 Fourth Meeting:
Transcript of March 20
ADVISORY COMMISSION ON ELECTRONIC COMMERCE
FOURTH MEETING
Dallas, Texas
Monday, March 20, 2000
2
1 MEMBERS:
2 THE HONORABLE JAMES S. GILMORE, III CHAIRMAN
Governor, Commonwealth of Virginia
3
DEAN F. ANDAL
4 Chairman, California Board of Equalization
5 C. MICHAEL ARMSTRONG
Chief Executive Office, AT&T
6
JOSEPH H. GUTTENTAG
7 Senior Advisor to the Assistant Secretary
for Tax Policy, U.S. Department of the
8 Treasury
9 THE HONORABLE PAUL C. HARRIS,
Senior Delegate, Virginia House of
10 Delegates
11 DELNA JONES
Commissioner, Washington Country
12 Administrative Offices
13 THE HONORABLE RON KIRK
Mayor, City of Dallas, Texas
14
THE HONORABLE MICHAEL O. LEAVITT
15 Governor, State of Utah
16 GENE N. LEBRUN
President, National Conference of
17 Commissioners on Uniform State Laws
18 THE HONORABLE GARY LOCKE
Governor, State of Washington
19
GROVER NORQUIST
20 President, Americans for Tax Reform
21 ROBERT NOVICK
Counselor, U.S. Trade Representative
22
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1 MEMBERS (CONT'D):
2 RICHARD PARSONS
President, Time-Warner, Inc.
3
ANDREW PINCUS
4 General Counsel, U.S. Department of Commerce
5 ROBERT PITTMAN
President and Chief Operating Officer
6 America OnLine, Inc.
7 DAVID POTTRUCK
President and Co-Chief Executive Officer
8 Charles Schwab Corporation
9 JOHN W. SIDGMORE
Vice Chairman, MCI WorldCom; Chairman, UUNET
10
STANLEY S. SOKUL
11 Davidson & Company, Inc.
12 THEODORE WAITT
Chairman and CEO, Gateway, Inc.
13
14 * * * * *
15
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17
18
19
20
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22
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1 P R O C E E D I N G S
2 (12:30)
3 CHAIRMAN GILMORE: Good afternoon,
4 ladies and gentlemen. And welcome to the
5 fourth and final meeting of the Advisory
6 Commission on Electronic Commerce. I'm Jim
7 Gilmore, the chairman of the Commission and
8 Governor of the Commonwealth of Virginia, and
9 I would like to welcome everyone and to call
10 this meeting to order.
11 The Advisory Commission on
12 Electronic Commerce was established by the
13 Congress to study the issue of taxation of
14 electronic commerce. And for the last ten
15 months we've been deeply engaged in that
16 endeavor. The Commission held its first
17 meeting in Williamsburg, Virginia last June.
18 We met again in New York City in September,
19 and then again in San Francisco in December.
20 And I think we've come a long way since last
21 June.
22 Since June of last year, the
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1 Commission has heard testimony from over 55
2 experts and academics and think tanks and
3 interest groups representing a broad range of
4 perspectives on tax and electronic commerce
5 policy. If there's an opinion out there,
6 we've heard it. We've received over 7,000
7 pieces of mail and over 50,000 E-mails. Our
8 library has grown to over 280 selections.
9 Our web site received an award from MultiNet.
10 It was selected as one of that publication's
11 top sites of 1999. The Commission has been
12 viewed by tens of thousands of people on
13 C-SPAN, and our work has been closely
14 followed by the members of the United States
15 Congress.
16 In short, I think we can be
17 confident that we have fulfilled our
18 obligation to fully engage and to educate the
19 people of the United States on the policy of
20 Internet taxation. We have followed
21 Mr. Pottruck's work plan. And following that
22 work plan, the Commission began to move
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1 toward some conclusions by distilling dozens
2 upon dozens of issues into a policies and
3 options paper, which we discussed in San
4 Francisco. That document moved us to our
5 task here in Dallas, to sift through the
6 possible solutions and to come to some
7 conclusions regarding the direction that we
8 believe is best for the people of the United
9 States. And I'm confident that we will reach
10 a constructive conclusion and offer to
11 Congress policy proposals that will benefit
12 the people of America with regard to the
13 taxation of electronic commerce. In short,
14 this is the meeting that all of us have been
15 waiting for.
16 I would like to remind everyone
17 that this meeting is open to the public, it
18 is being Web-cast over the internet on the
19 Commission's Web site, which is
20 www.ecommercecommission, one word, .org.
21 Www.ecommercecommission.org.
22 Additionally, we have many members
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1 of the media who are covering our proceedings
2 here today. Among them is C-SPAN. C-SPAN is
3 taping this meeting and will broadcast it at
4 a later date.
5 At this time I would like to
6 introduce the very distinguished members of
7 the Commission. People who have devoted
8 hundreds of hours over the last year to serve
9 the people of the United States. Let me
10 begin, if I could, and I think these are
11 close to being in order.
12 Mr. John W. Sidgmore on my left,
13 the vice-chairman of MCI WorldCom and
14 Chairman of UUNet Technologies.
15 Mr. Robert Pittman, President and
16 chief operating officer of America OnLine.
17 Mr. Stan Sokul, Davidson and
18 Company, Incorporated and consultant to the
19 Association of Interactive Media.
20 Ms. Delna Jones. She is the
21 commissioner of Washington County, Oregon.
22 Governor Locke is not yet here;
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1 when he arrives we will introduce him. He is
2 the Honorable Gary Locke, the governor of the
3 State of Washington, who will be joining us
4 soon.
5 The Honorable Ron Kirk, the mayor
6 of the City of Dallas, where this illustrious
7 meeting is being held today.
8 The Honorable Michael O. Leavitt,
9 the governor of the State of Utah.
10 Let's see here, let's see, we have
11 one change. Mr. Lebrun, is that you? I'm
12 having a hard time seeing through those
13 lights. Gene Lebrun, who is president of,
14 1997-1999, the National Conference of
15 Commissioners of Uniform State Laws.
16 And then of course, good old Joe H.
17 Guttentag, the senior advisor to the
18 assistant secretary for tax policy, United
19 States Department of the Treasury. Joe.
20 On my right, the Honorable Dean F.
21 Andal, the chairman of the California Board
22 of Equalization.
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1 Mr. David Pottruck, President and
2 co-chief executive officer of Charles Schwab
3 Corporation.
4 Mr. Theodore "Ted" Waitt, the
5 founder and chairman of Gateway,
6 Incorporated.
7 Mr. Richard Parsons. He is the
8 president of Time Warner, Incorporated.
9 Mr. Grover Norquist, president of
10 Americans for Tax Reform.
11 Mr. C. Michael Armstrong, the
12 chairman of the Board of AT&T.
13 The Honorable Paul C. Harris,
14 Senior. He is a member of the House of
15 Delegates, Virginia State Legislature.
16 Mr. Lebrun I have previously
17 introduced.
