepared Statement ............................................................................................. 23 

Mr. Timothy Firestine, Chief Administrative Officer, Montgomery County, 

Maryland, on behalf of the National League of Cities, the National Association of Counties, the U.S. Conference of Mayors, and the Government 

Finance Officers Association 

Oral Testimony ..................................................................................................... 31 

Prepared Statement ............................................................................................. 34 

Ms. Sally Greenberg, Executive Director, National Consumers League 

Oral Testimony ..................................................................................................... 41 

Prepared Statement ............................................................................................. 44 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Chairman, Committee on the 

Judiciary, and Member, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 66 

Response to Post-Hearing Questions from Raymond T. Wagner, Jr., Vice 

President, Government and Public Affairs, Enterprise Holdings, Inc. ............ 69 

Response to Post-Hearing Questions from Mr. Timothy Firestine, Chief Administrative Officer, Montgomery County, Maryland, on behalf of the National League of Cities, the National Association of Counties, the U.S. 

Conference of Mayors, and the Government Finance Officers Association ..... 72 

Response to Post-Hearing Questions from Sally Greenberg, Executive Director, National Consumers League ........................................................................ 75 

Prepared Statement of Dr. Kevin Neels, The Battle Group ................................ 78 

Page

IV 

Prepared Statement of the Federation of Tax Administrator .............................. 98 

Prepared Statement of Stephen J. Collins, American Automotive Policy 

(AAPC) Council .................................................................................................... 100 

Prepared Statement of Jeffrey Friedman, Sutherland, Asbill & Brennan LLP . 103 

Letter from Grover Norquist, President, Americans for Tax Reform .................. 113 

Letter from Richard D. Broome, Sr. Vice President, Corporate Affairs & 

Communications, The Hertz Corporation .......................................................... 114 

Letter from Chris Russo, President and Chair, American Society of Travel 

Agents (ASTA) ...................................................................................................... 116 

Letter from Joe B. Huddleston, L.L.D., Executive Director, Multistate Tax 

Commission (MTC) ............................................................................................... 118 

Prepared Statement of the Truck Renting and Leasing Association (TRALA) .. 120 

Letter from Alan Reuther, Legislative Director, International Union, United 

Automobile, Aerospace & Agricultural Implement Works of America—UAW 123 

(1) 

END DISCRIMINATORY STATE TAXES FOR 

AUTOMOBILE RENTERS ACT OF 2009 

TUESDAY, JUNE 15, 2010 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 11:13 a.m., in 

room 2141, Rayburn House Office Building, the Honorable Steve 

Cohen (Chairman of the Subcommittee) presiding. 

Present: Representatives Cohen, Johnson, Scott, Chu, Franks, 

and Jordan. 

Staff present: (Majority) Norberto Salinas, Counsel; Adam Russell, Professional Staff Member; and (Minority) Stewart Jeffries, 

Counsel. 

Mr. COHEN. This hearing of the Committee of Judiciary Subcommittee on Commercial and Administrative Law will now come 

to order. Without objection the Chair will be authorized to declare 

a recess of the hearing. I will now recognize myself for a short 

statement. 

The Congress is well aware of the plight of state and local governments caused by the current recession. And because state and 

local governments need more revenue, consumers may see an increase in taxes to help balance budgets. 

Only in certain states they will see that and some states that 

will see their budgets slashed. With this in mind though, many witnesses have urged us not to pass legislation which may restrict 

state’s abilities to tax. However, we have also written that some 

state and local taxes unduly burden a single industry and its consumers. 

Taxes on the rental of cars and trucks are one such discriminatory tax which hits consumers’ pocketbooks. Some consumers may 

be shocked when the quoted price of renting a car is nowhere near 

what they pay. I am one of those consumers. 

The shock stems not from the price charged by the rental company, oftentimes sounding inviting and low, but because of the 

added taxes and fees which can increase the total rental price 15 

to 25 percent or more and makes one look at their receipt and say, 

‘‘What happened to the rate they quoted me when I called them on 

the 800 number?’’ 

The rate of these taxes is often far higher than the local tax rate 

placed on goods services. No matter the reasoning behind these 

2 

higher tax rates, the taxation of the rental cars and trucks is a familiar form of discriminatory taxation which may burden interstate 

commerce. 

These taxes also chill car rental companies from investing and 

expanding. Conventional wisdom tells us that tourists and business 

travelers feel the primary impact of car rental taxes and fees and 

that local governments target these taxes at visitors and not their 

residents. 

It also tells us the local governments adhere to the old adage 

that as I understand Senator Russell Long first coined and then a 

dear colleague, a Republican conservative from Millington, Tennessee, Senator Leonard Dunavant of blessed memory used to say, 

‘‘Don’t tax me, don’t tax thee, tax that person behind that tree.’’ So 

this is perfectly in accord with Senator Dunavant’s warnings. 

According to a recent report that assumption is incorrect, though, 

statistics reveal that more motor vehicles are rented from neighborhood locations than from airport facilities. Thus, car rental taxes 

and fees disproportionately fall on local residents who often rent 

cars while their own vehicles are being repaired or vans to ferry 

little league teams to baseball tournaments or other heart-rending 

activities that we could have listed here in this opening statement. 

Today we hold a hearing on H.R. 4175, the ‘‘End Discriminatory 

State Taxes for Automobile Renters Act of 2009.’’ H.R. 4175 would 

impose a moratorium on any new taxes, discriminatory that they 

may be or not, with respect to the rental of motor vehicles, businesses who rent motor vehicles or the property of those businesses. 

The legislation would prevent increasing taxes imposed solely on 

the rental of cars and trucks. 

[The bill, H.R. 4175, follows:] 

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Mr. COHEN. Similar to other tax bills before this Committee, the 

moratorium on new discriminatory taxes should encourage the 

motor vehicle rental industry and local governments to come together and work on reforming the current tax structure. 

For example, the state and local governments and the car rental 

industry could work together to broaden the tax base rather than 

have state and local governments over rely on a few hundred taxpayers. Of course, that would require enlightened legislators and 

local officials. But we will see what happens. 

Such reform would maintain a steady stream of revenue for state 

and local governments while ensuring a fair tax burden for consumers such as those who rent cars and trucks. This hearing will 

provide Members of the Subcommittee the opportunity to hear testimony about local government’s reliance on taxes and fees on the 

rental of motor vehicles. 

Members will also hear testimony about how those taxes and fees 

impact consumers and the car rental industry, and the testimony 

should help determine whether or not Congress should intercede 

with this legislation. 

As you may be aware, 2 months ago this Subcommittee held a 

hearing on the current plight of state and local governments that 

they are experiencing in this recession. I can certainly sympathize 

with their concerns as they receive lower revenues, but they are 

still expected to provide these services that they have done over the 

years. 

However, we need fair tax policies which do not act as another 

regressive tax on consumers, and we need fair tax policies which 

encourage capital investment rather that discourage it. Fortunately, to the rescue, comes Representative Boucher, who introduced this legislation, drafted it so as to not affect current government revenues. 

H.R. 4175 will not prevent taxing authorities from continuing to 

tax the rentals of motor vehicles or the rental companies and so 

that will allow them to continue to fund the stadia and arenas and 

whatever other assorted goods and services and products that they 

have and facilities that they fund. Instead, this will impose a moratorium on new discriminatory taxes. 

So I thank Mr. Boucher for his work. Accordingly, I look forward 

to receiving today’s testimony and I now recognize my colleague 

Mr. Franks, the distinguished Ranking Member of the Subcommittee, for his opening remarks. 

Mr. FRANKS. Well, thank you, Mr. Chairman. I am going to get 

you to introduce me at my next speech somewhere. Just want to 

thank you for the effort to hold this hearing, and I know that the 

Subcommittee has held many hearings on discriminatory taxation 

over the years, but I believe today’s hearing is—on H.R. 4175, the 

‘‘End Discriminatory Taxes for Automobile Renters Act,’’ I think 

that it is a first. 

And while the subject of today’s hearing, namely rental cars, may 

be new, the general topic of discriminatory taxes—I will get that 

word—is not new. Supporters of H.R. 4175 claim that states and 

localities target rental car companies and consumers for unusually 

high and discriminatory taxes. And I think the research is certainly in their favor. 

13 

They claim that these discriminatory taxes are often used to pay 

for new stadiums or other municipal improvements. And in other 

words, while the citizens get to enjoy the benefits of a new ballpark, the costs are passed on to tourists and business travelers who 

had no say in the financing decisions behind those projects. 

And such exportation of tax burdens, if true, Mr. Chairman, of 

course troubles me. And of course I am also concerned that discriminatory taxes are a job killer fundamentally. 

Supporters of H.R. 4175 also point to the economic impact that 

these discriminatory taxes have on our Nation’s auto industry. 

Rental car companies purchased over 1 million autos from General 

Motors, Chrysler and Ford in 2008. That constituted more than 15 

percent of the Big 3 car sales last year. 

Given the financial interest the Federal Government has in those 

companies and with no fault in mind, just for the record and hence 

American taxpayers have taken in General Motors and Chrysler, 

we should be aware of state taxation regimes that threaten the viability of those entities. 

