Making Emergency Supplemental Appropriations for the Fiscal Year Ending September 30, 2014

Floor Speech

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Mr. CRUZ. Madam President, I rise today to speak in favor of a principle that should unite us all--the principle of Internet tax freedom. One of the great blessings of our modern economy is the productivity, the entrepreneurial spirit the Internet has created, the ability of anyone with an idea to jump online, to communicate, to create a business, to reach the world.

One of the reasons the Internet has been such an entrepreneurial haven is that Congress has wisely decided to keep it free from taxation, not to subject the Internet to taxation. Well, unfortunately, we are at the precipice of that long tradition changing. If the Senate refuses to take action, the Internet will be taxed this November.

For a decade and a half, Americans have been able to use the Internet all across the country free of taxes, and Republicans and Democrats have agreed on this basic principle. There is not a lot of agreement in this town on much of anything, including what time of day it is. Yet on Internet taxes--in 1998 President Bill Clinton signed the law banning Internet taxes. Congress has extended it three times--in 2001, 2004, and 2007.

Today there is a bipartisan coalition on the record to keep the Internet tax free. The senior Democratic Senator from New York and the senior Democratic Senator from Wisconsin both publicly support keeping the Internet free from taxation. Conservatives in the Senate, such as the junior Republican Senator from Utah, the junior Republican Senator from Florida, and the senior Republican Senator from Louisiana, agree as well. There are 52 cosponsors in the Senate on the bill by the senior Democratic Senator from Oregon, who is here with us, to keep the ban on Internet taxes.

This should be easy. This should be a matter of easy agreement because rarely is there an issue that has united parties so broadly as keeping the Internet tax free. Yet, unfortunately, this session of the Senate is also seeing politicians who want to extend sales taxes to the Internet, who want to subject small businesses, mom-and-pops, businesses started by people just wanting to build a business, to crushing sales taxes from 9,600 jurisdictions nationwide.

I am passionate in saying we should fight against taxing the Internet, and we should not open the door to Internet taxes. The average tax rate right now on telephone services and other voice services is 17 percent. The average tax rate on cable and video services is 12 percent. If this Senate does not act, you are going to see consumers in States such as Montana and South Dakota and Massachusetts, on November 1, begin paying taxes for having basic Internet service. Those State laws are already in effect and will go into effect on Internet services.

I would note for the Senators who represent Montana and South Dakota and Massachusetts that come November 2--which, I might note, is right before an election day--anyone in those States should be prepared to answer questions from their citizens on why the Senate stood by and let taxes be raised on their citizens just for having an Internet connection.

Americans are struggling to pay their bills in the Obama economy. Life has gotten harder and harder for working men and women in this country. Life has gotten harder and harder for the most vulnerable among us--for young people, for Hispanics, for African Americans, for single moms. The last thing we should be doing is playing politics and jacking up taxes on people accessing the Internet.

I would note that the U.S. House of Representatives has already acted. On July 15 the House voice voted H.R. 3086, the Permanent Internet Tax Freedom Act. It had 228 cosponsors. My friend Senator Wyden has introduced the Senate version of it, S. 1431. It has 52 cosponsors, including 18 Democrats. This ought to be something where we stop playing games and say let's all come together and agree: Do not tax the Internet. Yet, unfortunately, we are not in that situation. Unfortunately, we are seeing an objection to the House-passed bill, to a bill that has the support of a majority of Senators. Why? The only reason is because there is hope that by holding the Internet Tax Freedom Act hostage, it can become a vehicle to impose sales taxes on transactions over the Internet, to impose sales taxes on every small business.

I would note one of many wonderful things. It used to be that if you were a single mom and you wanted to start a small business, you wanted to make something, you wanted to sit down and make something, whether it was a computer program or sweaters for dogs or anything else, it used to be that to create a small business took time, it took money, it took infrastructure. You had to have in place warehouses and distributors. You had to have a mechanism to sell your products.

Do you know the great thing about the Internet? If you are a single mom and you have an idea to start a business, you can put up a Web site, and with FedEx you can deliver anywhere in the country.