18 Mr. Novick. Excuse me, Mr. Novick.
19 He is the general counsel of the U.S. Trade
20 Representative.
21 And Mr. Andrew J. Pincus, the
22 general counsel of the United States
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1 Department of Commerce.
2 Welcome, ladies and gentlemen, to
3 this meeting in Dallas.
4 And now with a bit of an
5 introduction, I would like to recognize our
6 host here in Dallas today. Mayor Kirk, I
7 want to thank you very much for inviting the
8 Commission to hold this final meeting in
9 Dallas. Dallas has grown to be home to many
10 of the major technology firms in the country,
11 such as EDS and Texas Instruments, whose
12 engineer Jack Kilby (phonetic) developed the
13 first semiconductor, as well as
14 Broadcast.com, now owned by Yahoo. With the
15 concentration of high-tech firms in this
16 area, it's fitting for us to conclude our
17 efforts here in Dallas.
18 Mayor Kirk, we're addressing a big
19 issue; Texas is a big state; Dallas is a big
20 city, and I know I speak for my fellow
21 Commissioners to give you a big thank you for
22 your hospitality. Ladies and gentlemen, the
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1 honorable mayor of the City of Dallas, Ron
2 Kirk.
3 MAYOR KIRK: Governor
4 Gilmore and fellow members of the Commission,
5 it's my privilege to welcome you to Dallas.
6 I was going to tell you about Jack Kilby
7 inventing the first semiconductor and Dallas
8 being the home to important companies like
9 EDS and Broadcast.Yahoo.com and Texas being a
10 big state. But you did a pretty good job of
11 summarizing that, Governor. But we are
12 thrilled to have you here.
13 And this is an important issue for
14 our city and for our state. Many people may
15 not realize the State of Texas now produces
16 more semiconductors than they do in the
17 Silicon Valley. We have the second highest
18 concentration of people employed in the
19 technology industry, with over a hundred
20 thousand high tech jobs added over the last
21 several years, and many of those are here in
22 our metropolitan area. And this is an
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1 important issue and will continue to be for
2 the future. And it's still my hope that this
3 Commission will find enough common ground to
4 make our work substantive rather than
5 perfunctory, and that we will be able to meet
6 the mandate of Congress for the required two
7 thirds majority to give them some direction
8 on the treatment of this incredible industry
9 as we go forward.
10 But in the meantime, we turned the
11 thermostat up and the wind down and cut the
12 rain off, and I hope you all got in safe, had
13 a wonderful day, and I hope our meeting and
14 our work product is as pleasant as the
15 weather. So, welcome, and let's get down to
16 business.
17 CHAIRMAN GILMORE: Thank you,
18 Mr. Mayor.
19 Over the next two days the
20 Commission will discuss several proposals and
21 resolutions that address our main charge:
22 What tax policies the people of America
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1 should pursue with regard to electronic
2 commerce. Keeping with tradition of this
3 Commission, I certainly encourage open
4 discussion, a frank exchange of ideas and an
5 honest debate over the next two days. I
6 expect that there are going to be some issues
7 that we will agree on and some we will not
8 agree on. But the debate itself will be
9 providing valuable information to Congress
10 and will be recorded for posterity at the
11 National Archives in Washington, D.C. Which
12 is a bit shocking. But in any case it will
13 be -- it will be there.
14 Ladies and gentlemen, an agenda has
15 been distributed to you. You will see that
16 the agenda proposes an orderly process for us
17 to move through the resolution and amendments
18 pre-filed, in advance of the meeting,
19 pursuant to Operating Rule IV.C. I would
20 like to call everybody's attention to
21 Operating Rule IV because it served the
22 important public purpose of providing the
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1 media, the public, and each of the
2 Commissioners fair advance notice of the
3 issues and policy proposals to be presented
4 and debated at this meeting. This is a fair
5 and open process that the Commission approved
6 when we developed the Operating Rules, and
7 Heather Rosenker, the Executive Director,
8 sent several notices to all Commissioners
9 reminding everyone of each deadline for
10 filing resolutions and amendments to be
11 considered here. As you can see from the
12 agenda that's in your notebooks there were
13 some 29 -- and your notebooks, there were
14 some 29 resolutions and amendments filed in
15 advance, and some of them are quite
16 comprehensive and extensive. The agenda
17 gives each Commissioner who complied with --
18 who complied with the rules a fair
19 opportunity to present his or her proposal.
20 We have received a procedural
21 resolution filed by Andy Pincus to amend the
22 rules to permit Commissioners to raise new
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1 proposals from the floor even if they were
2 not filed in advance. With regard to
3 Commissioner Pincus's resolution let me say
4 that I think that each of the Commissioners
5 here wants to preserve some flexibility in
6 the procedures to offer floor amendments,
7 depending upon how the debate goes today.
8 But I think that it's important that we give
9 those Commissioners who followed the rules an
10 opportunity to present and adopt their
11 proposals that they pre-filed with fair
12 notice to the world. So I've attempted to
13 balance the rights of each of the
14 Commissioners in a fair and an orderly
15 process.
16 First, the agenda takes up all
17 pre-filed proposals, resolutions, and
18 amendments, so long as each Commissioner
19 wishes to present and move their proposals.
20 After we've concluded the first round of
21 presentations and debate and amendments, then
22 I propose that we take up Mr. Pincus's
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1 resolution. And if it is the Commission's
2 pleasure, give each Commissioner an
3 opportunity to offer further amendments to
4 proposals from the floor.
5 Now, I think this is the fair way
6 to proceed. It protects the rights of the
7 Commissioners who operated in accordance with
8 the rules in round one; it provides for an
9 orderly and efficient process so that we can
10 get through the 29 pre-filed proposals
11 without staying here until Thursday; and it
12 accommodates a forum for floor amendments for
13 those Commissioners who wish to offer them in
14 a second round. Now, a copy of this agenda
15 was sent out last Thursday.
16 Without objection, I move that the
17 agenda be adopted as printed, and then we
18 will proceed to the business of the day.
19 GOVERNOR LEAVITT: Mr. Chairman
20 --
21 CHAIRMAN GILMORE: We'll start --
22 GOVERNOR LEAVITT: Mr.
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1 Chairman, I think there is some question with
2 respect to the agenda.
3 CHAIRMAN GILMORE: Governor
4 Leavitt.
5 GOVERNOR LEAVITT: I think
6 there is some concern about the fact that
7 we're going to be looking to develop a
8 proposal in toto. And I'd like to move that
9 we amend the agenda to provide for the
10 individual resolutions that would be offered
11 at this point in the agenda to the end of the
12 agenda when we would be able to look at those
13 in the context of the larger proposal.
14 That's my motion.
15 CHAIRMAN GILMORE: The Governor of
16 Utah, Mike Leavitt, has moved that we, in
17 fact, amend the agenda. And what is the
18 nature of the amendment?