Now that said, I know that discrimination, at least in this context, can be in the eye of the beholder. So to that end, we will hear 

from the states and localities that they are hurting. My own state, 

of course, is currently trying to close a $3 billion deficit, so I understandably sympathize with their plight as well. 

And as I have said repeatedly at these hearings, I am a strong 

supporter of state’s traditional powers in this area. I mean, I am 

somebody that has read the 10th Amendment. But even when I 

support legislation like this, state to curb the tax authority such as 

the Cell Tax Fairness Act, I want to make sure we do it right and 

that the relief is targeted in a way that it should be. 

So therefore I look forward to hearing from all of the witnesses 

today to determine the scope of the problem and whether H.R. 

4175, which I have some concerns about, the approach that it 

takes, but I am open to hearing a better approach, but I believe 

it is a sufficiently limited remedy to the problem to warrant my 

support. 

And so I yield back the balance of my time, Mr. Chairman. 

Mr. COHEN. Thank you, Mr. Franks. Isn’t the 10th Amendment, 

is that the one ‘‘Thou shalt honor thy state and local government?’’ 

Mr. FRANKS. That is close enough for a Democrat. [Laughter.] 

Mr. COHEN. Yes, I think I am getting them—somehow I am getting them confused, yes. And now—thank you for your statement. 

I am now pleased to introduce the first panel for today’s hearing. 

First thanks to all the witnesses who are willing to participate in 

today’s hearing. If Mr. Scott has a statement we will enter it in the 

record without objection. 

Without objection written statements will be placed in the record. 

We ask that you limit your remarks to 5 minutes. We have the 

lighting system which Mr. Boucher is most familiar with, and then 

we will have the questioning period. 

Our first witness is Congressman Rich Boucher of Virginia’s 9th 

Congressional District. Representative Boucher is in his 14th term 

in the United States House of Representatives. He is a Member of 

the House Judiciary Committee, serving on the Courts and Competition Policy Subcommittee. 

14 

He sits on House Energy and Commerce Committee, serving on 

two Subcommittees, Communications, Technology and the Internet 

of which he is the Chairman, as well as the Energy and Environment Committee. 

He is the author of H.R. 4175, the ‘‘End Discriminatory State 

Taxes for Automobile Renters Act of 2009’’ which he introduced on 

December 2, 2009. He is one of the most cerebral Members of our 

Congress, and his district touches Tennessee. And for all those 

good reasons, I thank him for his testimony and recognize him now 

for his statement. 

TESTIMONY OF THE HONORABLE RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA 

Mr. BOUCHER. Well, thank you very much Chairman Cohen. I 

also intend to invite you to come campaign for me this fall. I appreciate those very kind remarks. And I thank you and Ranking Member Franks and other Members of the Subcommittee for your attention today to H.R. 4175, which is designed to prohibit prospectively 

discriminatory car rental taxes imposed by state and local governments. 

I am joined in the co-sponsorship of the bill by 10 Members of 

the House, including Mr. Jordan and Mr. Issa, who are Members 

of this Subcommittee. Today, special car rental taxes have been enacted by 43 states and by the District of Columbia. In 1976 there 

was one such tax. Today there are 115. 

Localities have found that car rental taxes are an attractive 

means of financing projects that have no direct relation to the rental of automobiles. For example, 35 sports stadiums have been funded with these discriminatory taxes, a performing arts center and a 

culinary institute have been funded by car rental taxes. 

And these taxes carry a huge social cost. They fall disproportionately on minority households. Nationwide, minority households 

bear 52 percent of the burden of these taxes. In the state of Georgia, for example, minority households constitute 12 percent of the 

population, but they bear 27 percent of the car rental tax burden. 

And these are not taxes that are simply imposed on non-residents who are traveling through the state, as the Chairman indicated during his opening statement. The bulk of car rentals come 

from neighborhood rental facilities, not from the airport located in 

the various communities. 

These taxes also drive up insurance costs. Since a large portion 

of car rentals are temporary replacement vehicles that are rented 

by insurance companies while an automobile that was involved in 

an accident is being repaired. 

A recent study has shown that these taxes also significantly depress new car sales, perhaps by as much as 12 percent. These social costs are simply far too high. The taxes frequently fund 

projects that are unrelated to car renting. And they are discriminatory, since similar taxes are not imposed upon the leasing of other 

tangible personal property in the various locality. 

Our legislation prohibits the imposition of new discriminatory car 

rental taxes by states and localities, while allowing to remain in effect those taxes that had been enacted prior to December the 2nd, 

2009. That was the date upon which our legislation was introduced, 

15 

serving notice to localities nationwide, that Congress would now be 

considering respectively prohibiting these taxes. 

The taxes that were in effect on December 2, 2009 can remain 

in effect as long as they are not changed, they do not lapse, and 

the rate of those taxes does not increase. We inserted the 

grandfathering provision to acknowledge that localities have financed projects in anticipation of these tax receipts, and we are 

carefully avoiding disrupting the financing flows that enable those 

projects to be paid for. 

I would note that the Congress has previously adopted similar 

kinds of legislation that prohibit the imposition of local taxes on 

bus, airplane and train transportation. This is very much a corollary and an analogy to those previous congressional enactments, 

and I think very appropriate as a complement to them. 

I would note, Mr. Chairman, and Members, that our legislation 

has been endorsed by a large number of organizations, including 

The National Consumers League, The National Urban League, The 

United Autoworkers and the major United States auto manufacturing companies. 

I want to thank all of these endorsing organizations and the 10 

individual Members of the House, who have co-sponsored the bill. 

And I thank you, Chairman Cohen, Mr. Franks and other Members 

of the Subcommittee, for your attention to the merits of our legislation today. Thank you for having me here as your witness. 

[The prepared statement of Mr. Boucher follows:] 

16 

PREPARED STATEMENT OF THE HONORABLE RICK BOUCHER, 

A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA


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Mr. COHEN. Thank you for your testimony, and for introducing 

the bill, Mr. Boucher. I didn’t realize that I was not a sponsor of 

it. 

And maybe, I don’t know, maybe it was because of the idea of 

being impartial for the hearing, but we have since the hearing has 

started, we are going to become a sponsor. I think it is good legislaVerDate Aug 31 2005 14:41 Nov 10, 2010 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061510\56953.000 HJUD1 PsN: DOUGA

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tion, and I appreciate you for bringing it to the Committee. I do 

not have questions for Mr. Boucher. 

Mr. Franks, do you have questions? 

Mr. FRANKS. Not for Mr. Boucher. We are going to let him off the 

hook. 

Mr. COHEN. Mr. Scott, though, has been waiting to grill you. 

[Laughter.] 

Mr. Scott, you are recognized. 

Mr. SCOTT. I would like to thank Mr. Boucher for his testimony. 

Mr. BOUCHER. Thank you very much 

Mr. COHEN. The Virginia gentleman that he is. We thank you for 

your testimony and—excuse me, Mr. Jordan, would you like to 

grill? 

Mr. JORDAN. No, I am—— 

Mr. COHEN. You are a sponsor. 

Mr. JORDAN. [Off mike.] 

Mr. COHEN. Well, that ends Congressman Boucher’s day on the 

Hill. [Laughter.] 

Mr. BOUCHER. Thank you very much, Mr. Chairman. 

Mr. COHEN. We thank you for your testimony and for bringing 

the bill. 

Our next panel, are we ready for the next panel? Will the next 

panel of witnesses be seated? Thanks to each of you for participating in today’s hearing. We had the instructions. We didn’t do 

them when Mr. Boucher was there. 

We have got a 5-minute system, lighting system up front, and 

when the light is green that means you have started or at least it 

means that counsel has turned on your light. And it means you 

have got 4 minutes until it turns to yellow. And when it turns to 

yellow that means you have got 1 minute left. And when it turns 

to red that means you should be finished. 

After you finish your statements, each Member of the Committee 

will have five minutes to ask you questions, and we will have the 

same lighting system and can submit the questions to you later to 

ask you to respond to. But we ask you for that. 

First witness will be Mr. Ray Wagner, vice president of Enterprise Holdings. He oversees Enterprise’s government and legislative agenda. Prior to joining Enterprise in 1995, he served in the 

cabinet of two governors, as director of revenue in Illinois and Missouri, conflicted in St. Louis on a certain football game, that occurs 

there annually. 

In 2003, Mr. Wagner was unanimously confirmed by the United 

States Senate to serve as a member of the IRS Oversight Board. 

On March 17, 2005, he was unanimously confirmed for his second 

term to the board and served as the chairman of that board for 2 

years. 

He was a municipal judge in the city of Ballwin, Missouri, a position he held from April 1999 to May of 2005. And an attorney in 

private practice, in the areas of securities, municipal finance, banking, corporate and tax law. Thank you Mr. Wagner, you may begin 

your testimony. And are you in the Big 10, the Big 12 or—— 

20 

TESTIMONY OF RAYMOND T. WAGNER, JR., VICE PRESIDENT, 

GOVERNMENT AND PUBLIC AFFAIRS, ENTERPRISE HOLDINGS, INC. 

Mr. WAGNER. I haven’t read this morning’s newspaper, so I don’t 

know—— [Laughter.] 

Mr. COHEN. Moving around. Thank you, sir. 

