PERMANENT INTERNET TAX FREEDOM ACT; Congressional Record Vol. 161, No. 91
(House of Representatives - June 09, 2015)

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                   PERMANENT INTERNET TAX FREEDOM ACT

  Mr. GOODLATTE. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 235) to permanently extend the Internet Tax Freedom Act.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                H.R. 235

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Permanent Internet Tax 
     Freedom Act''.

     SEC. 2. PERMANENT MORATORIUM ON INTERNET ACCESS TAXES AND 
                   MULTIPLE AND DISCRIMINATORY TAXES ON ELECTRONIC 
                   COMMERCE.

       (a) In General.--Section 1101(a) of the Internet Tax 
     Freedom Act (47 U.S.C. 151 note) is amended by striking 
     ``during the period beginning November 1, 2003, and ending 
     October 1, 2015''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxes imposed after the date of the enactment 
     of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Virginia (Mr. Goodlatte) and the gentlewoman from Texas (Ms. Jackson 
Lee) each will control 20 minutes.
  The Chair recognizes the gentleman from Virginia.


                             General Leave

  Mr. GOODLATTE. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous materials on H.R. 235, currently under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Virginia?
  There was no objection.
  Mr. GOODLATTE. Mr. Chairman, I yield myself such time as I may 
consume.
  The clock is ticking down on a key law that protects Internet 
freedom. On October 1, 2015, a temporary moratorium on State taxation 
of Internet access will expire.
  In 1998, Congress temporarily banned State and local governments from 
newly taxing Internet access or placing multiple or discriminatory 
taxes on Internet commerce. With minor modifications, this ban was 
extended five times, with enormous bipartisan support. The most recent 
extension passed in 2014.
  If the moratorium is not renewed, the potential tax burden on 
consumers will be substantial. The average tax rate on communications 
services in 2007 was 13.5 percent, more than twice the average rate on 
all other goods and services. The FCC's recent reclassification of the 
Internet as a telecom service emboldens States to apply these telecom 
taxes to Internet access immediately, should ITFA lapse.
  To make matters worse, this tax is regressive. Low-income households 
pay 10 times as much in communications taxes as high-income households 
as a share of income.
  The Permanent Internet Tax Freedom Act converts the moratorium into a 
permanent ban--on which consumers, innovators, and investors can 
permanently rely--by simply striking the 2015 end date.
  This legislation prevents a surprise tax hike on Americans' critical 
services this fall. It also maintains unfettered access to one of the 
most unique gateways to knowledge and engines of self-improvement in 
all of human history.

                              {time}  1645

  This is not an exaggeration. During the 2007 renewal of the 
moratorium, the Judiciary Committee heard testimony that more than 75 
percent of the remarkable productivity growth that increased jobs and 
income between 1995 and 2007 was due to investment in 
telecommunications networks technology and the information transported 
across them.
  Everyone in Silicon Valley knows Max Levchin's story. He came to 
America from the Soviet Union at age 16. He had $300 in his pocket, and 
he learned English by watching an old TV set he hauled out of a 
dumpster and repaired. Ten years later, he sold PayPal, a well-known 
Internet payments platform he cofounded, for $1.5 billion.
  That is the greatness of the Internet. It is a liberating technology 
that is a vast meritocracy. It does not care how you look or where you 
come from. It offers opportunity to anyone willing to invest time and 
effort.
  That is precisely why Congress has worked assiduously for 16 years to 
keep Internet access tax-free. Now we must act again, once and for all.
  The Permanent Internet Tax Freedom Act has 188 cosponsors. Identical 
legislation passed last year on suspension by a voice vote.
  Nevertheless, small pockets of resistance remain. They argue that the 
Internet is no longer a fledgling technology in need of protection. But 
it is precisely the ubiquity of the Internet that counsels for a 
permanent extension. It has become an indispensable gateway to 
scientific, educational, and economic opportunities.
  It is the platform that turned Max Levchin from an impoverished 
immigrant into a billionaire. The case for permanent Internet tax-free 
access to this gateway technology is stronger today than it ever has 
been.
  It is important to note that PITFA does not address the issue of 
State taxes on remote sales made over the Internet. It merely prevents 
Internet access taxes and unfair multiple or discriminatory taxes on e-
commerce, whether inside the taxing State or without.
  That said, the committee is also eager to proceed with legislation 
that levels the playing field between traditional and online retailers 
without letting States tax and regulate beyond their borders. 
Productive discussions continue.
  I would like to specifically thank Ms. Eshoo, Mr. Chabot, 
Subcommittee Chairman Marino, and Subcommittee Ranking Member Cohen for 
their work on and support of this legislation.
  This bipartisan legislation is about giving every American unfettered 
access to the Internet, which is the modern gateway to the American 
Dream. I urge all of my colleagues to support it, and I reserve the 
balance of my time.
  Ms. JACKSON LEE. Mr. Speaker, I yield myself such time as I may 
consume.
  We have often worked, in the Judiciary Committee, as Mr. Goodlatte 
has so noted, because of the bipartisan leadership, including the 
offerer of this bill, the gentlewoman from California