19 GOVERNOR LEAVITT: The items
20 that we would move to now, which would be the
21 international issues, Items A1 and A2, I
22 would like to have those moved to the end of
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1 the resolutions that have been filed. The
2 items under B, Domestic Issues, really begin
3 to focus us on the entire package that we
4 ultimately hope to develop. And I would
5 argue and move that we not try to break those
6 into individual pieces, but deal with them
7 after we've had a chance to look at the
8 context of the entire report.
9 CHAIRMAN GILMORE: Is it your
10 position that the floor amendments be
11 considered throughout?
12 GOVERNOR LEAVITT: No, to be
13 specific, I would move items A1 and A2 to be
14 Item 17 1 and 2.
15 CHAIRMAN GILMORE: What is the
16 pleasure of the Commission? Is there any
17 further debate on the movement of the agenda
18 prior to its adoption?
19 There is a motion from the floor
20 that Items A 1 and 2, the international
21 issues, be moved to be Items 17 and 18 in
22 Section B. Is there a second?
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1 COMMISSIONER ANDAL: Mr. Chairman?
2 CHAIRMAN GILMORE: Mr. Andal. Is
3 there a second?
4 COMMISSIONER LEBRUN: I'll second.
5 CHAIRMAN GILMORE: Mr. Lebrun
6 seconds. Open for debate. Mr. Andal.
7 COMMISSIONER ANDAL: Yeah, unless
8 there's a compelling reason that I haven't
9 heard of, Governor Leavitt, I think that
10 everybody here has prepared for what is kind
11 of a torturous technical journey today by
12 having the items in order. And unless
13 there's some reason that the international
14 issues couldn't be resolved first, there's
15 only two of them, and they don't relate to
16 the domestic issues directly, I'd rather
17 stick to the formula that we knew we were
18 going to prepare for. I think if we start
19 mixing and matching these and moving around,
20 that we're going to get -- make this a more
21 complicated job than it would otherwise be.
22 Is there a -- is there a reason, other
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1 than --
2 GOVERNOR LEAVITT: The reason,
3 basically, is we'd like to deal with the
4 resolutions in the context of specific
5 proposals as opposed to looking at them one
6 at a time. Context, we need to have context
7 in which all of this fits.
8 COMMISSIONER ANDAL: Okay. Yeah, I
9 understand viewing things in context, but I'm
10 not sure why these two items at the beginning
11 or at the end are any less in context.
12 They're both individual items, and I think
13 it's just a matter of order.
14 CHAIRMAN GILMORE: Mr. Norquist?
15 COMMISSIONER NORQUIST: This builds
16 on a resolution that I introduced and that we
17 passed in New York, which is generally being
18 supportive of this Administration's
19 international position. I was sort of happy
20 that we were able to be supportive of
21 president Clinton's international initiative
22 prior to Seattle. And I think it's sort of a
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1 consensus issue within us, and when we have
2 the opportunity to be supportive of some --
3 something the Administration's doing right,
4 I'd kind of like to take it.
5 CHAIRMAN GILMORE: Further debate?
6 Okay, we'll call the question on
7 the question of Governor Leavitt to move the
8 first two items around in the agenda prior to
9 its adoption. Executive Director, would you
10 please call the role on the issue of whether
11 we pass or defeat Governor Leavitt's motion.
12 MS. ROSENKER: Mr. Andal?
13 COMMISSIONER ANDAL: No.
14 MS. ROSENKER: Mr. Armstrong?
15 COMMISSIONER ARMSTRONG: No.
16 MS. ROSENKER: Governor Gilmore?
17 CHAIRMAN GILMORE: No.
18 MS. ROSENKER: Mr. Guttentag?
19 COMMISSIONER GUTTENTAG: Yes.
20 MS. ROSENKER: Mr. Harris?
21 COMMISSIONER HARRIS: No.
22 MS. ROSENKER: Mr. Kirk?
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1 MAYOR KIRK: Yes.
2 MS. ROSENKER: Ms. Jones?
3 COMMISSIONER JONES: Yes.
3 MS. ROSENKER: Governor Leavitt?
4 GOVERNOR LEAVITT: Yes.
5 MS. ROSENKER: Mr. Lebrun?
6 COMMISSIONER LEBRUN: No.
MS. ROSENKER: Governor Locke here?
7 Mr. Norquist?
8 COMMISSIONER NORQUIST: Yes. No.
9 Sorry.
10 COMMISSIONER NOVICK: Good start.
11 Does he get to vote twice?
12 COMMISSIONER NORQUIST: I voted for
13 Locke and had --
14 MS. ROSENKER: Mr. Norquist?
15 COMMISSIONER NORQUIST: No. Thank
16 you.
17 MS. ROSENKER: Mr. Novick?
18 COMMISSIONER NOVICK: Yes.
19 MS. ROSENKER: Mr. Parsons?
20 COMMISSIONER PARSONS: No.
21 MS. ROSENKER: Mr. Pincus?
22 COMMISSIONER PINCUS: Yes.
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1 MS. ROSENKER: Mr. Pittman?
2 COMMISSIONER PITTMAN: No.
3 MS. ROSENKER: Mr. Pottruck?
4 COMMISSIONER POTTRUCK: No.
5 MS. ROSENKER: Mr. Sidgmore?
6 COMMISSIONER SIDGEMORE: No.
7 MS. ROSENKER: Mr. Sokul?
8 COMMISSIONER SOKUL: No.
9 MS. ROSENKER: Mr. Waitt?
10 COMMISSIONER WAITT: No.
11 CHAIRMAN GILMORE: The Executive
12 Director's handed me the roll call. In favor
13 of the motion, seven, against the motion
14 eleven, one abstention. The motion is
15 defeated.
16 Without further objection, we will
17 proceed with the agenda. We start with the
18 presentation of the resolution filed by the
19 Business Caucus entitled, Proposal to Foster
20 International Consensus Regarding the
21 Taxation of Electronic Commerce. And who
22 would like to present this resolution on
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1 behalf of the Business Caucus? Is there a
2 designee?
3 First of all, is there a motion to
4 adopt the Business Caucus --
5 MAYOR KIRK: I'll move
6 approval of Item 1.
7 SPEAKER: Second.
8 CHAIRMAN GILMORE: Motion for the
9 approval of Item 1. The Proposal to Foster
10 International Consensus Regarding the
11 Taxation of Electronic Commerce. It is moved
12 and seconded. Is there debate on this issue
13 or presentation?
14 COMMISSIONER PITTMAN: I would like
15 to just say a couple of words, if I could.
16 The international proposal is a four-part
17 proposal that recommends Congress take
18 actions that will foster international
19 consensus regarding taxation of electronic
20 commerce.
21 Our four-part plan includes the
22 following specific recommendations. One,
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1 that Congress should support a permanent
2 extension of the current moratorium on
3 tariffs and duties on electronic
4 transmissions. This proposal has been
5 discussed at every meeting, and nearly all of
6 us have favorably commented on the
7 desirability of a continued tariff
8 moratorium.