Mr. WAGNER. Mr. Chairman, Ranking Member Franks, Members 

of the Subcommittee. Again, my name is Ray Wagner—— 

Mr. COHEN. I think it might be. I didn’t tell you about the microphone. You have got to punch it, is the light on? 

Mr. WAGNER. Is it on? Right? Better? 

Mr. COHEN. Better, better, I guess it is. 

Mr. WAGNER. Can you hear me? 

Mr. COHEN. Yes, I can. 

Mr. WAGNER. Now it seems to be working, okay. Mr. Chairman, 

Ranking Member Franks, Members of the Subcommittee, again, 

my name is Ray Wagner, and I am the vice president of government and public affairs for Enterprise Holdings. 

As the Chairman suggested, I served as director of revenue of 

two states, Missouri and Illinois. I believe in a fair system of taxes, 

and in the Federal system of government. 

I am testifying in support of the bipartisan bill, that serves both 

of these American ideals of fairness and federalism on behalf of a 

coalition that spans in spectrum from Grover Norquist to the UAW. 

The End Discriminatory State Taxes on Automobile Act, 

EDSTAR, seeks to address an increasing propensity of state and 

local governments to target, or in other words discriminate against 

rental car consumers. 

Prohibiting such taxation, which burns interstate commerce, is a 

valid use of congressional power under the commerce clause. With 

the 4R Act and similar laws, Congress, as our sponsor suggested, 

has prevented discriminatory taxes on railroads, trucks, buses and 

airlines. 

Rental cars equally cross state lines and when they don’t, renters 

drive on federally funded highways, roads, bridges and tunnels. 

Make no mistake, rental cars are a part of interstate commerce. 

Yes, the rental car industry accepts fair taxation, but that 

doesn’t mean our consumers should pay at a higher rate. These 

taxes are simply wrong and millions of Americans understand why. 

Have you ever rented a car that you thought would be at a great 

rate of $35 a day only to find out that the bill wound up being close 

to $45 or greater? 

Part of that increase may be the result of the discriminatory 

taxes imposed by state and local governments. These extra taxes 

come on top of the broad base of general taxes, registration fees, 

personal property taxes, gasoline taxes, airport user fees—every 

other tax already imposed on all car owners and users. 

We don’t object to the broad base of taxes. EDSTAR will not affect these. We do, however, object to taxes that specifically target, 

unfairly discriminate and single out rental car customers. Let me 

be clear. The coalition is not asking for any sort of handout. 

We are merely asking local governments to take their hands out 

of our customer’s pockets. Let me explain what else EDSTAR will 

21 

and will not do. It will only prohibit state and local governments 

from enacting future discriminatory rental car taxes. 

It will not affect any of the 118 existing rental car taxes or the 

projects they fund, including the sport stadiums. Local officials find 

these taxes so seductive because many believe car rental taxes export the tax burden to non-resident voters. 

They also believe that all car renters can afford these extra 

taxes. Rental cars do, indeed, affect airport renters, but there is a 

whole segment of renters who go largely unnoticed. Contrary to 

popular belief, as has been suggested, most rental car companies 

are not business travelers. 

The majority rent cars as individuals. Some are renting to replace their own car while it is repaired, while others rent because 

they don’t own a car at all. And of course, many rent cars for vacation or other special occasions. 

Singling out renters is unfair because there is rarely a connection 

between renting a car and the purpose for which the tax was enacted. Not only that, but these taxes are regressive. They have proportionally greater impact upon people of modest means than they 

do on the wealthy, many of whom are reimbursed for business expense. 

They also impact minorities disproportionately. As the respected 

economics firm The Brattle Group reported in a recent study, minorities are approximately 75 percent more likely to rent than 

Whites. 

The African Americans are 12 percent of the population. They account for 27 percent of the rentals, car demand, and pay 28 percent 

of rental car taxes. That is one reason why the National Urban 

League is concerned with this issue. 

Finally, these taxes even impact those who don’t rent cars at all. 

As Congressman Boucher indicated, auto insurance companies are 

forced to pay rental taxes through the claims process, and these 

costs are passed along to all policyholders whether they have ever 

rented a car or not. 

These taxes are not only unfair to consumers they are bad for the 

economy. They suppress the demand for rental cars. That leads to 

slower growth and fewer job opportunities in the industry. That 

also results in reduced purchases of new cars by the rental car 

companies that ordinarily account for 1.2 million vehicles or 12 to 

15 percent of all vehicles sold in the country. 

And that means fewer jobs for the American autoworkers at a 

time when their industry is struggling in this recession. Unfair and 

harmful as these taxes are, many public officials like them because 

they are so easy to impose. 

While aimed at those from out of town who don’t vote, these 

taxes are more likely to hurt economically vulnerable households 

with little political influence. This is a modern day version of taxation without representation or maybe again, as Senator Russell 

Long said it best, ‘‘Don’t tax me, don’t tax thee, tax that fellow behind the tree.’’ 

Well, let me close by adding working families depend upon the 

health of the auto industry and the entire economy. Working families deserve the opportunity to rent cars for special occasions and 

22 

urgent emergencies. And finally, working families demand and deserve fairness in our tax system. 

Thank you for the opportunity to speak for those families and for 

that fellow behind the tree. 

[The prepared statement of Mr. Wagner follows:] 

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PREPARED STATEMENT OF RAYMOND T. WAGNER, JR. 


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Mr. COHEN. Thank you for remembering Senator Long’s quote, 

which you might hear again today. Our next witness is Mr. Timothy Firestine, chief CAO from Montgomery County, Maryland, appointed to that position November 2006. 

Prior to that, he was the county’s director of Finance for 15 

years. Twelve years of management positions in the Office of Management Budget and before coming to Montgomery County, he was 

in Allegheny County, Pennsylvania in the Comptroller’s office, currently a member of the Executive Board of the National Government Finance Officers Association and vice chair of its Committee 

on Debt Management. 

He is a member of District of Columbia Water and Sewer Authority—excuse me—where he currently serves as vice chair, plus 

an adjunct professor at the University of Maryland Graduate 

School of Public Policy where he taught public finance. 

Thank you, Mr. Firestine. 

TESTIMONY OF TIMOTHY FIRESTINE, CHIEF ADMINISTRATIVE 

OFFICER, MONTGOMERY COUNTY, MARYLAND, ON BEHALF 

OF THE NATIONAL LEAGUE OF CITIES, THE NATIONAL ASSOCIATION OF COUNTIES, THE U.S. CONFERENCE OF MAYORS, 

AND THE GOVERNMENT FINANCE OFFICERS ASSOCIATION 

Mr. FIRESTINE. Good morning, Chairman Cohen, Ranking Member Franks, and other Members of the Subcommittee on Commercial and Administrative Law. I am Tim Firestine, Chief Administrative Officer of Montgomery County, Maryland. 

On behalf of the National League of Cities, the National Association of Counties, U.S. Conference for Mayors and the Government 

Finance Officers Association, I am pleased to testify on H.R. 4175. 

As our organizations have noted in the past, we respectfully oppose 

H.R. 4175. 

This legislation would preempt the ability of states and localities 

to make their own determinations regarding the appropriate taxation of businesses within their communities. It also represents an 

unwarranted Federal intrusion into the long recognized authority 

of local and state governments to make tax classifications, and 

opens the door to unprecedented Federal control and oversight of 

local and state tax authorities. 

Over the past year, states and local governments have witnesses 

a parade of various industries coming forward to request that Congress preempt state and local government taxing authority of their 

particular industry, first the telecommunications industry, then the 

hotel industry, and today the rental car industry. 

Our associations have always maintained that any industry’s 

plea for federally mandated tax favoritism would open the door to 

other industries asking Congress for similar special exemptions for 

protections from state and local taxing authorities. 

That is what we are now witnessing. H.R. 4175 and other legislation of its kind pose a dire threat, not merely to state and local tax 

revenues, but to the entire existence of independent state and local 

taxation authorities and our system of federalism. 

The requirements of H.R. 4175 would, if enacted, open the door 

to unchecked Federal oversight, and rewriting of all state and local 

tax laws and classifications. Since state and local governments 

32 

must balance their budgets, such a federalization of state and local 

tax classifications would not lower total taxes paid by state and 

local taxpayers, but rather just shift the tax burden to other types 

of taxes. 

Moreover, the ability to tailor taxing authority at the local level 

is extremely important. For example, Washington State permits all 

counties to impose a 1 percent tax on car rentals, yet only four 

counties in the state impose such tax. 

H.R. 4175 departs radically from long standing principles of federalism, and sets an unprecedented and dangerous new standard 

of Federal intervention into state and local government tax classifications. 

If the standard for Federal intervention into supposedly discriminatory state and local taxation becomes that every economic sector 

in every service has to be taxed at the same rate when measured 

against other sectors, then there would be no limit at all to Federal 

intervention in state and local tax classifications. 

Indeed, such a standard for discriminatory state and local taxes 

would mean contrary to long-established precedent, that the Federal Government has the power to preempt all state and local tax 

classifications and to impose a federally mandated state and local 

tax code of only a single tax rate for all businesses. That would 

mean the end of state and local tax classification authority. 

Furthermore, Congress adds insult to injury by entertaining any 

such measures during today’s difficult economic times, for states 

continue to struggle to balance their budgets and often do so by 

dramatically decreasing the assistance they provide to local government. 

