Passenger Rail Investment and Improvement Act of 2007

Floor Speech

PASSENGER RAIL INVESTMENT AND IMPROVEMENT ACT OF 2007 -- (Senate - October 25, 2007)

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INTERNET TAX MORATORIUM

Mr. WYDEN. Mr. President, a large number of Senators of both parties are working in good faith to try to address this question of the Internet tax moratorium. I simply want to take a few minutes this afternoon to bring to light a new development in the discussion that I hope all Senators will keep in mind.

The Congressional Research Service--our independent group that analyzes policy matters--informed me this morning that because the other body, the House of Representatives, changed the definitions in the current Internet tax moratorium, it would be possible, under the language that was adopted by the other body, to tax various Web services, such as e-mail. I know no Member of the Senate who wishes to see that happen.

Mr. President, I ask unanimous consent at this time to have printed in the Record the memorandum the lawyers at the Congressional Research Service sent me about the Internet tax moratorium.

There being no objection, the material was ordered to be printed in the Record, as follows:

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Mr. WYDEN. Mr. President, in reference to the language that came from the other body, which I am concerned about, the Congressional Research Service said:

..... if an Internet user utilized one provider to connect to the internet and another paid provider of, for instance, email services, the connection provider would be covered by the moratorium but not the paid email provider. Under the current moratorium, each would be covered.

What that means is, if you are an American, for example, who gets your Internet access from Verizon, under the House language that would continue to be protected. But if you get your e-mail from, say, another provider--perhaps EarthLink or Google or Yahoo--under the language that was passed by the other body, that could be taxed, according to the Congressional Research Service. I do not think any Member of this body wants that to happen.

Also, reading further from the Congressional Research Service memorandum, they say it would also allow the taxation ``of many more products and services than the existing exemption under the current moratorium.''

The reason I wanted to bring this to light this afternoon is I know various proposals will be voted on next week. I will not be able to be here next week because of some very exciting news in our household, but I do want all Senators to be aware of what the Congressional Research Service has said. We have had the Internet tax moratorium now for a decade. I wrote the original law with now-SEC Chairman Christopher Cox, and it has worked well. The Internet has thrived and prospered. It is, of course, a technology treasure trove that we use for business, health opportunities, education, and a vast array of services.

We were told when the original proposal came out that it would, for example, be harmful to States, that they would lose revenue. That hasn't been the case. The States have gained in revenue for something like 16 straight quarters.

We heard it would be harmful to Main Street, to small businesses. That hasn't been the case either. In fact, most small businesses now look to something called ``Bricks and Clicks'' where they have a physical presence and an Internet presence.

We were also told it would be harmful to malls, as if our original proposal would empty the malls. That hasn't happened either. The moratorium has worked well, and I wish to make it permanent.

Frankly, the thing I am most concerned about this afternoon is the change in these definitions. The change in the definitions from the original moratorium, as outlined in this memo by the Congressional Research Service, ought to trouble every Senator as this body considers the various alternatives that will be presented this upcoming week. I think the current definitions have served us well. They have allowed the net to thrive and prosper and they haven't caused damage to the States or to small businesses on Main Street or to the shopping malls. I see no reason for changing those current definitions.

I hope Senators will reflect on this language. Certainly it is going to be hard to explain to folks at home making changes that would open up the prospect, as the Congressional Research Service has said, for taxing e-mail. But an awful lot of Americans get their Internet access from one provider and they get their e-mail from somebody else. Given that, I wanted to make sure the Senate was aware of this, and that as the Senate considers this legislation, the issue of whether the moratorium should be made permanent is important, but even more important is getting this question of the definitions of what is covered in the moratorium right, because I don't believe any Senator wants to see happen what the Congressional Research Service has indicated this morning could happen under the bill that was passed by the other body.

Mr. President, I yield the floor.

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