9 Two, Congress should affirm support
10 for the OECD's efforts to build international
11 consensus for tax rules that allow continued
12 growth of global E-commerce activities. The
13 OECD member nations have already made
14 substantial progress. For example, they've
15 obtained agreement that new taxes should not
16 be applied to E-commerce, and they support
17 application of existing rules to avoid trade
18 distortions.
19 Three, Congress should provide
20 adequate funding and other support for the
21 U.S. Treasury Department's efforts to build
22 international consensus for cross-border
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1 E-commerce activities. It's important to
2 enable the U.S. to work with foreign
3 governments. We need to ensure that tax
4 policies are not used to erect barriers to
5 markets for U.S. companies.
6 Fourth, and finally, Congress
7 should avoid legislation inconsistent with
8 the tax policy principles that emerge from
9 the international discussion. Otherwise our
10 leadership position could be compromised if
11 we take actions inconsistent with the tax
12 policies that we're encouraging other
13 countries to adopt. We can be sure that the
14 international community is watching this
15 Commission. Approval of this proposal will
16 demonstrate our commitment to a consensus
17 approach to E-commerce tax policies, to fair
18 treatment of consumers and businesses, and to
19 continued development of E-commerce. I do
20 encourage you to vote for this proposal.
21 CHAIRMAN GILMORE: Further
22 discussion? Mr. Pincus?
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1 COMMISSIONER PINCUS: Thank you,
2 Governor. Yeah, I would like to say a few
3 words, maybe generally, and then also
4 specifically about this issue.
5 I think the Commission has begun a
6 national discussion of some very important
7 issues. The president recognized the
8 importance of these issues early in February
9 '98 when he announced his support for the
10 Internet Tax Freedom Act and noted the
11 importance of developing consensus on them.
12 In accordance with that view that
13 the interests of all stakeholders have to be
14 taken into account, we've sought to work with
15 everyone, making good faith attempts to
16 achieve consensus within the Commission. And
17 I have to single out Governor Leavitt, who's
18 the chairman of the National Governors
19 Association, as someone who's truly made
20 Herculean efforts toward that goal.
21 Unfortunately, the Commission has
22 not yet been able to serve as a forum to
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1 forge that consensus. And we'd looked
2 forward to supporting an overall package that
3 would have reflected the views of at least
4 two thirds of the Commission, as Congress
5 required for a valid recommendation. And
6 we've been working hard as an honest broker
7 to try and achieve the balance that that
8 requires between technology interests, state
9 and local governments who have to provide
10 services and the continued viability of
11 traditional retailers, large and small. And
12 we've been working hard talking to many
13 members here about that. Unless the
14 consensus develops, however, we're going to
15 abstain from voting.
16 We remain open, however, to the
17 possibility that a principle consensus will
18 develop, and we hope before the meeting is
19 over we can attract two- thirds consensus,
20 but we do have views on the issues. And I
21 would like to say in connection with this
22 debate, as we've spoken of before, the
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1 Administration has argued forcefully
2 internationally that the current moratorium
3 on customs, duties on electronic
4 transmissions should be made permanent, and
5 that any taxation of electronic commerce
6 should be neutral, non- discriminatory,
7 simple, certain, fair, and flexible. And we
8 continue and we will continue to argue those
9 positions forcefully in every international
10 forum.
11 COMMISSIONER SOKUL: Governor?
12 CHAIRMAN GILMORE: Yes, sir.
13 Mr. Sokul?
14 COMMISSIONER SOKUL: I just have a
15 quick question for Tom, our counsel. In
16 light of that announcement, that the
17 Administration is going to abstain, how does
18 that affect the two-thirds supermajority
19 requirement? Because as I understand it, the
20 statute says the two thirds is with reference
21 to the Commissioners serving at the time.
22 Not serving at the time and voting, so
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1 abstention equals a no, effectively. Is that
2 true?
3 CHAIRMAN GILMORE: I'm going to ask
4 the Counsel and Parliamentarian to address
5 the issue that was raised --
6 COMMISSIONER SOKUL: But basically
7 for all intents and purposes a decision to
8 abstain is a decision to vote no.
9 MR. GRIFFITH: The statute requires
10 that for findings and recommendations to be
11 included in the report, they achieve
12 two-thirds support of the members of the
13 Commission. There are nineteen members of
14 the Commission. It would take thirteen
15 members to achieve that supermajority
16 requirement. Whether a particular
17 Commissioner abstains or not does not affect
18 that requirement. So to become a finding or
19 recommendation, according to the language of
20 the statute, you would need thirteen votes.
21 Does that answer your question,
22 Commissioner Sokul?
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1 COMMISSIONER SOKUL: I think so. I
2 think what you're saying is the abstention
3 has the same effect as a no.
4 CHAIRMAN GILMORE: Are you
5 inquiring as to whether an abstention
6 prevents the Commission from reaching the
7 thirteen number? It obviously does --
8 COMMISSIONER SOKUL: I guess that's
9 my point, that if this is going to make it
10 more difficult to reach two thirds because
11 three players have been taken out of an
12 equation and an abstention is effectively a
13 no.
14 CHAIRMAN GILMORE: Well, we shall
15 see. Are there other inquiries on this
16 matter? Any other debate that wishes to be
17 had? Is the Commission -- Mr. Norquist?
18 COMMISSIONER NORQUIST: I just want
19 to speak in favor of the measure. I think
20 the Administration has moved in the right
21 direction on this, and I think the Business
22 Proposal Resolution is very helpful and moves
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1 in the right direction, and I'm delighted to
2 be able to support it.
3 CHAIRMAN GILMORE: Okay.
4 SPEAKER: Call the question.
5 CHAIRMAN GILMORE: The motion has
6 been made to call the question. Second it?
7 SPEAKER: Second.
8 CHAIRMAN GILMORE: All in favor of
9 calling the question please say aye.
10 All opposed nay?
11 Roll call vote, please, on the
12 adoption of the first provision, the Business
13 Council Proposal to Foster International
14 Consensus Regarding the Taxation of
15 Electronic Commerce.
16 Ms. Rosenker, would you call the
17 roll, please?
18 MS. ROSENKER: Mr. Andal?
19 COMMISSIONER ANDAL: Aye.
20 MS. ROSENKER: Mr. Armstrong?
21 COMMISSIONER ARMSTRONG: Yes.
22 MS. ROSENKER: Mr. Guttentag?
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1 COMMISSIONER GUTTENTAG: For the
2 process and procedure reasons announced by
3 Governor Leavitt and by Commissioner Pincus,
4 I abstain.
5 MS. ROSENKER: Mr. Harris?
6 COMMISSIONER HARRIS: Aye.
7 MS. ROSENKER: Mr. Kirk?
8 MAYOR KIRK: Same reasons
9 articulated by Mr. Guttentag and the
10 Governor, I abstain.
11 MS. ROSENKER: Ms. Jones?
12 COMMISSIONER JONES: I abstain.
13 MS. ROSENKER: Governor Leavitt?
14 GOVERNOR LEAVITT: Abstain.
15 MS. ROSENKER: Mr. Lebrun?
16 COMMISSIONER LEBRUN: Abstain.
17 MS. ROSENKER: Mr. Norquist?
18 COMMISSIONER NORQUIST: Yes.
19 MS. ROSENKER: Mr. Novick?
20 COMMISSIONER NOVICK: Abstain.
21 MS. ROSENKER: Mr. Parsons?
22 COMMISSIONER PARSONS: Aye.
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1 MS. ROSENKER: Mr. Pincus?