It is arguable that the worst recession since the Great Depression is not time for Congress to limit any local or state tax receipts. 

State and local government budgets face billions of budgetary 

shortfalls over the next couple of years. 

In most places, the local response to shrinking revenue has consisted of a round of unfortunate, but unavoidable, layoffs, service 

cut backs, and in some cases, increasing fees and taxes. 

It is clear that Congress recognizes the struggle of states and localities, which have included a surge in unemployment as well as 

an increase in individuals and families dependencies on municipal 

services and responded with the adoption of the American Recovery 

and Reinvestment Act. 

But it is ironic that at the same time Congress supports and enacted such measures, that it would be considering legislation such 

as H.R. 4175, which would provide states and localities far less 

flexibility to make decisions to enable our leaders to confront the 

economic crisis and ultimately assist in providing services such as 

police, fire, education, housing and job training. 

We urge Congress not to give with one hand and take away with 

the other. Finally, I would like to briefly discuss briefly what is 

done with the tax dollars state and local governments collect from 

rental car companies and how they are used to enhance the quality 

of life in hometowns, small and large. 

As noted in the written testimony, communities across the country depend on these taxes to provide a variety of improvements in 

their state, counties and cities, including ones that help the rental 

33 

car companies through capital improvements to airport facilities 

and tourism initiatives that serve to bring more customers to them. 

There are other examples of the funds being used for a variety 

of government services and programs including public safety programs and road and transit improvements. In Maryland, the state 

collects an 11-1/2 percent tax on rental cars, which is estimated to 

bring in $52 million in fiscal year 2011. 

Our statutes dictate that these funds go into the state’s Chesapeake Bay Trust Fund and the Transportation Trust Fund. Montgomery County benefits from both of these initiatives. The Bay 

Trust Fund pays for projects that control storm water run-off. 

And monies from the Transportation Trust Fund helps fund a variety of projects in the county including resurfacing and maintaining roads, replacing and installing streetlights, implementing pedestrian safety measures, snow removal and various transit initiatives throughout our community. Thank you. 

[The prepared statement of Mr. Firestine follows:] 

34 

PREPARED STATEMENT OF TIMOTHY FIRESTINE


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Mr. COHEN. Thank you, Mr. Firestine. 

Ms. Sally Greenberg, Executive Director of the National Consumers League—not to be confused with the National Football 

League—her focus in NCL, four key priorities, fraud, child labor, 

health care and the NCL’s Team Consumer Education and Financial Literacy Program. 


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She came to the National Consumers League from the Consumers Union, where she worked from 1997 until 2007 on auto 

safety, product safety, civil justice reform, including keeping the 

justice system open, accessible and accountable for all consumers, 

advocated for enhanced auto and product safety, intellectual property, securities reform and investor protections and civil justice reform. 

She had worked at the U.S. Department of Justice Foreign 

Claims Settlement Commission and first served as a time as Eastern States Civil Rights Counsel for the Anti-Defamation League in 

Boston. 

Ms. Greenberg, thank you, and we begin your testimony. 

TESTIMONY OF SALLY GREENBERG, EXECUTIVE DIRECTOR, 

NATIONAL CONSUMERS LEAGUE 

Ms. GREENBERG. Thank you so much, Chairman Cohen, Ranking 

Member Franks, Members of the Subcommittee. Thanks for the opportunity to appear before you today in support of H.R. 4175, a bill 

entitled the ‘‘End Discriminatory State Taxes for Automobile Renters Act of 2009.’’ 

I am, indeed, an Executive Director of the National Consumers 

League. We are the Nation’s oldest consumer organization founded 

in 1899 with a mission of protecting the interest of both workers 

and consumers in creating a more fair marketplace for both. 

Mr. Chairman, today’s consumers feel that many of their transactions they are nickeled and dimed, whether it is on their cell 

phone bills, late fees and finance charges on credit and debit cards, 

bogus convenience fees slapped on the tickets for live entertainment performances or extra fees imposed on just about everything 

else we consumers do when purchasing goods and services. 

Indeed, a good example is the recent survey from ‘‘Consumer Reports’’ that finds that travelers hate—the fees that travelers hate 

most are the extra fees they have to pay for luggage and airline 

ticket fees. 

The National Consumers League feels consumer’s pain and unfortunately most of the time we have little power to change these 

fees. However, today we are here to support legislation that says 

enough. Consumers need to fight back and H.R. 4175 will prospectively bar discriminatory car rental taxes which are really added 

fees imposed by states and localities. 

As of February 2010, 43 states and the District of Columbia have 

imposed 118 excise taxes on car rentals. This is eight times the 

number of these taxes that existed in 1990. My grandmother would 

have said the word goniff comes to mind. 

Rental car taxes tend to pay for entertainment items like stadiums, performing art centers, culinary institutes, and not for vital 

services like schools, libraries, hospitals or services to the elderly. 

Industry research indicates that rental car consumers spent more 

than $7.5 billion in taxes to fund pet projects of elected officials. 

A perfect example is the situation unfolding right now in my hometown of Minneapolis. 

The Minnesota Vikings already have the Metrodome. It is a 

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neapolis. But Zygmunt Wilf, the Vikings billionaire owner, he 

wants another one. 

He wants one with a retractable roof, and he wants consumers 

who rent cars to help pay for it. So the state is now considering 

levying a 2.5 percent tax on rental cars to finance a new billion dollar stadium. 

More than half of those who rent cars in Minnesota are residents 

of the state. But to add insult to injury, Minnesota residents are 

already paying a special 6.2 percent excise tax on car rentals, a tax 

that was adopted to pay for the cost to the state of trying to attract 

the Super Bowl. That tax was supposed to expire in 2005 but it 

was extended even though the revenue it raised far exceeded its 

original purpose. 

Tourists are also affected by these pervasive fees. Tourists may 

be easier to tax as non-constituents but fees on tourists are also 

spiraling out of control. According to the New York Times, taxes 

and other fees such as vehicle licensing fees or high levels of excise 

taxes raise the average rental bill 28 percent at airport locations. 

In addition, from my professional vantage point as head of a nonprofit overseeing a staff of 14, when we travel or have meetings locally and don’t have access to a car, we have to rent cars. I see the 

bills come in and often the excise fees and the sales taxes together 

represent a hefty percentage of the entire bill. 

These added costs hurt nonprofit organizations like mine that operate on modest bills but are vitally important to civil society. Unfortunately, politicians who pass these taxes are operating on several false assumptions. 

First, there is the misconception that the vast majority of people 

who rent cars are from outside the state or locality. Second, there 

is the misperception that most consumers who rent cars are either 

businesses who won’t feel the extra charge or affluent consumers 

who won’t notice an extra $10 or $15 on a car rental. 

First, the first myth is that people who rent cars are from out 

of state. If local officials gave some thought to the idea, they would 

understand that many people who don’t own a car because they 

can’t afford one might rent when they have a special need. 

And the other misperception is that consumers that rent cars for 

these reasons are not affluent out-of-town business people that 

state and local legislators seem to believe rent most of the cars. Far 

from it, and they need affordable rental car options. 

There have been several studies mentioned. One is the Brattle 

Group Study that Ray Wagner mentioned. It shows the revenues 

in 2004 from car rentals were about $17.6 billion. Half of that was 

from home-city rentals. 

Another study that was commissioned by the Brookings Institution analyzed the impact of a $4 per day rental car tax in Kansas 

City. The researchers found that piling taxes onto car rental customers is both inefficient because it distorts choices about modes 

of transportation, and it is inequitable. Communities that are already taxing car rental customers might want to take a look at 

their long-term strategy. 

So in conclusion, Mr. Chairman, with an eight-fold increase in 

taxes on rental cars since 1990, it seems clear that the piling on 

of these excise taxes has gotten out of hand. NCL understands the 

43 

importance of citizens paying his or her share of taxes for schools, 

libraries, roadways, and for clean water and other very worthy 

projects. 

But when rental car customers are asked to pay for stadiums or 

art centers and taxes imposed seem to have no limits, it is time to 

say enough. 

I appreciate the opportunity to testify and look forward to your 

questions. 

[The prepared statement of Ms. Greenberg follows:] 

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PREPARED STATEMENT OF SALLY GREENBERG


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Mr. COHEN. Thank you, Ms. Greenberg, and we will now have 

the questioning session, and I will recognize myself for 5 minutes 

of questioning. Mr. Firestine, you have got the government perspective. Taxes—if you have a property tax, everybody pays at the 

same rate. Sales tax, pay at the same rate. 

Why do people that rent cars pay higher taxes than those people 

proportionately than those that own cars? Why should there be a 

special tax on folks that rent the car and use it for a week or short 

term than those who have it for a year? There is not such a tax 

on renters of apartments per month or necessarily. Why is that? Is 

that fair? 

Mr. FIRESTINE. Okay, I am glad to respond to that. And again, 

our emphasis here is that state, you know, tax policy is a decision 

made at the local and state level by elected officials. There is a 

whole combination of factors that go into deciding what is the right 

portfolio of taxes to have to support services. 

Once you have decided what you are going to offer whether it is 

education, all the community needs that are trying to be met 

through these local governments, let us start with the property tax. 

Even though everybody may pay the same rate, the burden is 

going to be different from taxpayer to taxpayer. There are tax credits that are included. It is based on the assessment of the house. 