[[Page H3953]]

(Ms. Eshoo), in a bipartisan manner as it deals with this new 
phenomena, and when I say ``new phenomena,'' continually changing 
phenomena, the Internet and the entire world of social media and the 
new technologies that we face today in communications.
  So, I am always eager to find common ground and would have liked to 
have done so as we worked together on this very important bill, H.R. 
235.
  As a senior member of the House Judiciary Committee, and as the 
ranking member on the Subcommittee on Crime, Terrorism, Homeland 
Security, and Investigations, coming from Houston, I rise with great 
concern on H.R. 235, the Permanent Internet Tax Freedom Act.
  When originally enacted in 1998, the Internet Tax Freedom Act 
established a temporary moratorium on multiple discriminatory taxation 
of the Internet, as well as new taxes on Internet access. This 
moratorium, however, is due to expire on October 1 of this year.
  Since 1998, Congress has extended the moratorium on a temporary 
basis. The bill before us, H.R. 235, will make that moratorium 
permanent.
  Unfortunately, in doing so, H.R. 235 also ends the act's grandfather 
protection for States that imposed such taxes prior to the act's 
enactment. There lies the crux of the problem: intrusion into 
individual States' authority dealing with taxation and providing them 
with a bridge of revenue.
  H.R. 235 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 such 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 
retailers who must collect sales taxes when they compete with out-of-
state 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.
  Now, I do know that a lot of our businesses are taking to the 
Internet, and I applaud that. But before I came here today I spoke 
before at least 100-plus small businesses. I can tell you that they are 
worth considering, for many of them are in bricks-and-mortar, and they 
are small businesses trying to increase their revenue and trying to 
employ a number of employees. We should thank them for the energy that 
they provide to the economy.
  I believe 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 grandfather-protected States and all States progressively in 
the long term.
  The CBO, 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 grandfather-protected States to lose at least $500 
million in lost revenue.
  For my home State of Texas, enactment of this bill will result in a 
revenue loss of $358 million, and Texas will not be alone in those 
losses annually.
  Mr. Speaker, I reserve the balance of my time.
  Mr. Speaker, as 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 H.R. 235, the ``Permanent Internet Tax Freedom 
Act.''
  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, H.R. 235 will make that moratorium 
permanent.
  Unfortunately, in doing so, H.R. 235 also ends the Act's grandfather 
protections for states that imposed such taxes prior to the Act's 
enactment date.
  Mr. Speaker, H.R. 235 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 
retailers--who must collect sales taxes--when they compete with out-of 
state 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 grandfather-protected 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 grandfather-protected 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 services--such as 
educating our children, maintaining needed transportation 
infrastructure, and providing essential public health and safety 
services--or 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 non-grandfathered states of 
almost $6.5 billion in potential state and local sales tax revenues 
each year in perpetuity.
  H.R. 235 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 that--back in 1998--was still in its commercial 
infancy. Yet, this bill ignores the significantly changed environment 
of today's Internet.
  The bill's 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 Congress's 
ability to revisit and make any necessary adjustments.