2 COMMISSIONER PINCUS: Abstain.
3 MS. ROSENKER: Mr. Pittman?
4 COMMISSIONER PITTMAN: Yes.
5 MS. ROSENKER: Mr. Pottruck?
6 COMMISSIONER POTTRUCK: Yes.
7 MS. ROSENKER: Mr. Sidgmore?
8 COMMISSIONER SIDGEMORE: Yes.
9 MS. ROSENKER: Mr. Sokul?
10 COMMISSIONER SOKUL: Yes.
11 MS. ROSENKER: Mr. Waitt?
12 COMMISSIONER WAITT: Yes.
13 CHAIRMAN GILMORE: Chairman votes
14 yes, also.
15 MS. ROSENKER: Chairman Gilmore.
16 CHAIRMAN GILMORE: The vote on the
17 first item on the agenda is eleven yeas,
18 seven abstentions. Obviously it passes
19 eleven to no nays, seven abstentions. It is
20 a majority vote, but not the statutory two
21 thirds to yet be a recommendation within the
22 report.
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1 The next item is Commissioner
2 Sokul's recommendation, The Need for Improved
3 Knowledge of International Relations.
4 Mr. Sokul, you wish to move the
5 adoption of your resolution?
6 COMMISSIONER SOKUL: Yes.
7 CHAIRMAN GILMORE: Second?
8 SPEAKER: Second.
9 CHAIRMAN GILMORE: Moved and
10 seconded to adopt Mr. Sokul's resolution, The
11 Need for Improved Knowledge of International
12 Ramifications.
13 COMMISSIONER SOKUL: Governor
14 Gilmore?
15 CHAIRMAN GILMORE: It's been moved
16 and seconded. Debate. Mr. Sokul?
17 COMMISSIONER SOKUL: If it would
18 tease out some votes, I'd have this come up
19 last.
20 GOVERNOR LEAVITT: It just
21 might.
22 MAYOR KIRK: I might remind
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1 Mr. Sokul, you just voted against that
2 opportunity. Would you like to change your
3 vote on Governor Leavitt's motion?
4 COMMISSIONER SOKUL: I guess what
5 you're saying is won't make a difference.
6 MAYOR KIRK: Might make a
7 big difference.
8 CHAIRMAN GILMORE: Mr. Sokul, the
9 Commission has concluded that it will not at
10 this time recommend the first item. It may
11 not recommend yours. But the business of
12 this Commission will be reported to the
13 Congress, so please proceed.
14 COMMISSIONER SOKUL: Okay. I
15 offered this resolution because I think
16 there's a distinction that's important
17 between the development of international
18 rules among nations and how domestic
19 decisions affect our global competitiveness.
20 The previous resolution, which was an
21 excellent resolution, deals with the need to
22 develop consensus among nations on an
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1 international level. My resolution deals
2 with how domestic decisions that we make
3 amongst ourselves as a nation may have global
4 ramifications.
5 The resolution makes two points.
6 First, I think we should recommend to
7 Congress that whatever they do on this issue
8 they should explore: How would that system
9 that they set up or the states set up affect
10 the competitiveness of United States
11 companies competing in the global
12 marketplace? And on that issue I would note
13 that at the last meeting I asked the official
14 from the EU if he ever foresaw a time when
15 the European Union would require their
16 companies to collect state and local taxes
17 for our country. And his response was: No,
18 the states should maybe try to come up with a
19 system where their companies would
20 voluntarily comply. That raises the question
21 of what if we come up with a system that
22 forces our companies to collect every state's
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1 taxes and burdens our companies that way? I
2 mean, in the Internet environment, what's to
3 prevent a consumer from buying a product from
4 an international company? And unless we're
5 going to set up a world tax organization or
6 states are going to stop little brown trucks
7 at the border, like we heard last meeting,
8 that's an issue. And I think it's an
9 important issue that needs to be discussed.
10 Second, the resolution makes the
11 point that Congress should consider the
12 effects of our decisions becoming a model for
13 global action. We're the leaders in
14 E-commerce, the world watches us for signals
15 as to what's important and how things should
16 be structured. And how we treat our
17 sub-national taxes could become a model for
18 global action.
19 So my resolution just raises these
20 issues in point -- and I suggest that the
21 Commission should ask Congress not to decide
22 one way or another, but just note that these
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1 are important issues that should be explored
2 and considered as they debate the Internet
3 tax issue domestically.
4 CHAIRMAN GILMORE: Any further
5 discussion on Mr. Sokul's resolution?
6 Seeing none, ready to call the
7 question?
8 COMMISSIONER ARMSTRONG: Call the
9 question.
10 CHAIRMAN GILMORE: Mr. Armstrong
11 calls the question. Second?
12 SPEAKER: Second.
13 CHAIRMAN GILMORE: All in favor of
14 calling the question say aye.
15 All opposed nay?
16 We'll call the roll, please,
17 Ms. Rosenker.
18 MS. ROSENKER: Mr. Andal?
19 COMMISSIONER ANDAL: Aye.
20 MS. ROSENKER: Mr. Armstrong?
21 COMMISSIONER ARMSTRONG: Aye.
22 MS. ROSENKER: Mr. Guttentag?
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1 COMMISSIONER GUTTENTAG: I abstain
2 for the reasons stated with respect to the
3 previous resolution.
4 MS. ROSENKER: Mr. Harris?
5 COMMISSIONER HARRIS: Aye.
6 MS. ROSENKER: Mayor Kirk?
7 MAYOR KIRK: I abstain.
8 MS. ROSENKER: Ms. Jones?
9 COMMISSIONER JONES: Abstain.
10 MS. ROSENKER: Governor Leavitt?
11 GOVERNOR LEAVITT: As indicated
12 to Mr. Sokul, this may well have my vote at a
13 future time, as well as Mr. Norquist's, and I
14 abstain.
15 MS. ROSENKER: Mr. Lebrun?
16 COMMISSIONER LEBRUN: Abstain.
17 MS. ROSENKER: Governor Locke?
18 GOVERNOR LOCKE: Abstain.
19 MS. ROSENKER: Mr. Norquist?
20 Mr. Novick?
21 COMMISSIONER NOVICK: Abstain.
22 MS. ROSENKER: Mr. Parsons?
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1 Mr. Pincus?