Likewise with—— 

Mr. COHEN. But the assessment, there is a correlation in your 

ability to pay because there is ability to purchase. So if you can 

purchase a $100,000 house, your assessment is at that rate or if 

you purchase a million dollar house your assessment is at that 

rate. There is some correlation. 

What is the correlation with having a car for a week that you 

rent as distinct from having a car for a year that you own? 

Mr. FIRESTINE. Well, again, I would—— 

Mr. COHEN. And I am not asking—and I appreciate your knowledge, and your acumen and your professorial experience, but I am 

asking you this question not as a government witness, to give me 

a government answer, because obviously I know that. I am asking 

you as a person who considers justice and fairness and the philosophy professor to give me the answer. 

Mr. FIRESTINE. And that is what I am saying. I would say, you 

know, from a tax policy perspective, you know, since it is a consumption tax like the sales tax that you mentioned earlier, you can 

choose whether or not you want to participate in that service, 

whether you—— 

Mr. COHEN. You can choose—if you travel to Los Angeles, you 

can say I am going to be in Los Angeles and instead of renting a 

car I am going to walk? 

Mr. FIRESTINE. No, you could—— 

Mr. COHEN. You could. You would have a very weird trip. 

Mr. FIRESTINE. You have other alternatives. You could take—— 

Mr. COHEN. What are your alternatives? A cab? 

Mr. FIRESTINE. A cab. 

Mr. COHEN. That is insane in Los Angeles. Nobody takes the cab. 

I tried to find one last week. They don’t have cabs. It is not New 

York. 

50 

Mr. FIRESTINE. But again, I—my point is these are local taxes 

decisions. There are other taxes out there that are very similar to 

the rental car taxes. I mean, cell phone taxes were mentioned. 

They are a primary source of funds for Montgomery County. We 

tax cell phones. There are tobacco taxes in the state of Maryland—— 

Mr. COHEN. But you tax cell phones based on having a cell 

phone, not on having it for a week. You are really not getting to 

the point that I think is germane. You discriminate and charge 

people that rent cars a large tax, and what is the basis? 

What is the rational connection? What is the nexus? Is there one 

or is it just we trust and put in our elected officials total discretion? 

Mr. FIRESTINE. Again, I think that is my point is that, you know, 

that is a local elected official’s decision to make in terms of how 

much to tax. 

Mr. COHEN. I got you. I got you. 

Ms. Greenberg, your grandmother’s philosophy, we have heard 

from people that want to have us protect them from Internet access 

taxes, from—from hotel industry wants us to talk about taxes, and 

satellite television. They all claim that these taxes are goniff taxes, 

too. To paraphrase your grandmother, why should this goniff be 

different from all other goniffs? 

Ms. GREENBERG. Well, you know, I said in my statement that 

consumers feel like they are getting nickel and dimed, and they 

are. This bill is an opportunity to say no and say enough with regard to this particular tax. 

I mean, I would be right there fighting a lot of the taxes and fees 

that are imposed on consumers which we as consumers don’t have 

any understanding where that money goes. So here we have a bill 

that gives us an opportunity—— 

Mr. COHEN. So you have got a forum? 

Ms. GREENBERG [continuing]. To articulate some of the—— 

Mr. COHEN. Right. 

Ms. GREENBERG [continuing]. Concerns we have about this fee 

but I don’t love the fees that I have to pay on my cell phone bill 

either. 

Mr. COHEN. I got you. Ms. Greenberg or Mr. Wagner, do you see 

any connection, any nexus, logical nexus other than this is an opportunity to grab some money on having this extra tax on rental 

car users? Nobody sees a nexus? 

Mr. WAGNER. Chairman, I will speak to that. On the—I think 

you have captured the essence of the issue here about fairness. 

There truly is no nexus typically between the taxes imposed and 

the purpose for which the rental itself. 

The issue here is generally that the taxpayer or the taxing entity 

sees these as easy targets; that these people are non-voting residents who typically live out of town. They are taxes have the end 

impact of discouraging travel, punishing the low and moderate income individuals and throwing a wrench into the American auto industry. 

Mr. COHEN. Thank you, Mr. Wagner. 

My 5 minutes have expired, and I will now recognize Mr. Franks. 

Mr. FRANKS. Well, thank you, Mr. Chairman. You know, it is always a challenge when you are dealing with competing interests 

51 

like this. I think it was Fred Bastiat said that, you know, ‘‘Government is that great fiction through which everyone endeavors to live 

at the expense of everyone else.’’ 

And one of the challenges we are having to deal with here is one 

that some of the founders had to deal with as well. You know, 

when they had the Articles of Incorporation they needed some kind 

of a mechanism to create interstate commerce. And they knew that 

if they just let, you know, it would be a free-for-all. That it would 

end up being kind of a disaster. 

And yet I am afraid that some of my liberal colleagues would, if 

they decided to mandate that all Members of Congress had flying 

saucers, that they would reference the commerce clause in the Constitution as a basis for giving them that authority. 

So it is kind of a, you know, kind of a tug-of-war here between 

the commerce clause rightfully interpreted and the second—I am 

sorry, the 10th Amendment. 

And so, you know, I am convinced here that the real issue is discriminatory. What is a discriminatory tax? And if there is a discriminatory tax, then it seems to be something that needs to be addressed. And that is my own position that there is evidence that 

there is a discriminatory tax burden here and that that is why we 

should address it. 

Now I am not sure, as I said in my opening statement, that this 

bill is the best way to do that. And I am hoping that somehow it 

will catalyze a discussion that will make sense to everyone, you 

know, at least every reasonable person and that we can deal with 

that. 

So I guess with that, Mr. Wagner, I would like to start with you. 

What is the dollar burden on rental car companies and consumers 

of these discriminatory taxes? Just give us a little kind of a picture 

of it. 

Mr. WAGNER. The collective amount of dollars that have been 

raised is typically over $7 billion a year. That is the amount of revenue that is being collected from the travelers that fly into a particular town to rent cars or from in-state, in-community renters. 

Mr. FRANKS. Well, I know the big challenge is distinguishing between an ordinary taxation and a discriminatory taxation regime. 

How would you make an effort to make that distinction between 

ordinary taxation and discriminatory taxation? 

Mr. WAGNER. Well, I think when the tax that is applied to a single group of individuals that is not generally based upon or imposed upon a broad base of taxpayers, a tax that is disproportionate and falls upon a segment of the community would be discriminatory. 

And I think these rental taxes are very clearly discriminatory 

when you look at the other modes of transportation in interstate 

commerce which have been regulated and addressed already by 

Congress. With the 4R Act, the railroads were protected, the buses 

were protected, trains. 

And I think at one point in time states targeted bus tickets and 

interstate bus travelers and Congress stepped in to protect them 

because those taxes were discriminatory in that mode of transportation. 

52 

And I think this is a similar situation where a particular group 

of taxpayers has been identified and has been targeted and discriminated against with a specific tax that the rest of the population and the rest of the community does not need to pay. 

Mr. FRANKS. Well, Mr. Firestine, I might ask you the same question. How would you distinguish between a discriminatory tax 

and—and an ordinary tax? Or would you make that distinction 

given some of your fundamental predicate? 

Mr. FIRESTINE. Well, I think it is a good question because, you 

know, I think discrimination, trying to define that, would be a challenge. And I guess my point is those are issues that are best left 

to local elected officials to try to come up with a group of taxes on— 

and where the burden falls relative to thinking about this issue of 

discrimination. 

Certainly local and state officials don’t want to tax a business out 

existence and to the extent a business is needed for—I mean, rental car companies do provide jobs in our community so certainly we 

are not going to do something that would jeopardize the ability to 

have those jobs continue in our community. 

Likewise, it is instrumental because people won’t take a cab, 

they would rather have a rental car, and it is critical to people 

coming to the state of Maryland because they want to be able to 

drive around and see the Bay and certainly you are going to set 

your tax policy so that it doesn’t preclude those rental car companies from doing business in the state of Maryland. 

But again, you know, those are local decisions that are made in 

that context. You know, in terms of nexus too, if I could just make 

a point about that, I have heard several times the comment that, 

you know, they are being used for stadiums and other things. 

First of all, it is a tax. It is not a fee, so it—to me, since it is 

a tax, it can be utilized for various purposes. Tobacco taxes, for example, go to the general fund and aren’t necessarily used for smoking cessation programs. Cell phone taxes aren’t used to build cell 

phone towers, things like that. So I do think those, again, are local 

decisions for local elected officials to make. 

Mr. FRANKS. Well thank you. The Chairman is indulging me here 

very briefly. Mr. Wagner, assuming the Congress agrees with you 

and passes H.R. 4175, how do you distinguish between rental cars 

and other businesses that may come looking for what might be considered preferential tax treatment from Congress? 

Mr. WAGNER. Well, again, rental car companies, the rental car 

industry, is uniquely a form of interstate commerce transportation 

very similar to buses, trains, automobiles. We, by virtue of the fact 

that the automobiles are transported and drive across state lines, 

that they use and travel upon federally-funded highways, I think 

that does set them apart. And much the way that buses, trains, 

and airplanes were taken care of. 