[[Page H3954]]

  Simply put, a permanent moratorium is unwise.
  In closing, urge my colleagues to oppose H.R. 235.
  Mr. GOODLATTE. Mr. Speaker, at this time it is my pleasure to yield 3 
minutes to the gentleman from Ohio (Mr. Chabot), a member of the 
Judiciary Committee and chairman of the Small Business Committee.
  Mr. CHABOT. Mr. Speaker, I want to thank the chairman of the 
Judiciary Committee, Mr. Goodlatte, not only for yielding me this time 
but also for his leadership on promoting and pushing for this bill.
  The Internet is an essential component of our economy. It drives 
innovation, job creation, and has resulted in a higher standard of 
living for virtually every American.
  The bill before us today provides certainty to Americans by making 
the current law of the land permanent and protecting access to the 
Internet against new taxes.
  Mr. Speaker, there is common ground in this Chamber today. We all 
agree that the Internet is an essential part of our lives and an 
incredibly powerful tool for communication, education, and job 
creation. Let's not make accessing the Internet more costly and more 
difficult.
  The Permanent Internet Tax Freedom Act, H.R. 235, makes the current 
law of the land permanent and protects access to the Internet from new 
taxes, and that is why I would urge my colleagues to support the bill.
  The Internet, it is essential to our everyday lives. Americans use it 
to run small businesses, to do research, to apply for jobs, to listen 
to music, to communicate with friends and family, to check the weather 
and the traffic, and for so many other things.
  Since 1998, Congress has made sure that access to the Internet 
remains tax-free. Unfortunately, this protection expires in October, at 
which point taxes could go up on every American who wants to get 
online.
  Now is the time to make sure that this policy remains permanent. Now 
is the time to protect access to the Internet.
  So I want to again thank the chairman of the Judiciary Committee, Mr. 
Goodlatte, for his leadership on this issue. Let's make sure that 
access to the Internet stays tax-free. That is the way it is under the 
existing law. What we are trying to do is to make that permanent. I 
would urge my colleagues to do that.
  Ms. JACKSON LEE. Mr. Speaker, it gives me great pleasure to yield 4 
minutes to the gentlewoman from California (Ms. Eshoo), the 
longstanding author of this legislation.
  Ms. ESHOO. I thank the gentlewoman from Texas.
  Mr. Speaker, I rise in strong support of H.R. 235, the Permanent 
Internet Tax Freedom Act.
  Now, whether it is communication, commerce, business, education, 
research, access to the Internet is today an integral part of the 
everyday life of millions of Americans and people around the world. And 
we take great pride in this because this is an American invention.
  Just this month, the GAO released a new report which found that 
broadband affordability continues to be the most frequently identified 
barrier to adoption.
  Now, this whole issue of taxation for access to the Internet, this is 
not the collection of taxes across State lines. That is another issue.
  There are over 10,000 taxing agencies in the United States today. 
Imagine if we, you, your constituents, everyone in the country who uses 
the Internet has to pay for access to the Internet every time they go 
to use it, that they would be taxed on that.
  So, the temporary, or the moratorium bill that we have, now this one 
makes it permanent. This is a bipartisan effort. Over 200 cosponsors in 
the Congress are on it.
  We want to encourage expanded broadband adoption. If you tax it, you 
are going to shrink it. And I think in the communities that are of 
lower economic means, this is going to hurt them even more.
  We need to do everything we can to ensure that Internet access is 
universally affordable. This bill is an important component of that 
effort by permanently eliminating the taxation of Internet access.
  The current moratorium, as my colleagues have said, expires October 
1, and we want to be ahead of that to keep the door open, but no 
taxation to access.
  I want to salute the chairman, Chairman Goodlatte. We are good 
friends. We have worked on other efforts.
  As I said, this bill has nearly 200 bipartisan cosponsors and strong 
support of the communications, Internet, and e-commerce industries. So 
I would urge all of my colleagues to support this, and understand that, 
from the ground up, we want to expand the use of broadband in our 
country for every community. Whether they are poor, whether they are 
rural, whether they are in a city, whether they are middle class 
individuals, we don't want to weigh the Internet down with taxation of 
average people in this country. It would really be unfair, and I think 
it would smother the Internet as we know it.
  Mr. GOODLATTE. Mr. Speaker, I have only one speaker remaining. I 
believe I have the right to close, so if the gentlewoman has additional 
speakers, I reserve the balance of my time.
  Ms. JACKSON LEE. Mr. Speaker, I am delighted to yield 1\1/2\ minutes 
to the distinguished gentleman from Tennessee (Mr. Cohen), who is the 
ranking member on the Judiciary Committee's Regulatory Reform, 
Commercial and Antitrust Law Subcommittee.
  Mr. COHEN. Mr. Speaker, I thank the gentlewoman for providing the 
time, and I want to thank her for her good work.
  I also want to thank the chairman of the committee for bringing this 
bipartisan bill, which is bipartisan. I signed on to this bill, I 
guess, with Representative Eshoo and maybe Representative Goodlatte, 
back in 2007 because it is my belief that the Internet is a necessity, 
and it is a necessity in minority communities who need that outreach to 
information, whether it is educational or commercial, to reach out and 
be a part of the society. Without the Internet, you can't do that.
  Now, the gentlewoman from Texas and my State, Tennessee, neither have 
an income tax, and therefore, our governments rely on taxes that tend 
to be regressive. I think Tennessee is the most regressive State in the 
country on its taxes, very high sales tax.
  And the local governments will reach out for anything they can find 
to tax to make up for the fact that our State doesn't have a 
progressive tax base.

