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“INTRODUCTION OF THE INTERNET TAX SIMPLIFICATION ACT OF 2000” mentioning the U.S. Dept. of Commerce was published in the Extensions of Remarks section on pages E741-E742 on May 17, 2000.
The publication is reproduced in full below:
INTRODUCTION OF THE INTERNET TAX SIMPLIFICATION ACT OF 2000
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HON. JOHN CONYERS, JR.
of michigan
in the house of representatives
Tuesday, May 16, 2000
Mr. CONYERS. Mr. Speaker, I am pleased to join with Chairman Hyde, Administrative and Commercial Law Subcommittee Chairman Gekas and Ranking Member Nadler in introducing the ``Internet Tax Simplification Act of 2000.'' We are introducing this legislation at the request of a group of Advisory Commission on Commerce Members led by Utah Governor Micahel Leavitt. Several weeks ago we introduced H.R. 4267 at the request of a group of Advisory Commissioners led by Virginia Governor James Gilmore.
This bill would amend the Internet Tax Freedom Act to extend by five years the moratorium on State and local taxes on Internet access and extend for two years the moratorium on multiple and discriminatory taxes on electronic commerce. It encourages the States to work cooperatively with the National Conference of Commissioners on Uniform State Laws to develop a simplified and uniform sales and use tax. The legislation also authorizes an interstate sales and use tax compact providing for a uniform sales and use tax system, authorizes the States to simplify their use tax rates, and authorizes those States which enter into the compact to collect use taxes on remote sales. Finally, the bill encourages States to work cooperatively with the telecommunications industry and other relevant groups to reduce the complexity of complying with State and local telecommunications taxes.
We will be holding hearings on this bill and H.R. 4460 tomorrow, and it is my hope and expectation that we can quickly move to markup and legislative action. There are few economic issues before our committee which are more important than simplifying the sales tax and failure to act on this issue will harm all interested parties--retailers (both electronic and otherwise), State and local governments and consumers.
The problems with the present system are several fold. First, the complexity of the system is daunting. There are presently over 6,500 taxing jurisdictions in the United States, when all State, county and municipal authorities are included. Needless to say, any retailer with a physical nexus to a State (and therefore subject to state tax jurisdiction under the 1992 Quill decision) is subject to a myriad of confusing and complex State and Local taxes.
Second, the current disparate tax treatment as between traditional
``bricks and mortar'' retailers (which are subject to state tax) and remote sellers (which are not) has the potential to cause continuing economic distortion. As the New York Times editorial board has written,
``[a]n elementary principle of taxation says that taxes should distort purchasing decisions as little as possible. It is not the role of a tax code to determine whether customers shop in stores, online, or by mail order.
With regard to the impact on State and local governments, maintenance of the current system carries with it the potential for significant financial loss. Sales taxes constitute the most important State and local revenue source, far greater than income and property taxes, with the Census Bureau estimating the 47.9% of State and local revenues come from sales taxes. With projections of online sales estimated to exceed $300 billion annually by 2002, State and local governments could lose as much as $20 billion in uncollected sales taxes under the present system.
Finally, the present system could significantly harm individual consumers. This could obviously be the case if individuals faced increasing income and property taxes or declining services as a result of the loss of sales taxes from remote sales. A separate concern is the adverse impact of the present bifurcated system on poor and minorities. According to a recent Commerce Department study, wealthy individuals are 20 times more likely to have Internet access, and Hispanics and African Americans are far less likely to have such access. This means that poor and minorities who only buy locally face a greater sales tax burden than their counterparts. Maintaining the present system will only serve to perpetuate that disparity.
Time is of the essence, and I look forward to the Judiciary Committee and the full House taking up this important issue.
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