Mr. FRANKS. Mr. Chairman, it seems like one of the key problems here is that much of the tax burden falls on those without a 

local vote and that is one of the challenges. So thank you for the 

extra time. 

Mr. COHEN. Thank you. Since I gave you an extra minute, I will 

take the privilege to distinguish your last remark. I think that it 

falls on those that have the appearance of not having a vote but 

53 

the reality from the testimony which we found which was news to 

me is it really falls on the people who have a vote. It is just they 

don’t realize it or think about it. 

And so that is—when I voted for those taxes, I thought about, 

well, they use the stadium. They go to the convention center. But 

when I realized that most of the people in fact were local residents 

who would have a fender bender or some other problem with their 

car, then it does fall and you just don’t think about it per se. 

With that, Mr. Scott of Virginia is recognized. 

Mr. SCOTT. Thank you. Mr. Wagner, can you respond to the question I think Mr. Franks raised the question on what the Federal 

role in all this is. Can you respond to that? 

Mr. WAGNER. Well, I think under the commerce clause, Representative, Congress is charged to regulate interstate commerce. 

And I think with respect to this notion that Congress at this very 

moment is considering stimulus packages and relief for local governments, this bill in no way conflicts with that but in essence 

complements that. 

The stimulus money, the other revenues that are provided to 

local governments generally are from broad-based taxes. These particular rental car taxes are not from broad-based imposition of—— 

Mr. SCOTT. Well, the question was what the Federal role is in all 

of this because in stimulus package a lot of, I mean, states tax a 

lot of things and I mean we have had other hearings on that various question because they start crossing state lines and every 

state whose line is crossed wants to get a little piece of it. Where 

is the Federal role for deciding how the tax would be imposed? 

Mr. WAGNER. Well the authority for Congress to become involved 

centers around the commerce clause of the Constitution, interstate 

commerce. And I think again that the rental car tax is this Congress or Congress has already suggested and incorporated into legislation in the past that the rental car industry is a part of the 

interstate commerce system. And so that is the authority by which 

the courts have been—— 

Mr. SCOTT. Well, yes, I know we have the authority but I mean 

what is the rationale to dip into this tax and not every other local 

decision? 

Ms. Greenberg, do you want to have a comment on that? 

Ms. GREENBERG. Well, I think I—in terms of—— 

Mr. SCOTT. Not the policy—— 

Ms. GREENBERG. Right. 

Mr. SCOTT [continuing]. Whether it is a good idea or bad idea 

but—— 

Ms. GREENBERG. Why this? 

Mr. SCOTT [continuing]. Why—why should the Federal Government dip into this decision? 

Ms. GREENBERG. Partly I think it is there has been this explosion 

in rental car taxes beyond what you see in other areas. And the 

bill does a pretty good job, I think, of defining what discriminatory 

means. We have really seen an explosion, and as we have said in 

our testimony and other witnesses—— 

Mr. SCOTT. Well, is that not a local decision rather than a Federal decision? 

54 

Ms. GREENBERG. Well, there comes a point at which they are 

really gouging consumers, so I am speaking from a consumer perspective and—— 

Mr. SCOTT. That is the policy. 

Ms. GREENBERG. Right and we, you know, I see this as an opportunity for consumers to fight back because there is, you know, 

there is misperceptions that were really taxing out-of-staters. 

We are doing that with these taxes but we are also taxing primarily people who live within the state. Many of those people are 

lower income people who can’t afford to own a car. 

Mr. SCOTT. Mr. Firestine mentioned the question—I think somebody mentioned the idea that the taxes have nothing to do with the 

purpose to which the revenues are put. And I think Mr. Firestine 

said that that is irrelevant. Anyone want comment on that? 

Mr. FIRESTINE. Well, I—a couple things. I am saying that some 

cases it is relevant but it is a local policy decision. I mentioned in 

Maryland—— 

Mr. SCOTT. Well I mean there is no—what you are saying there 

is no requirement that you—that the taxes—— 

Mr. FIRESTINE. There is no—— 

Mr. SCOTT [continuing]. Go to any particular use. 

Mr. FIRESTINE. No. 

Mr. SCOTT. Sometimes it is convenient and sometimes it is easier 

to raise the tax. But from a Federal perspective what difference 

does that make? That they are not using it for something related 

to rent a car? 

Mr. FIRESTINE. And I guess that is my point, I don’t think it has 

to be used even though for example in Maryland it is. 

Mr. SCOTT. Well let us let the others comment on that. 

Mr. FIRESTINE. I am sorry. 

Mr. SCOTT. Okay. 

Ms. Greenberg, is that a relevant factor from the Federal perspective? 

Ms. GREENBERG. I think for consumers who see their bills almost 

double, and I have been in that position. I have been thinking 

about this issue since I was at Consumers Union, and now I am 

in the National Consumers League. 

You know, you go in and rent a car and it—you might get a great 

deal but you have got, you know, 30 or 40 percent added on to the 

rate of the car. You feel like you are—okay, well if you are paying 

for something related to this rental, that is one thing, if it is going 

to build the stadium for a billionaire in Minneapolis because he 

needs a new toy, those are the kinds of things that drive consumers 

crazy. 

Mr. SCOTT. Okay. Well that is the policy question and let me— 

we have taxes at airports like we charge taxes, a little fee to pick 

somebody up at the airport, parking fees and things like that. Why 

would this be different if we add on a little fee at the airport? 

Mr. WAGNER. Well, I will speak to that, Representative. First of 

all, I think this is an appropriate place for Congress to steer the 

course. You know, these taxes are proliferating at a rapid rate, 

eightfold rate since 1990 as was stated earlier. 

So it is appropriate for Congress to get involved in here. State 

and local governments are not acting in the best interest of interVerDate Aug 31 2005 14:41 Nov 10, 2010 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061510\56953.000 HJUD1 PsN: DOUGA
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state travelers and out-of-state travelers or for that matter, the 

other individuals who are saddled with these taxes, nickeled and 

dimed with these taxes at the local level. 

The industry is suffering a death by a thousand nicks in many 

respects with respect to the taxes that are being imposed. 

Your question about concession fees that are paid at the airport, 

those in essence are user fees. Those in essence constitute the taxes 

that are—or fees that are levied upon rental car companies for the 

privilege of operating at an airport, which are entirely different 

from a tax imposed on a rental car company that goes into some 

other purpose, completely unrelated to the rental car industry or 

as was suggested perhaps into some general revenue account. 

So a user fee, a personal property tax fee, a gasoline tax, a vehicle licensing fee, a registration fee, all of those are appropriate fees 

that relate to the rental car business and to the cost of—of that car 

operating in the community. 

Mr. SCOTT. So if a locality called it a fee rather than a tax, it 

would be different? 

Mr. WAGNER. No, I don’t think it would necessarily be different 

because many of the fees that I outlined are indeed taxes, personal 

property taxes, that sort of thing. 

But if it is a tax which is aimed to generate revenues for a purpose wholly unrelated to the car rental business, then it would be 

a discriminatory tax, and it would be appropriate for Congress to 

step in to intervene in protection of the interstate commerce system, like it has done with the buses and the airplanes and the railroads. 

Mr. SCOTT. I think Mr. Firestine wanted to comment on—— 

Mr. COHEN. You may go on if you would like, Mr. Scott. 

Mr. FIRESTINE. Let me comment, just—— 

Mr. COHEN. You are recognized. 

Mr. FIRESTINE. Generally a fee does require an access to some 

service being provided, whereas the tax doesn’t. And second, just 

to comment about, if I may, on the discrimination issue, it does appear there are legal remedies that somebody could pursue if they 

feel they are being discriminated relative to a tax. 

Montgomery County just instituted a new carbon tax on a facility 

in the county. The power plant and certainly the owner of the plant 

is going to seek whatever legal remedy they can get and then the 

courts will help to decide. So in addition to elected officials making 

decisions, there certainly are other mechanisms in place if it truly 

is a discriminatory tax. 

Mr. COHEN. Thank you. 

Ms. Chu? 

Mr. Johnson, I don’t how to really—Ms. Chu is recognized, the 

lady from California, very knowledgeable about these taxes. 

Ms. CHU. Thank you so much, Mr. Chair. 

I was a city council member and mayor of a city near Los Angeles for a period of 13 years. And it was a city that was popular with 

tourists, so I know what extra impacts tourists have on a city. We 

did not have a car rental tax, but I could see why our city would 

impose such a thing. 

And in fact I have a situation at the LAX airport, who have 

raised concerns with your bill as it is currently written because it 

56 

would prohibit a customer facility charge, which is clearly an airport and travel-related fee. 

Currently LAX is using these fees to finance the design, consolidation and maintenance of a consolidated rental car facility. Currently, the rental car facilities are decentralized and they are 

spread out within a three mile radius of the airport. 

And LAX passengers wishing to rent or return a car must use 

one of several car shuttles to reach their destination. And as a result, there are 800,000 shuttle trips during the year causing significant traffic congestion. 

So the city of Los Angeles is seeking to address these concerns 

through the construction of a consolidated rental car facility, which 

would be the largest such facility in the United States, and it 

would significantly reduce the numbers of shuttle trips and their 

impact on nearby communities. 

But is dependent on this fee and this charge and without this 

charge, LAX and dozens of other airports throughout the country 

would not be able to build these facilities. 