                              {time}  1700

  I want to protect my constituents against regressive taxes at all 
levels and protect them against taxes that might limit their 
potentiality of getting access to the World Wide Web and information 
they need.
  So I am proud to be a sponsor of this, to work with the gentleman 
from Ohio (Mr. Chabot), with whom I have worked on so many bills 
together, trying to get the Delta Queen going back down the river and 
all these other things, and the gentleman from Virginia (Mr. 
Goodlatte), the chairman on the Judiciary Committee. I thank them for 
their work and hope they will all vote for this in a bipartisan 
fashion. I hope the Senate will, as they did on the USA FREEDOM Act, 
follow the lead of the House and show that the House leads.
  Mr. GOODLATTE. Mr. Speaker, I reserve the balance of my time.
  Ms. JACKSON LEE. Mr. Speaker, I yield myself the balance of my time.
  First of all, let me again say that in the Judiciary Committee, we 
have consistently worked together on issues dealing with the Internet, 
continue to work together on issues dealing with innovation, so I would 
hope as this bill makes its way to the Senate we will find an 
opportunity to work together again.
  But I want to make mention of the fact that in addition to Texas, 
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 services, such as educating our 
children, maintaining needed transportation infrastructure, and 
providing essential public health and safety services, or shift the tax 
burden onto other taxpayers to increase property income and sales 
taxes.
  Now let me be very clear: I am not interested in taxing the Internet. 
I am

[[Page H3955]]

interested in the process that most States are utilizing. It is the 
purchase of items that juxtapose against those who have bricks and 
mortar, and particularly small businesses.
  Meanwhile, the Center on Budget and Policy Priorities has estimated 
that the permanent moratorium will deny the non-grandfathered States of 
almost $6.5 billion in potential State and local sales tax revenue--
sales tax, not access to the Internet.
  H.R. 235 will burden taxpayers while excluding an entire industry 
from paying their fair share of taxes. I want this industry to grow, 
and, again, I do not want taxing on access. You can be on the Internet 
from morning until the early sunrise again, the next day. But for those 
States who have worked and worked with our committee, trying to find a 
pathway forward, I would like to see us find a compromise.
  Finally, this bill ignores the fundamental nature of the Internet. 
The original moratorium was intentionally made temporary to ensure 
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, such as acts. The act was 
intended as a temporary measure to assist and nurture the fledgling 
Internet that back in 1998 was still in its commercial infancy, yet 
this bill ignores the significantly changed environment of today's 
Internet.
  The bill's supporters continue to believe that the Internet still is 
in need of extraordinary protection in the form of exemptions from 
State taxation, but the Internet of 2015 is drastically different from 
1998. It is standing on its own two legs. It is not a toddler. It is a 
full-grown adult.
  Permanently extending the tax moratorium severely limits Congress' 
ability to revisit and make any necessary adjustments, though I hope we 
will.
  Simply put, the permanent moratorium is unwise, and I urge my 
colleagues to consider the problems of H.R. 235. H.R. 235, I think, 
should be addressing these issues dealing with the many who have 
opposed it.
  Let me, as I close, mention that the National Governors Association 
recently introduced the following statement: ``The National Governors 
Association is disappointed that the House Judiciary Committee is 
moving to make the Internet access tax moratorium permanent.''

