Date: 2015-12-11
Speaker: JACKSON LEE (democrat)
Chamber: H

Mr. Speaker. the point I want to make is. with what you are doing. even though there is a 4year lapse. you are grandfathering this. My own State of Texas will lose $358 million. Wisconsin $120 million. Ohio $65 million. and South Dakota will lose about $13 million. Are we going to replace those moneys from the Federal Government? What are we going to do to the retail industry that has bricks and mortar? My friends. I am going to support a CR. but I do believe we should work together to do things that impact us positively and not negatively. Get rid of the riders and help our States. which have a need to have this Internet tax provision lifted. Mr. Speaker. as a senior Member of the House Judiciary Committee. as the Ranking Member of the Subcommittee on Crime. Terrorism. Homeland Security. and Investigations. and as the representative from Houston. I rise in opposition to the "Permanent Internet Tax Freedom Act" being in this bill. When originally enacted in 1998. the Internet Tax Freedom Act established a temporary moratorium on multiple and discriminatory taxation of the Internet as well as new taxes on Internet access. This moratorium. however. is due to expire on October 1st of this year. Since 1998. Congress has extended the moratorium on a temporary basis. The bill before us will make that moratorium permanent. Unfortunately. in doing so. the bill also ends the Acts grandfather protections for states that imposed such taxes prior to the Acts enactment date. Mr. Speaker. the bill is problematic for several reasons. First. Congress. instead of supporting this seriously flawed legislation. should be focusing on meaningful ways to help state and local governments. taxpayers. and local retailers. The House can do that by addressing the remote sales tax issue. In addition to extending the expiring moratorium on a temporary basis. the House should take up and send to the Senate legislation that would give states the authority to collect sales taxes from remote sellers. Such a proposal would incentivize remote sellers to collect and remit sales taxes as well as require states to simplify several procedures that would benefit retailers. Such legislation would enable states and local governments to collect more than $23 billion in estimated uncollected sales taxes each year. The measure would also help level the playing field for local retailerswho must collect sales taxeswhen they compete with outofstate businesses that do not collect these taxes. Retail competitors should be able to compete fairly with their internet counterparts at least with respect to sales tax policy. The House should do its part and address the remote sales tax disparity before the end of this Congress. Second. this legislation will severely impact the immediate revenues for the grandfatherprotected states and all states progressively in the long term. The Congressional Budget Office. for example. estimates that this bill will cost certain states "several hundred million dollars annually" in lost revenues. Indeed. the Federation of Tax Administrators has estimated that the bill will cause the grandfatherprotected states to lose at least $500 million in lost revenue annually. For my home state of Texas. enactment of this bill will result in a revenue loss of $358 million per year. Texas will not be alone in these losses. annually: Wisconsin will lose about $127 million. Ohio will lose about $65 million. and South Dakota will lose about $13 million. Should this bill become law. state and local governments will have to choose whether they will cut essential government servicessuch as educating our children. maintaining needed transportation infrastructure. and providing essential public health and safety servicesor shift the tax burden onto other taxpayers through increased property. income. and sales taxes. Meanwhile. the Center on Budget and Policy Priorities has estimated that the permanent moratorium will deny the nongrandfathered states of almost $6.5 billion in potential state and local sales tax revenues each year in perpetuity. This bill will burden taxpayers. while excluding an entire industry from paying their fair share of taxes. Finally. this bill ignores the fundamental nature of the Internet. The original moratorium was intentionally made temporary to ensure that Congress. industry. and state and local governments would be able to monitor the issue and make adjustments where necessary to accommodate new technologies and market realities. The Act was intended as a temporary measure to assist and nurture the fledgling Internet thatback in 1998was still in its commercial infancy. Yet. this bill ignores the significantly changed environment of todays internet. The bills supporters continue to believe that the internet still is in need of extraordinary protection in the form of exemption from all state taxation. But. the internet of 2015 is drastically different from its 1998 predecessor. And. surely the internet and its attendant technology will continue to evolve. Permanently extending the tax moratorium severely limits Congresss ability to revisit and make any necessary adjustments. Simply put. a permanent moratorium is unwise. In closing. I urge my colleagues to oppose H.R. 235 and I reserve the balance of my time. The bill is misguided legislation that will devastate state revenues. especially for those states currently protected by the grandfather clause. and could force state governments to eliminate essential governmental programs and services. while increasing the burden on taxpayers. For all of these reasons. I urge my colleagues to reject this flawed legislation. that makes the internet tax moratorium permanent. in part.