So Mr. Wagner, you argue that these taxes and fees are often 

used to pay for unrelated services. However, a number of airports 

including my hometown airport, LAX, uses customer facility 

charges to pay for the construction of these consolidated rental car 

facilities. 

And as it is currently written, I understand that this bill would 

eliminate these fees as well. So are you saying that these fees are 

inappropriate and should be forbidden by Congress? 

Mr. WAGNER. Thank you, Representative Chu. I respectfully suggest that perhaps the LAX officials misread the bill, too, because 

in—the bill intend to carve out and protect consolidated facility 

type fees. 

In my remarks and in my comments a few moments ago, I suggested that user fees, taxes, fees that related directly to the automobile industry or the airport are indeed protective of the industry 

and the coalition has no objection to those. 

In fact, I think if you look at H.R. 4175 on page five, it expressly 

says the term ‘‘tax’’ does not include any charge imposed by state 

or locality with respect to a concession agreement at a federally assisted airport. 

And so we would have no objection to those types of taxes, nor 

do we have any objections to the other taxes and fees which are 

imposed on all owners of cars and all users of cars. 

Ms. CHU. Well as the former mayor of a city that had a lot of 

tourism, which had tourists drive through the streets and use our 

facilities, I would wonder if local government might be in a better 

position to determine these things? And therefore I would like to 

ask Mr. Firestine why is it that local government could be in a better position to make such a determination? 

Mr. FIRESTINE. Well, I think for the reasons you just stated. And 

that has been the point of our testimony is these are local decisions, state decisions that should be left up to local officials. 

You know, balancing the tax burden within the communities to 

take into account factors such as if it is something that you want 

to do to promote tourism and you feel that a high tax would discourage that, then certainly that is a local decision. 

57 

And if the local community doesn’t feel that you are making the 

right decision, they can elect somebody else to do that. But I do 

think that those are local matters. 

Ms. CHU. In fact, the money might not be used directly for a 

rental car facility consolidation such as the example, I used but it 

could be for other impacts and are there examples where it is used 

for other types of impact? 

Mr. FIRESTINE. Yes, in my testimony I noted in Maryland for example, there is an 11-1/2 percent tax on rental cars. It is split. Basically it goes into the Transportation Trust Fund and into the 

Chesapeake Bay Trust Fund. 

So part of the initiative is—part of the money is distributed to 

the counties in the state of Maryland to pay for road maintenance, 

replacing and installing street lights, pedestrian safety initiative, 

things like that. 

But it also goes to help support Bay initiatives, reducing run-offs 

into the Bay. You know, the Bay is related to tourism in the state 

of Maryland and certainly people come there to participate in Bay 

activities. 

These monies would help clean up the Bay, although I don’t believe, as I said earlier, it necessarily is required that there be a 

nexus between the tax and the services provided. 

Ms. CHU. And what impact would this legislation have on state 

and local revenues? 

Mr. FIRESTINE. Well, again, at a time when we are scrambling 

to identify any revenues possible to keep our budgets balanced because we do have to stay balanced, as I indicated this is another 

tool in the toolbox, and it is another place to go to manage that. 

Property taxes at the local level are the primary source of revenue. We all know what has happened to—home values have declined, therefore, you know, making that a difficult tax to be a productive tax. So we do look to other taxes. 

I did indicate in Montgomery County for example, we have instituted a higher cell phone tax. We instituted a carbon tax on a 

power plant, so we do look at other options that are out there relative to the total burden within the community. 

Ms. CHU. Thank you. I yield back. 

Mr. COHEN. Ms. Chu. 

And now Mr. Johnson, the distinguished Subcommittee Chairman recognized from Georgia. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

I don’t know I am suspicious about the statistics that I have 

heard that would lend credence to the theory that car rental taxes 

are primarily born by minority consumers. Take a place like Miami 

for instance, heavily—a tourist haven. I would suppose that you 

would have more car rental facilities there than you would in another part of Florida that did not see a lot of tourists. 

A place like Atlanta, convention industry being a major source of 

car rental demand, so I question the stats that have been cited. 

And I have not been here for the full hearing but I have kind of 

read over the hearing materials. 

The statistics that have been cited to support the notion that 

these car rental taxes are borne primarily by minorities, distinguish between locations where tourism and business activities were 

58 

the primary source of the revenues? Did they cut out those kinds 

of locations in compiling the statistics? 

Mr. WAGNER. Well, Representative, the study was conducted by 

the Brattle Group, and it did take a number of communities and 

analyzed the rental revenues and—— 

Mr. JOHNSON. So it did not take all 16,000 car rental locations 

into effect? 

Mr. WAGNER. No, sir it did not study the entire country and 

16,000, you know, offices across the country, but rather took a representative sample in Georgia and other communities, looked at industry statistics, applied a number of other data points, census 

data and so on to it and engaged in a statistical analysis. 

I would be very happy to share with you that study and meet 

with you about it to talk further about the particulars if you would 

be interested. 

Mr. JOHNSON. What group commissioned the study? 

Mr. WAGNER. The study was commissioned by Enterprise Holdings in consultation with members of the coalition that existed at 

the time that the study was undertaken. 

Mr. JOHNSON. Is that connected to Enterprise Leasing at all? 

Mr. WAGNER. Yes. Yes, sir. Yes, sir, Enterprise Holdings is the 

holding company for Enterprise Rent-A-Car and Alamo and National. 

Mr. JOHNSON. Yes, is there any—does anyone think that if the 

local and state abilities to apply a tax to car rental activity would 

result in a reduction of the price of car rentals to consumers? 

Ms. GREENBERG. If I can respond to that. I think consumers 

would be greatly relieved to get a quote on a car rental and have 

the final bill be far closer than it is today. 

When you rent a car, you can, you know, you can get a car for 

$25 or $35 a day and end up with a $60 bill. And that added 

amount is not anticipated by many consumers, and it ends up 

being taxes and fees and things that you have, you know, no real 

ability to predict. 

Mr. JOHNSON. So are you saying that there are some car rental 

taxes that are 100 percent or, you know 75 percent on the tax— 

I mean on the rental cars? 

Ms. GREENBERG. When you add up the local tax, the state tax, 

various fees for delivery, there is sometimes convenience fees. I 

may be getting the names of the fees wrong, but I rent cars all the 

time and I am absolutely astounded by how much those fees add 

up onto the actual, you know, the base price of the car. 

Mr. JOHNSON. But you are not going to suggest or you are not 

suggesting that local and state taxes would cause a 100 percent 

jump in the amount of the car rental? 

Ms. GREENBERG. Well, I have rented a car for as low as $25 and 

seen $15 worth of taxes added on, so it is not 100 percent but it 

can get up there to a hefty percentage. And that is I think something that is distressing to consumers. 

Mr. WAGNER. Representative, I might also add from our information and our studies and our practice in the industry, it is clear to 

us that rental car prices are very price sensitive, very tax sensitive. 

And with the continued piling on of these sorts of taxes, again as 

59 

I said earlier, the industry in essence is suffering a death by a 

thousand nicks. 

These taxes do pile up. Most recently in the State of Wisconsin, 

an $18 transaction tax was passed and authorized. In Kansas City 

there is a $4 per day tax, and I can go on and on with a list of 

taxes that really do reach that point where the consumer says, ‘‘I 

will take a cab.’’ as was suggested earlier, at which point that 

eliminates choices, reduces choices. 

And is—really discourages travel in particular, and punishes the 

low and moderate income renters, who maybe don’t have that extra 

$18, who don’t have that $4 a day. They don’t have that $10 a day. 

So a tax in and of itself may—is a significant factor. But the 

taxes that we are talking about are the discriminatory taxes that 

are added on top of all of the other broad base of taxes which the 

industry and the rental car company pays, which include personal 

property taxes, certainly general sales taxes, local sales and use 

type taxes, registration fees and so on and so forth. 

So in essence, it is the same rationale that prompted Congress 

into saying enough is enough with additional discriminatory taxes 

being placed on bus tickets in 1995 when Oklahoma in that particular case that led to the congressional activity imposed a tax on 

bus tickets. 

And consumers were already burdened with other taxes that existed on those tickets and Congress said it was the proper place for 

Congress to step in and regulate interstate commerce. 

There is the rental car industry I think by all accounts through 

the court cases, through congressional action and so on is clearly 

a part of the interstate commerce system. And it is appropriate for 

Congress to take a good look at this issue and say enough is 

enough with respect to the piling on of these taxes on behalf of consumers, which again adversely impact the entire automobile industry. 

Mr. JOHNSON. Well, I certainly agree that Congress maintains 

and in fact should do exactly what we are doing today, which is to 

take a look at these rates. I am just kind of seeking addition information. 

The majority of cars rented in America are to business and tourist travelers or to people who have had an accident and need temporary rental or somebody who just wants to rent a car for the 

weekend or something like that? 

You know, what makes up the most significant share of the market, business and tourism or consumers, just regular, every day Joe 

Blow consumers? 

Mr. WAGNER. If you group business and tourism together that 

would be the largest segment. The notion that rentals happen for 

business purposes predominantly or exclusively that is not true, 

business rentals comprise of less than half of the overall rental 

business by 46 percent. 