2 COMMISSIONER PINCUS: Abstain.
3 MS. ROSENKER: Mr. Pittman?
4 COMMISSIONER PITTMAN: Yes.
5 MS. ROSENKER: Mr. Pottruck?
6 COMMISSIONER POTTRUCK: Yes.
7 MS. ROSENKER: Mr. Sidgmore?
8 COMMISSIONER SIDGEMORE: Yes.
9 MS. ROSENKER: Mr. Sokul?
10 COMMISSIONER SOKUL: Yes.
11 MS. ROSENKER: Mr. Waitt?
12 COMMISSIONER WAITT: Yes.
13 MS. ROSENKER: Chairman Gilmore?
14 CHAIRMAN GILMORE: Aye.
15
16 Mr. Sokul's resolution has received
17 eleven votes. No nay votes and eight
18 abstentions.
19 COMMISSIONER ANDAL: Mr. Chairman?
20 CHAIRMAN GILMORE: Mr. Andal.
21 COMMISSIONER ANDAL: Yes, I have a
22 parliamentary inquiry of the Chair. Given
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1 that we have a significant number of
2 Commissioners who are not going to vote on
3 these issues, they're going to abstain, I'd
4 like to ask the Chair to give me the answer
5 to two questions. One is, what is the legal
6 significance of a majority vote rather than a
7 two-thirds majority vote? And will a
8 majority vote be reflected in our report to
9 Congress?
10 CHAIRMAN GILMORE: Call on the
11 Counsel and Parliamentarian for a response to
12 that.
13 COMMISSIONER LEBRUN: Mr. Chairman?
14 CHAIRMAN GILMORE: Mr. Lebrun.
15 COMMISSIONER LEBRUN: Yeah --
16 CHAIRMAN GILMORE: Well, just a
17 moment, Mr. Lebrun --
18 COMMISSIONER LEBRUN: On this --
19 CHAIRMAN GILMORE: -- I've called
20 on the Parliamentarian first, and then after
21 his remarks I will come back to you.
22 Mr. Griffith?
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1 MR. GRIFFITH: Thank you, Mr.
2 Chairman. This is a question that's been
3 directed to our office many times since the
4 Commission was created, and we've answered it
5 informally to a number of Commissioners and
6 their staff. I'm asking Mr. Jowers to
7 distribute to each of the Commissioners now a
8 letter that we prepared over the weekend in
9 response to this question.
10 At the outset let me explain the
11 role of Counsel, the role of Parliamentarian
12 on these sorts of issues. The Commission
13 itself determines its own rules. The
14 Commission itself has the responsibility of
15 determining the statute and what it means and
16 how it applies to the Commission's
17 proceeding. Nevertheless, Counsel can be and
18 is now being called upon to give its best
19 advice about the meaning of the statute. And
20 that's what we have done. And you'll be
21 seeing our work product in just a moment.
22 Let me describe it for you orally.
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1 The first point to keep in mind is that it is
2 the Internet Tax Freedom Act itself that
3 established the Commission. It is the source
4 of the authority for the Commission to
5 transact its business. In the statute,
6 Section 1103 of the Internet Tax Freedom Act,
7 it makes clear that it is the obligation and
8 duty of this Commission to transmit a report
9 of the results of its study to Congress.
10 There is language in Section 1103 that talks
11 about a two- thirds supermajority
12 requirement. That language applies only to a
13 finding or recommendation of the Commission.
14 It is clear from our vantage point that
15 Congress wants a report, that Congress
16 expects a report; that is consistent with
17 hallmark principles of congressional
18 accountability that have followed advisory
19 commissions since they were created.
20 Now, the content of that report is
21 up to the Commission. For example, in our
22 view it would be perfectly appropriate for
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1 the Commission in its report to Congress to
2 include a listing of all the votes that came
3 before the Commission. To vote -- to report
4 the yeas and nays of the proposals.
5 Furthermore, it would be appropriate for the
6 Commission, if it were to determine that it
7 wanted to present the report in this way, to
8 highlight certain of the votes as being more
9 significant for Congress's attention than
10 other votes. Furthermore, it's also our view
11 that, if the Commission were so to determine
12 it, that it would be within the meaning of
13 the Act that the Commission could report the
14 majority proposals of the Commission. How
15 the Commission presents its report is
16 squarely within its discretion. But it does
17 not have the authority to call its work
18 product a finding or a recommendation unless
19 it has two thirds of the votes of the
20 Commissioners. Presumably, for those items
21 that two-thirds supermajority support can be
22 garnered, that will have a greater influence
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1 and impact upon Congress. Congress will
2 weight that differently than it would any of
3 the other actions of the Commission. But
4 it's certainly within the discretion of the
5 Commission, in our view, to present Congress
6 a report of its dealings.
7 But finally, it's been brought to
8 our attention that over the weekend the
9 Majority Leader of the Senate, Senator Lott,
10 and then I believe today the Speaker of the
11 House of Representatives, Speaker Hastert,
12 have sent letters to the Commission saying
13 that in their view they would welcome a
14 report of this Commission's works that
15 included majority votes, even if there were
16 no issues on which a supermajority could be
17 attained.
18 We, finally, think that that is
19 significant direction inasmuch as Congress
20 created this Commission, it is a Commission
21 within the Legislative Branch of Congress,
22 that Commissioners would do well to weigh
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1 heavily the views of the Congressional
2 leadership about what they expected to have
3 from this Commission.
4 Now, with that, I'd be happy to
5 answer any questions. Does that answer your,
6 question?
7 COMMISSIONER ANDAL: It does.
8 MR. GRIFFITH: Okay.
9 CHAIRMAN GILMORE: It is ruling of
10 the Chair that the report is mandatory under
11 the statute, all actions receiving a majority
12 vote on this Commission will be included and
13 designated as such. Only items receiving the
14 super two-thirds majority will be designated
15 as findings and recommendations.
16 COMMISSIONER LEBRUN: Mr. Chairman?
17 CHAIRMAN GILMORE: Mr. Lebrun.
18 COMMISSIONER LEBRUN: May I address
19 this point?
20 CHAIRMAN GILMORE: Yes, sir.
21 COMMISSIONER LEBRUN: Will all due
22 respect, I don't agree with Counsel. The
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1 statute's very clear. It says: No finding
2 or recommendation shall be included in the
3 report unless agreed to by at least two
4 thirds of the members of the Commission
5 serving at the time the finding and
6 recommendation is made. Those of us in the
7 group that are lawyers know what findings
8 are. When you try a case to a court, you
9 make findings of fact and conclusions of law.
10 Both Items A1 and A2 conclude findings of
11 fact, if you use it in the legal sense. They
12 set forth the premise upon which a
13 recommendation may or may not be made, but
14 they are clearly findings. And if the
15 findings don't obtain the necessary
16 two-thirds vote, they are not to be included
17 in the report. Had Congress wanted us to
18 include in the report something less than
19 findings that receive two-thirds vote, it
20 could have said so. It chose not to. It's
21 my understanding that the people who are
22 suggesting that it takes less than two thirds
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1 are the people who suggested to Congress that
2 they require the two thirds in the first
3 place. I think if we go this route, we're
4 changing the rules, we're not doing what
5 Congress told us to do, and I strongly object
6 to including in the report anything that
7 receives anything less than the necessary two
8 thirds vote, because these are clearly
9 findings, and calling them something else
10 doesn't change what they actually are. They
11 are findings.