              NGA Statement Regarding Internet Access Tax

                 [For Immediate Release, June 17, 2014]

       Washington--The National Governors Association today 
     released the following statement regarding the Internet 
     access tax moratorium:
       ``The National Governors Association (NGA) is disappointed 
     that the House Judiciary Committee is moving to make the 
     Internet access tax moratorium permanent.
       ``Federal prohibitions on state taxing authority are 
     contrary to federalism and the sovereign authority of states 
     to structure and manage their own fiscal systems.
       ``NGA encourages the committee instead to act to address 
     the disparity between Main Street retailers and online 
     sellers regarding the collection of state and local sales 
     taxes. Leveling the playing field for all retailers is a 
     priority for governors, consistent with federalism and the 
     best opportunity for states, Congress and the business 
     community to work together.''

  Ms. JACKSON LEE. I would like to make note that I came from local 
government, so I have a letter signed by representatives of the 
National Association of Counties, National League of Cities, U.S. 
Conference of Mayors, International City/County Management Association, 
Government Finance Officers Association, and the National Association 
of Telecommunications Officers and Advisors. In part, they simply say 
that they are writing on behalf of local governments: ``We urge you to 
oppose the legislation. . . . The most recent estimates provided by the 
Congressional Budget Office,'' they write, ``indicate that, if enacted, 
H.R. 3086 would cost State and local governments hundreds of millions 
of dollars in lost revenues.''

         National Association of Counties, National League of 
           Cities, U.S. Conference of Mayors, International City/
           County Management Association, Government Finance 
           Officers Association, National Association of 
           Telecommunications Officers and Advisors
                                                     July 8, 2014.
       Dear Representative: On behalf of local governments across 
     the nation, our organizations write to express our continuing 
     opposition to H.R. 3086, the Permanent Internet Tax Freedom 
     Act. We urge you to oppose the legislation when it is 
     considered on the House floor.
       The most recent estimates provided by the Congressional 
     Budget Office indicate that, if enacted, H.R. 3086 would cost 
     state and local governments hundreds of millions of dollars 
     in lost revenues. These are revenues that local governments 
     rely upon to fund essential services in their communities, 
     including well-trained firefighters and police officers; 
     schools, parks, community centers and libraries to support 
     youth; retirement security for dedicated career employees; 
     and continued investments to fix aging infrastructure.
       In addition, now that Internet access is ubiquitous and its 
     use generates scores of billions of dollars in revenue 
     annually, it no longer justifies protection from state and 
     local taxation. When the law was first enacted in 1998, the 
     Internet access and commerce industries were in their infancy 
     and only beginning to be significantly available to 
     households. The intent of the moratorium was to give the 
     then-nascent Internet industry time to grow and become 
     established. However, even at that time, Congress recognized 
     that the ban should not be permanent.
       Finally, as the telecommunications and cable service 
     industries transition to broadband, the scope of what the 
     ITFA immunizes from state and local taxation is rapidly 
     expanding. Over time, the ITFA would arbitrarily exempt this 
     fast growing, prosperous sector of the economy from taxation, 
     and unfairly shift the burden of supporting essential local 
     services onto other businesses and residents in a community.
       For all of these reasons, we urge you to vote against the 
     Permanent Internet Tax Freedom Act, H.R. 3086.
           Sincerely,
       Matthew D. Chase, Executive Director, National Association 
     of Counties;
       Clarence E. Anthony, Executive Director, National League of 
     Cities;
       Tom Cochran, Executive Director, U.S. Conference of Mayors;
       Robert J. O'Neill, Executive Director, International City/
     County Management Association;
       Jeffrey L. Esser, Executive Director, Government Finance 
     Officers Association;
       Stephen Traylor, Executive Director, National Association 
     of Telecommunications Officers and Advisors.