Local, the home city market that I think you are alluding to is 

generally 54 percent, but part of that same 54 percent is indeed 

business travel but otherwise it is leisure, replacement business, 

renting a car to replace another car because your car is in the garage, having warranty work, that sort of thing done. 

60 

So a significant portion, a dominant portion is indeed home city, 

local, non-business, non-vacation type rentals. 

Mr. JOHNSON. Okay, and my last question, Mr. Chairman, if I 

may. Gosh, and I had it right there on the tip of my tongue. Yes, 

what are state and local governments to do when all of the fingers 

of revenue raising for purposes such as the police, fire, ambulance, 

roads and drainage, parks and rec, just all of the things that local 

government is responsible for. 

And if we cut off all of the fingers on both hands of local and 

state governments to address those concerns through things like 

car rental taxes, what happens to—what is the impact on state and 

local governments, local governments in particular? 

Mr. FIRESTINE. If I could answer that, as I indicated in my testimony, you know, times have gotten tough, and we have started to 

run out of options. We do look for wherever we can to create diversification in our tax structure. But as property tax revenues have 

declined across the country, as income tax revenues have declined, 

we have looked for other alternatives. 

I would also like to comment if I can for a minute, on the issue 

of minority and low income participation in rental car usage. You 

know, coming from a diverse county in this region, I have to say 

that if 54 percent of the use of rental cars is local, home city usage. 

Quite frankly minorities and low income folks in Montgomery 

County are not using rental cars, they are using mass transit. If 

they drop their car off for a repair, if they have a car, they hop on 

the bus to go to work. 

So if the majority of it is home city, then it seems to me, you 

know, to make this argument that has a disproportionate impact 

on minorities than low income is not appropriate. 

Second, in an urban area, again from a policy perspective, the 

local elected officials might be trying to encourage the use of mass 

transit. And to that extent, how they tax automobile rentals may 

play into that local policy decision, to discourage use of vehicles to 

the extent they are available. 

Mr. JOHNSON. Thank you. 

Mr. WAGNER. Representative, if I might—— 

Mr. COHEN. Thank you, Mr. Johnson. 

Let me ask you this, if—Mr. Firestine, what is the tax in, say, 

Baltimore. I go to rent a car in Baltimore, how much is the rental 

car tax? 

Mr. FIRESTINE. Eleven and a half percent. 

Mr. COHEN. Eleven and a half percent. 

Mr. FIRESTINE. That is the state tax, yes on—— 

Mr. COHEN. And that is on the total commercial transaction, and 

it is in addition to any other fees and taxes, right? 

Mr. FIRESTINE. That is correct. 

Mr. COHEN. All right. So let us ask—then I got there and the car 

is give or take 50 bucks, and I am there for 3 days, so my contribution to Baltimore is—and what is the county? 

Mr. FIRESTINE. It would either be Baltimore City or Baltimore 

County but—— 

Mr. COHEN. It is the same county, so my—— 

61 

Mr. FIRESTINE [continuing]. It would go into the state trust fund 

and then be distributed to the counties. But you are talking what 

15, 16 bucks over that 3-day period. 

Mr. COHEN. Right. How does—but again and I know you—basically you said that other fees are supposed to have a nexus and 

taxes and don’t have to. But logically shouldn’t they? 

I mean do I really cause $16 more cost to the state of Maryland 

than somebody who is driving their car 365, 52 weeks a year, in 

which case you could raise taxes on the registration fees to deter 

people from owning cars and going to mass transit too. But do I 

really contribute $16 more use of the roads than somebody else or 

anything else? 

Mr. FIRESTINE. And again, that is my point about the relationship between a tax and a fee. I mean if you are a property taxpayer 

in Montgomery County but you don’t have kids in the school system, you are going to complain that why do I pay property taxes? 

So to the extent you are collecting more than you actually—— 

Mr. COHEN. You could, but of course having kids in school helps 

everybody. An educated society is going to have more productivity, 

create more jobs, less crime. I am a single guy. I benefit from public schools because if we didn’t have public schools, I am more likely to be the victim of crime. 

I am more likely to have a community that doesn’t have educated, trained people to have jobs and productivity and culture and 

blah, blah, blah. I don’t buy that, but I cannot see that—I don’t 

think works—— 

Mr. FIRESTINE. But again—— 

Mr. COHEN [continuing]. With the rental car situation. I don’t— 

the 16 bucks, where does that cost? 

Mr. FIRESTINE [continuing]. And if that $16 bucks goes toward 

transit initiatives, that helps everybody. It—— 

Mr. COHEN. Right but why should I pay for it? Why should the 

person who rents a car pay for it and not the person who just 

drives the car? 

Mr. FIRESTINE. Again, I think those are all questions we have 

about how taxes and what the impact is of this. 

Mr. COHEN. So what you are basically saying is we—in our system we allow the local governments, the state governments to do 

things that we can’t explain rationally. It couldn’t be fees because 

there is no nexus, but that they do because they think it is for the 

good of their constituencies. 

Mr. FIRESTINE. Well, I think there is a rationale behind all of our 

tax policy and as I said earlier, you get elected to make those decisions at the local level. And if folks don’t like the way you made 

those decisions, they can un-elect you. 

Mr. COHEN. But what if the people who are affected by it are the 

people that are from out of town? 

Mr. FIRESTINE. But we just heard—— 

Mr. COHEN. That you can’t vote. 

Mr. FIRESTINE [continuing]. Fifty-four percent of rental car usage 

in the home city. 

Mr. COHEN. Yes, but those people don’t expect to have to rent a 

car. Nobody expects to have an automobile accident. Those are the 

62 

lotteries of life and those are the people that have to go rent the 

car. 

Some people plan on it and go, ‘‘Oh, I am going to drive to Philly 

and I am—’’ 

But for most people it is something they don’t foresee. So when 

that tax comes about they don’t think ‘‘I am going to be renting a 

car because I am going to have a wreck in 2 weeks.’’ 

Mr. FIRESTINE. And I would offer up in that case most likely your 

rental car costs are paid for by your insurance company. That is 

what you have insurance for. 

Mr. COHEN. So and because of that all your rates go up and you 

pay more, and so as long as you pass along it is okay. You have 

got a tough job. You have done a good job. I am not going to grill 

you any longer. 

Mr. Wagner, what if these taxes were all required to go to things 

like airport fees, facilities that Ms. Chu mentioned or toward convention and visitor’s centers and/or stadia that do attract people 

that would oftentimes need rental cars and even though if we have 

the 54 percent argument, would that make it more palatable or 

still outside the—— 

Mr. WAGNER. Well, to the extent that they did go to those types 

of facilities, or consolidated facilities, airport terminals and so and 

so forth then the need to raise taxes higher would go down because 

the cost of those facilities would be considerably less. 

It would be the industry has no problem with paying a fair 

amount of taxes for a consolidated facility or airport rental car purposes. But the notion is the tax is above and beyond that the taxes 

needed to underwrite those facilities to pay for purposes or projects 

unrelated to the taxes is where the problem lies. 

Mr. COHEN. And you said that there is an exemption in the bill 

for the type of facility at LAX that they are coming up with. Is 

there exemptions for any other type of facility or is it just the ones 

that become the major homes of rental cars? 

Mr. WAGNER. The bill is not intended to apply to any project related to rental cars, operation rental facility operations. Again it 

would not in any way touch personal property tax assessed against 

rental cars or all car owners, consolidated facility type fees, registration fees and so on. So the bill only applies to those taxes that 

are levied for unrelated purposes. 

Mr. COHEN. Thank you. 

Ms. Greenberg, do you have any last things for consumers? I will 

give you the last statement. 

Ms. GREENBERG. Well one thing that I think needs to be said is 

that these taxes are regressive taxes. And if the statistics from the 

Brattle Group study is that 26 percent of the car rentals and 27 

percent of excise taxes are generated by African Americans and 13 

percent generated by Hispanics, these are regressive taxes. 

And if, you know, our thinking is if local governments need to 

raise revenue, we understand they do. And I said in my testimony 

I believe in tax policy and I think it is perfectly legitimate to pay 

for hospitals, schools, playgrounds and things that benefit the general public. 

63 

But if you want to raise taxes, you should do so in a progressive 

tax system that doesn’t fall so heavily on those who can least afford 

it. 

And also consumers don’t want to pay for stadiums that billionaires want to build because they want another additional toy when 

they already have—the Minneapolis example, when they, you 

know, why should people who rent cars be paying for things that 

ought to be paid for by people who can well afford to do so? 

And we see a lot of that in these taxes, so thank you for the opportunity to share my thoughts on those issues. 

Mr. COHEN. I want to thank all of the panelists. And I want to 

thank the Committee Members who attended and participated. The 

witnesses all did a good job defending their positions and advocating. 

Without objection, Members will have 5 legislative days to submit any additional written questions which we will forward to the 

witnesses and ask you to answer as promptly as possible, and it 

will be part of the record. 

Without objection, the record will remain open for 5 legislative 

days for the submission of any other additional materials. Thank 

you everyone for their time and patience. The hearing on the Subcommittee on Commercial and Administrative law is adjourned. 

[Whereupon, at 12:35 p.m., the Subcommittee was adjourned.] 

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PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

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LETTER FROM ALAN REUTHER, LEGISLATIVE DIRECTOR, INTERNATIONAL UNION, 

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