12 CHAIRMAN GILMORE: Mr. Lebrun, is
13 that by way of a challenge to the ruling of
14 the Chair?
15 COMMISSIONER LEBRUN: I suspect I
16 know what the vote would be on that, so no, I
17 won't challenge the ruling of the Chair.
18 CHAIRMAN GILMORE: You're not
19 challenging the ruling of the Chair?
20 COMMISSIONER LEBRUN: Not at this
21 time. Mr. Chairman, I defer to Mayor Kirk.
22 CHAIRMAN GILMORE: Did I hear a
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1 voice?
2 GOVERNOR LEAVITT: I heard
3 Counsel say that we had the ability as a
4 Commission to define in rule ourselves what
5 we would include. And I would invite the
6 Chair to propose a rule as to how we would
7 handle -- as opposed to just ruling from the
8 Chair, I wonder if it would be possible for
9 you to go through the same process in
10 establishing the rule on what the report
11 would follow, as we did in the adoption of
12 all other rules governing the operation of
13 this Commission.
14 CHAIRMAN GILMORE: I think the
15 plain reading of the statute should, in fact,
16 govern on this, and that is, in fact, the
17 ruling of the chair.
18 MAYOR KIRK: Mr. Chairman,
19 if that's the case --
20 CHAIRMAN GILMORE: Mr. Mayor.
21 MAYOR KIRK: -- then I
22 appeal the ruling of the Chair. And I would
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1 refer you to the letter from our Counselman
2 (sic) itself. I mean, it can't be any more
3 plain than the -- on page 2, in the first
4 paragraph it says clearly: A finding or
5 recommendation that has not been agreed to by
6 at least two thirds members of the Commission
7 serving at that time the recommendation is
8 made.
9 Later in the paragraph he refers to
10 the fact that -- and this is our Counsel, he
11 says: It is a cardinal principle of
12 parliamentary law that a body acts by simple
13 majority, unless the governing legislative
14 authority provides differently. And in this
15 case, the governing legislative authority is
16 explicit and mandates that any report or
17 finding has to have at least two thirds a
18 majority of this Commission. And I would
19 urge the Chair to either reconsider that and
20 make it clear that, absent that two-thirds
21 finding, that these recommendations do not go
22 into the Commission's final report.
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1 CHAIRMAN GILMORE: There's a second
2 to the appeal of the ruling of the Chair?
3 COMMISSIONER LEBRUN: Second.
4 CHAIRMAN GILMORE: Mr. Lebrun
5 seconds the appeal of the ruling of the
6 Chair.
7 COMMISSIONER ANDAL: Call to
8 question.
9 CHAIRMAN GILMORE: Mr. Andal has
10 moved the question of the ruling of the
11 Chair. Second to the calling of the
12 question?
13 SPEAKER: Second.
14 CHAIRMAN GILMORE: All in favor of
15 calling the question please say aye.
16 All opposed say nay.
17 The Chair has ruled that the
18 statute is mandatory with respect to the
19 presentation of a report. All actions that
20 receive a majority will be included in the
21 report, as the statue suggests. However,
22 they will not be given the dignity of
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1 findings or recommendations because, in fact,
2 they will not have received the two-thirds
3 ruling -- or majority vote by the Commission.
4 COMMISSIONER SOKUL: Governor,
5 could you add to that, or did you mean to
6 exclude from that that things that receive
7 less than a majority aren't going to be
8 included in the report? I think if something
9 loses one to eighteen, that should be
10 included, too.
11 CHAIRMAN GILMORE: I don't think in
12 any statute or anyplace else that there is a
13 ruling that indicates that something that is
14 defeated by the Commission would be included.
15 MAYOR KIRK: Governor, will
16 all due respect, if we're going to report
17 anything getting less than a two-thirds
18 majority, if we're going to report all of our
19 work, then you might as well report anything.
20 Otherwise --
21 COMMISSIONER NOVICK: I certainly
22 would like the opinion of Counsel on whether,
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1 if his conclusion is that the results of this
2 Commission can go forward, even if not as
3 findings and recommendations, how he can
4 take -- or whether he takes the position that
5 something that's voted down isn't included as
6 a result of the Commission as well.
7 MR. GRIFFITH: I'm sorry, I didn't
8 hear the last part of your comment.
9 COMMISSIONER NOVICK: How is it --
10 I don't know what your position is on this,
11 but I take it that if your conclusion is that
12 the Commission can forward a report with the
13 results of the Commission activities, which
14 is what the statute says, a result of the
15 Commission activities would also be a vote,
16 eight in favor, eleven against, six in favor,
17 thirteen against a particular proposal.
18 MR. GRIFFITH: I think our view is
19 that it would take a majority, at least a
20 majority, vote to transmit a report from the
21 body of the Commission.
22 MAYOR KIRK: Will all due
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1 respect, Counsel -- with all due respect,
2 could you point me to any language in the
3 statute that --
4 MR. GRIFFITH: In Section 1103 it
5 says the Commission shall transmit a report
6 of the results of the study.
7 MAYOR KIRK: Right. And it
8 does not at all differentiate between a
9 majority versus supermajority, does it?
10 MR. GRIFFITH: And the principle of
11 statutory interpretation is when it's a
12 legislative body and it does not require a
13 supermajority for an action that it's a
14 majority that determines --
15 MAYOR KIRK: Will all due
16 respect, Counsel, I'm not alleging we're an
17 advisory body and we -- it explicitly says
18 that you have to have a two-thirds majority.
19 There is no language anyplace else that says
20 two thirds, except for where you have a
21 majority or except for the stuff we don't
22 like. And I mean, if we're going to be that
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1 inventive -- we've got at least be
2 consistent, Governor.
3 MR. GRIFFITH: Well, I think I am.
4 If I might, the two thirds language describes
5 only findings and recommendations included in
6 the report. The way I read the statute, and
7 I would suggest this reading to others, is
8 that Section 1103 anticipates that there will
9 be a report. In the absence of language
10 saying what type of majority is necessary for
11 a report to be transmitted, clear
12 parliamentary law is that it requires a
13 majority of the Commission to do so. The two
14 thirds language applies only to the inclusion
15 of findings and recommendations, which have
16 the added weight of a finding and
17 recommendation from this body.
18 COMMISSIONER NOVICK: Accepting for
19 argument's sake that majority is enough to
20 transmit a report, the question is what are
21 the contents of that report? And the statute
22 speaks quite clearly to the effect that
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1 what's in the report are the results of the
2 Commission.
3 And I think the plain meaning of
4 the word results is whatever this Commission
5 concludes, whatever its results are. A no
6 vote would be a result of this Commission.
7 And so therefore should be contained in the
8 report. Even on the interpretation that the
9 report can go forward with a majority.