Anyone all over the country can do it, if you have an idea. Let me tell you, my cousin had an idea to sell scarves. She thought she had some good design ideas. My cousin Beatriz worked with her best friend to design scarves.

If you put up a Web site, suddenly you can sell all over the country. Well, what would the Internet sales tax do? It would say that when you start your business, if you start getting customers, you have to collect taxes in 9,600 jurisdictions all over the country. If the school district across the country changes its tax rate from 4.5 percent to 4.75 percent, you have to know that and collect that differential tax. This does not make any sense.

We should stand together united in protecting the entrepreneurial haven that is the Internet. We should stand united against taxing the Internet.

I would note that my friend the Senator from New Hampshire has a long and passionate record on this issue as well, and I am happy to yield to her for a question on this important topic.

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Mr. CRUZ. I thank my friend from New Hampshire. I would note that she is exactly right. We have the ability to do something productive, something that does not happen in Washington an awful lot. We have the ability right now to come together in a bipartisan way for the Senate to demonstrate that it can function productively to address the economic challenges in this country the way the House has.

The House is doing its job. The House has passed this bill. It is the Senate that has refused to take it up for a vote. It is the Senate that is refusing to do its job. We have an ability not just to protect the Internet from taxes but also to honor our word. How many Members of this body, on both sides of the aisle, go to the tech community and say: We want to stand with tech. We want to stand for the entrepreneurial vibrancy of tech?

Yet I would note anyone objecting to this right now is setting the stage for a massive Internet tax. How many of us make the case to young people that we are standing for the future for young people, we are standing for greater opportunity, we are standing for the chance to help young people achieve the American dream? You know, young Americans, 18 to 29 years old, oppose an Internet sales tax by 73 percent to 27 percent.

Yet if this body refuses to stand together in a bipartisan manner, we are telling young people: What we say on the campaign trial is not backed by action on the floor.

We ought to come together on what should be an uncontroversial bill, a bill that has passed three times before, a bill that was signed by President Bill Clinton, a bill that in this body is introduced by a senior Democrat. We ought to come together in a bipartisan way to say: We stand in unison protecting Internet tax freedom.

Accordingly, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 3086, which was received from the House. I ask unanimous consent that the bill be read a third time and passed, and the motion to reconsider be laid upon the table.

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Mr. CRUZ. Madam President, I wish to briefly explain to people watching the back-and-forth that just occurred what is going on here, because it is easy to not understand everything that is happening. There are three things going on here:

No. 1, what we are unfortunately seeing is the Senate holding one bill hostage in order to try to force through another unpopular bill.

There are two bills concerning the Internet. The first is the Internet Tax Freedom Act. That has been in place for over a decade. It has had bipartisan support. It has been championed by the Senator from Oregon who has been an outspoken and passionate advocate of making sure that when you and I go and sign up for the Internet, we don't face taxes for getting Internet service, and it has worked very well. That law has always been an area of bipartisan agreement.

But there is a second law that has been proposed in this body but not passed. The second law is the Internet sales tax, what its proponents call the Marketplace Fairness Act. The Internet sales tax is not focused on taxing someone just for signing up to the Internet. Rather, the people being punished by the Internet sales tax are all the small businesses trying to sell their wares online, and there are a number of Senators who very much want to impose taxes on those small businesses in 9,600 jurisdictions nationwide.

What is happening here, right now, is even though no one has serious objection to the Internet Tax Freedom Act, we are, unfortunately, seeing our colleagues from the Democratic side of the aisle hold that bill hostage in an effort to try to force through the Internet sales tax.

I would note the reason my friend from New Hampshire had no choice but to object to the 2-month proposal is the 2-month time period was not picked out of a hat. Two months means the Internet Tax Freedom Act would expire during a lameduck session. And why is that? Because in a lameduck session there are a bunch of Members who have been defeated, who aren't going to face voters ever again. A lameduck session is the session most likely to raise taxes.