  Ms. JACKSON LEE. I want to be very clear: I am here, as many Members 
are, to extend our hand of friendship for the protection of the 
Internet and the question of sales on the Internet. I hope we will be 
able to do that. I ask my colleagues to consider the failings of the 
present bill and to, in its present form, oppose it.

       To Members of the Texas Congressional Delegation: As some 
     of you already know, this bill would make permanent the 
     Internet Tax Freedom Act and, importantly for Texas, would 
     repeal the existing grandfather clause that has been in place 
     since the original passage of the Act in 1998 that has 
     allowed Texas to impose sales and use taxes on Internet 
     access services at the state and local level.
       The Texas legislature just finished its regular session on 
     June 1, and while it decided to cut property and franchise 
     taxes, it chose to maintain the sales and use tax imposed on 
     these services and anticipates receiving that revenue during 
     the next two year budget cycle.
       The estimated revenue loss to the state and local 
     jurisdictions if the grandfather is not extended is as 
     follows:
       State: $280 million
       City: 51
       Transit: 18
       County: 5
       Special districts: 4
       Total: $358 million (per year)
       Please feel free to get in touch with me if you need input 
     from the Comptroller's office on this or any other state/
     local tax bills that come before the House.
           Thanks,
     Nancy L. Prosser,
       Special Counsel to the Deputy Comptroller, Texas 
     Comptroller of Public Accounts.
                                  ____

                                                     June 8, 2015.

 Labor Unions Oppose H.R. 235 (PITFA) Ban on State & Local Government 
                       Taxes on Internet Access.

       Dear Representative: We, the undersigned labor unions, 
     oppose a federal ban on the authority of state and local 
     governments to impose taxes on internet access. We 
     strenuously oppose the ``Permanent Internet Tax Freedom Act'' 
     (H.R. 235), which would ban these internet access taxes 
     permanently. This type of federal tax preemption is typically 
     unwarranted because it restricts state and local government 
     taxing authority unnecessarily, narrows the tax base, and 
     often leads to harmful unintended consequences. In this case, 
     the internet's huge economic value, its vast and expanding 
     importance to daily life, and the vague statutory definition 
     of ``internet access'' makes this particular carve out 
     especially troubling and likely to cause fiscal problems. By 
     restricting state

[[Page H3956]]

     and local taxing authority, this bill reduces the ability of 
     state and local governments to raise funds to invest in 
     needed infrastructure, education, health care, job training, 
     and other vital public services.
       While a short-term ban is less troubling than a permanent 
     ban, any ban remains problematic and harmful to state and 
     local government finances. Ideally, the existing temporary 
     ban should be allowed to expire as scheduled on September 30, 
     2015. As new internet-based technology and related 
     applications increasingly affect our daily lives and rapidly 
     transform our economy, we are extremely wary of a ban that is 
     permanent. Congress should be extremely cautious before 
     supporting a permanent tax exemption for internet access. 
     Moreover, it would set harmful, inappropriate, and costly 
     precedents that could spillover into other sectors of our 
     economy.
       Years ago, some opined the internet needed time to grow 
     because it was weak, tiny, or immature. In contrast, today's 
     internet is an enormously powerful driver of our economy, a 
     central part of our daily lives, and an enormously valuable 
     well developed industry. As the internet continues providing 
     new transformative services to businesses and consumers, its 
     importance to America's economy grows. Prohibiting these 
     taxes would unfairly exempt this economic sector from 
     contributing to our common well being and communities. In 
     addition, this unneeded and undeserved carve out would 
     unfairly shift its share of taxes to other services, sectors, 
     and stakeholders. There is no reason to exempt internet 
     providers and users from state and local government taxes.
       Our labor unions urge you to oppose the ``Permanent 
     Internet Tax Freedom Act'' (H.R. 235) and any similar ban on 
     state and local government taxes on internet access.
         American Federation of Labor and Congress of Industrial 
           Organizations (AFL-CIO); American Federation of State, 
           County and Municipal Employees (AFSCME); American 
           Federation of Teachers (AFT); Amalgamated Transit Union 
           (ATU); Communications Workers of America (CWA); 
           Department for Professional Employees, AFL-CIO (DPE); 
           International Association of Fire Fighters (IAFF); 
           International Federation of Professional and Technical 
           Engineers (IFPTE); International Union of Police 
           Associations (IUPA); National Education Association 
           (NEA); Service Employees International Union (SEIU); 
           International Union, United Automobile, Aerospace & 
           Agricultural Implement Workers of America (UAW).

