National Defense Authorization Act for Fiscal Year 2016

Floor Speech

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Mr. WYDEN. Mr. President, I wish to address events from the last several days, both of which have the potential to reshape the way the American people use the Internet for communication and commerce.

The first came last week when the other body voted on a bipartisan basis to permanently extend the Internet Tax Freedom Act. I wrote that law, which is commonly known as ITFA, along with former Congressman Chris Cox, in 1998. The Internet Tax Freedom Act is one of the most popular tax policies in the country, and I believe it is past time for the Senate to follow the House's lead and send a permanent extension to the President's desk.

The second important matter came up yesterday, when a bill called the Remote Transaction Parity Act was introduced in the other body. What this proposal offers is a brand-new national sales tax managed by a privatizing, tax-collecting bureaucracy that not a single voter in America has approved. I see this online tax hike as a major threat to the Internet that has flourished under the bipartisan Internet Tax Freedom Act.

I want to address both of these issues briefly today, beginning with the importance of the permanent Internet Tax Freedom law. Ever since Congress passed it, it has been an essential tool in helping the Internet grow unencumbered by discriminatory taxation. It prohibits the kind of discriminatory taxes that some in Congress are too fond of; the kind of taxes that I believe will hurt innovation and punish the millions of citizens and businesses that use and depend on the Internet each day.

The Internet Tax Freedom Act has saved families in Oregon and across America hundreds of dollars a year. That is because without the law, access to the Internet would likely be subject to the same level of punishing taxation that is currently imposed on cigarettes and alcohol. We already see that with wireless services not protected by the Internet Tax Freedom Act, and this area does involve onerous taxes. Inflicting those taxes on Internet access is a burden the Senate absolutely should not heap on the American people.

Unfortunately, Congress has become too reliant on stop-and-go governing, so the Internet Tax Freedom Act has been extended several times on a temporary basis. Some Members in the Senate and House want to tie the Internet Tax Freedom Act, which saves people money, to a controversial proposal that will drive up the cost of using the Internet the way Americans do today, and that is where the second issue I would like to address comes in.

The House proposal, called the Remote Transaction Parity Act, has taken a variety of different forms over the years. An older version that died in Congress was called the Marketplace Fairness Act. The idea used to be to turn every business that operated online--big or small--into a tax collector for the thousands of tax jurisdictions across the country. With every new version of this online tax hike bill, we would see a new set of problems crop up. Now the proposal has become even bigger and more unwieldy. The new proposal coming from the other body would build an enormous, privatized, tax-collecting bureaucracy, and that new bureaucracy would take a big cut of every online sale before a single dime of sales tax gets distributed back to the States or local communities.

I will take a minute and talk about how this hurts my home State. My home State has no sales tax, but under this proposal, this murky tax-collecting middle man is going to get involved anytime somebody in Virginia, Michigan or California makes a purchase online from an Oregon company. This proposal would unfairly siphon money away from Oregon. Yet Oregonians will get nothing in return from these newly empowered national tax collectors. In effect, there would be a new national sales tax overseen by a privatized middle man, and that raises serious questions about whether taxpayer dollars should be going to a for-profit tax collector. It could put sensitive data about businesses and their customers into the crosshairs of hackers and criminals. That would be just about the biggest Federal intrusion into State commerce in a long time.

The online tax bill also creates a major new hurdle for small businesses that want to find consumers online. That would be a particularly harsh blow to companies in rural America, rural Oregon, and elsewhere. It would suddenly be a whole lot harder to compete with a retailer in a crowded city when the cost of doing business online takes a jump.

Finally, it takes a fundamentally tilted playing field against U.S. employers, and, in effect, makes those employers pay a national sales tax. It creates a fundamentally tilted playing field. The Internet spans national borders, but sellers from China, Canada, and Europe will not and cannot be subject to this tax, and under this approach, they will profit at the expense of the American consumer and American worker.

In my view, we have at hand now two radically different pieces of legislation.

The first has been on the books now for well over a decade and has been hugely valuable in terms of innovation, choice, and consumers. That is the permanent Internet Tax Freedom Act, in effect taking what we have had for over a decade and making it permanent. With the permanent approach, we lower costs for consumers and protect the Internet as a bulwark for free speech and commerce, promoting American companies and American ideals. So that is approach No. 1--making permanent legislation that has worked since 1998.

The second approach is the Remote Transaction Parity Act, which would raise costs for Americans, hurt small and rural businesses, and punish States such as Oregon that have kept taxes low.

In my view, it would be legislative malpractice to tie these two approaches together. The path forward for the U.S. Senate should be very clear; that is, to take the permanent Internet Tax Freedom Act that has sailed through the House and, with the ball in our court, pass it here. I believe that a permanent law protecting Internet access from taxation is long overdue, and the proposal for an online tax hike should not get in the way.

So I urge my colleagues to join me now in working for a bipartisan, permanent Internet Tax Freedom Act, unencumbered by the kind of approach which has been introduced in the House and which creates a national sales tax. Let's reject that and move to pass a permanent Internet Tax Freedom Act as soon as possible.

With that, I yield the floor.

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