So why is it there is an effort to extend this just 2 months? So when the Internet Tax Freedom Act expires in the lameduck, the Members of this body who lost their election and are immune from democratic accountability will all come together and say: OK, now let's pass the Internet sales tax. We shouldn't be holding the Internet hostage to the rapacious desire of tax collectors.

A second point I want to make about what is going on here--this is about discriminatory taxes, not about federalism. My friend, the Senator from North Dakota, was a learned attorney general who talked about the 10th Amendment and federalism. I welcome seeing friends of mine on the Democratic side of the aisle embrace the 10th Amendment. I look forward and hope aspirationally that friends on the Democratic side of the aisle will embrace the 10th Amendment on other issues.

I would note, however, that the constitutional history we were told was a little bit off, because if we look at the history of our country, originally we had the Articles of Confederation. The Articles of Confederation allowed States to enact discriminatory taxes against each other, and it led to chaos. It didn't work. One of the reasons our Constitution was adopted was to prevent discriminatory taxes, one State picking on another State.

So when Congress was given the authority to regulate interstate commerce, it is precisely to prevent a little mom and pop selling online from being forced by 9,600 jurisdictions nationwide to collect all of those taxes. If someone is living and working in the State of Texas, they shouldn't have to collect taxes for New York or California--for politicians they don't get to vote for. For politicians they don't get any input on, they shouldn't be forced to collect their taxes.

Indeed, for the approach of Members of this body who want to pass the Internet sales tax, recall President Reagan's famous admonition:

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Why don't we stop it at the outset? The Internet is moving. It is generating entrepreneurial steam throughout this country. We haven't been taxing it. Let's not start now.

The third and final point I will make about what this exchange is about is, more than anything, this exchange is about crony capitalism.

I would note the Presiding Officer today has been quite passionate discussing the corruption in Washington that favors big business. What we just saw on this Senate floor illustrates that as powerfully as anything that has happened this year. Because what is the Internet sales tax all about? It is about a coalition of big businesses coming together, both big bricks-and-mortar retailers and big online retailers coming to their elected officials, saying: You know what. We don't like competition. These little guys, these little upstarts, these single moms who start businesses and compete with us, we don't like that. So let's go to our friends in Washington--our friends, mind you, whom we hold campaign fundraisers for, whose campaigns we contribute to--and let's get the Congress to come together and hammer every small online business we can.

That is what we are seeing. This is crony capitalism. This is a law designed to benefit big companies and hurt small startups.

The beauty of our country is that anybody can come to this country with nothing but a hope and a dream and a vision and achieve anything. It is because the entrepreneurial vibrancy of this country gives the little guy a chance. Yet I am sorry to say Washington more and more behaves as though it is for sale to the highest bidder.

Right now, today, the top 1 percent in our country earns a higher share of our income than any year since 1928. We ought to come together in a bipartisan way and say: Stop being the handmaidens of big business. Stop using government to make it harder for the little guy, for young people, for single moms, for Hispanic and African-American entrepreneurs. Stop making it harder for them to achieve the American dream. Stop pulling up the ladder so the big companies can say: We have got ours; nobody else gets theirs.

When big business comes to Washington and says: We want government's help stifling small business, both parties should stand together and say: Sorry. That is not what the Congress is for. We work for the American people. But, I am sorry to say, what we just saw was a powerful demonstration that this Senate right now is more interested in preserving crony capitalism than it is in protecting mom-and-pops, in protecting opportunity, in protecting Internet tax freedom.

But the great thing about our system is at the end of the day, the American people don't work for the 100 Members of this body. It is the other way around: All 100 of us work for the American people. And I will tell you, the American people are getting fed up. They are getting fed up with Members of both parties who spend more time giving in to the corruption of Washington and entrenching power than they do removing barriers to people achieving the American dream.

I am hopeful and confident that the voters are waking up, are standing up,

and will hold every one of us accountable. Democrats and Republicans, every one of us, will be held accountable: Have you fought to make it easier to achieve the American dream or have you simply preserved the corrupt crony capitalism of Washington?

I hope we can together aspire to our better angels. I hope we can come together and keep and preserve in a bipartisan manner Internet tax freedom.

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