  Ms. JACKSON LEE. With that, I yield back the balance of my time.
  Mr. GOODLATTE. Mr. Speaker, I yield myself the balance of my time.
  The last thing the American people need is another tax bill at their 
door come October. If the ban lapses, State telecommunications taxes 
could take effect, and those rates are already too high. Basic 
economics teaches that, as price rises, demand falls.
  Former White House Chief Economist Austan Goolsbee estimated that a 
tax that increased the price of Internet access by 1 percent would 
reduce demand for Internet access by 2.75 percent. This bill ensures 
that access to the Internet--this unparalleled engine of social 
mobility--remains tax-free. That is why this bill is so overwhelmingly 
popular. Nevertheless, I believe it is proper to counter the criticisms 
of the small pockets of resistance that remain.
  The opponents' chief argument is that the bill would cost the States 
$6.5 billion annually. This argument confuses an out-of-pocket loss 
with prevention of a gain. States cannot currently tax Internet access, 
so they will suffer no actual revenue loss. The only out-of-pocket loss 
would be to taxpayers in 44 States who will owe an additional $6.5 
billion annually should it expire. They will have to pay taxes that 
they don't have to pay now.
  Nevertheless, some of our colleagues would prefer to extend the 
moratorium temporarily rather than permanently. That is simply 
inefficient. The moratorium has been periodically renewed by enormous 
bipartisan margins in both Houses for 16 years. No serious expectations 
are being upset by codifying what everyone knows is the case: the 
moratorium is not going away.
  The grandfathers will be eliminated, but that only affects six States 
that have had more than enough time to transition to other sources of 
revenue, which was the original intent of the grandfather clauses. If 
those States still need more time, I am open to working with the Senate 
on a final phaseout.
  Opponents also argue that PITFA creates unequal treatment of similar 
services. The example given is landline phone service, which is 
taxable, versus Skype which, under PITFA, is accessible tax-free. But 
this happens because Skype's basic service is free; Skype's paid 
service is taxable. Indeed, PITFA specifically provides that Internet 
phone service is taxable.
  More importantly, this neutrality argument conflates a service with 
the access to it.
  The toll road on the way to the shopping mall is not the same as the 
sales tax paid at the mall. PITFA is neutral because Skype's paid 
service remains taxable, just like landline service.
  True, there is no tax on Skype's basic service because it is free, 
but that is the function of Skype's revenue model, not a different tax 
treatment of the same service.
  This legislation has enormous bipartisan support precisely because 
Members on both sides of the aisle already understand the flaws in 
these objections. I catalog them here merely to complete the record.
  This is a great issue for the Congress to move forward on in a 
bipartisan fashion that will help to create jobs and economic growth 
and foster continued greater access to the unparalleled opportunities 
that Internet access provides. I urge my colleagues to support this 
legislation.
  I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Virginia (Mr. Goodlatte) that the House suspend the 
rules and pass the bill, H.R. 235.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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