10 MR. GRIFFITH: I think that's a
11 fair interpretation.
12 COMMISSIONER NOVICK: Well, that's,
13 I believe, the question that was posed, so if
14 we have a vote that is six, four and thirteen
15 against, that would also go in the report.
16 MR. GRIFFITH: I think that the
17 issue is, the two issues that Mr. Novick has
18 raised, the first issue is what does it take
19 for this Commission to transmit a report to
20 Congress? Mayor Kirk is correct that nowhere
21 in the statute does it say what type of
22 majority is necessary to transmit any report
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1 to Congress. In the absence of express
2 provision to the contrary, that means a
3 majority vote of this Commission determines
4 whether to send a report to Congress. That's
5 the first issue.
6 The second issue now is the content
7 of that report. And the statute is silent as
8 to the content of that report except for a
9 certain type of work product called finding
10 or recommendation. As to that type of work
11 product, it requires a two-thirds vote. It
12 does not say anything about what type of vote
13 is required for the rest of the report. And
14 it's to that that I believe, again, general
15 parliamentary procedure, general
16 parliamentary law, says that the majority of
17 the Commission can determine the nature of
18 the report. And that's the hypothetical that
19 I gave you. I don't presume to tell the
20 Commission what to do, but if the Commission
21 wanted in its report to list all the votes
22 that took place and inform Congress of what
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1 those votes were, I think that would be
2 perfectly permissible for them to do so. If
3 they only wanted to tell Congress of half the
4 votes that took place, I think it would be
5 permissible to do so.
6 COMMISSIONER NOVICK: But that --
7 CHAIRMAN GILMORE: Mr. Novick, can
8 you under --
9 COMMISSIONER NOVICK: -- wouldn't
10 be consistent with the results --
11 CHAIRMAN GILMORE: Mr. Novick, do
12 you understand the ruling of the
13 Parliamentarian?
14 COMMISSIONER NOVICK: I think I've
15 heard inconsistent rulings from legal counsel
16 on the question that Mr. Sokul raised, which
17 is: If there's a vote six to thirteen, would
18 that be a result of the Commission? I think
19 the plain reading of the statute, and I think
20 Counsel agreed, is that it would be one of
21 the results of the Commission.
22 CHAIRMAN GILMORE: You're engaging
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1 debate, Mr. Novick, which you're entitled to
2 do since we have not yet voted on the --
3 COMMISSIONER NOVICK: I appreciate
4 that.
5 CHAIRMAN GILMORE: -- call of the
6 question, and we will return to that.
7 But, Mr. Griffith, thank you, I
8 think you have made your position very clear.
9 COMMISSIONER SOKUL: Governor, Mr.
10 Chairman --
11 CHAIRMAN GILMORE: Now, the
12 Commission itself will make some decisions.
13 I'll call on Mr. Sokul, Mr. Norquist, and
14 then we'll return and Governor Leavitt.
15 Mr. Sokul?
16 COMMISSIONER SOKUL: I'd just like
17 to say that Counsel just answered my
18 question, and that is that the majority
19 determines the content of the report. And so
20 my prior question has been answered.
21 CHAIRMAN GILMORE: Mr. Norquist?
22 COMMISSIONER NORQUIST: It's my
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1 understanding that we had always planned to
2 allow Commissioners to put in their own
3 statements at the end, which were their
4 positions, and therefore anyone who has a
5 minority position that they would like
6 transmitted to Congress, it will be
7 transmitted. It doesn't take two thirds or a
8 majority, that we each have, I think, a
9 thousand words is what we'd agreed on, so,
10 you know, if the Administration wants to make
11 a case, they can put it in their thousand
12 words and it will be heard. Nothing won't be
13 heard. But we do have a letter from the
14 Speaker of the House and the Majority Leader
15 in the Senate, which is pretty authoritative
16 from the leadership of Congress that they
17 would like a report from us and consider a
18 majority to be quite fine.
19 CHAIRMAN GILMORE: Governor
20 Leavitt?
21 COMMISSIONER NORQUIST: And that's
22 what they look forward to and expect.
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1 CHAIRMAN GILMORE: Governor
2 Leavitt.
3 GOVERNOR LEAVITT: I'd just
4 like clarification. Will we ever have a
5 chance to vote on this report if it contains
6 no, quote, findings then, or is it the
7 position of the Parliamentarian that we'll
8 simply have a majority that will approve the
9 report?
10 CHAIRMAN GILMORE: Governor, first
11 of all, we have a two-thirds vote already on
12 the record that we voted in New York on
13 international tariffs and trade, eighteen to
14 one.
15 COMMISSIONER LEAVITT: No, no. My
16 question is: Will we ever have a chance to
17 vote on the report, if it --
18 CHAIRMAN GILMORE: Oh, certainly.
19 COMMISSIONER LEAVITT: -- contains
20 no formal findings, will we ever get a
21 chance --
22 CHAIRMAN GILMORE: Oh, certainly.
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1 COMMISSIONER LEAVITT: And will the
2 burden be two thirds, as it states in our
3 rules, or will it be 50 percent?
4 CHAIRMAN GILMORE: No, our rules
5 state the adoption of the report will be by a
6 majority vote.
7 COMMISSIONER LEAVITT: Our rules
8 say that --
9 CHAIRMAN GILMORE: Our rules say
10 Roberts' Rules --
11 COMMISSIONER LEAVITT: Now, do our
12 rules say that?
13 CHAIRMAN GILMORE: That is Roberts'
14 Rules of Order. You adopt the report by a
15 majority vote. However, we cannot include a
16 recommendation or a finding without two
17 thirds. The statute is clear about that.
18 COMMISSIONER LEAVITT: I would like
19 to have reference on the rule that adopts a
20 report by 50 percent, and it's my
21 understanding that we have the ability to
22 define this by rule. Is there a reason we
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1 couldn't define this in the same way we have
2 all the rest of our rules?
3 SPEAKER: That's right.
4 CHAIRMAN GILMORE: Mr. Andal?
5 COMMISSIONER ANDAL: It seems like
6 you could try to do that, if you like. But
7 right now we have the question before us of
8 whether or not a two-thirds majority is okay
9 for findings and recommendations, and a
10 simple majority under the Roberts Rules of
11 Order is okay for the rest of the report.
12 That was the ruling of the Chair. That
13 ruling has been challenged, and I suggest we
14 move to vote on that. And then we can -- if
15 you want to offer motions in the future to
16 amend the Operating Rules, we could do that.
17 But we need to move forward, I think.
18 I'll call the question, Mr.
19 Chairman.
20 CHAIRMAN GILMORE: Well, of course
21 the question has already been called, as a
22 matter of fact.
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1 SPEAKER: Mr. Chairman?
2 CHAIRMAN GILMORE: And I was
3 gaining -- adding a little latitude here so
4 that things could be aired out, as a matter
5 of fact. But to return to proper order,
6 there's a motion on the floor made by the --
7 There is a challenge to the Chair
8 that is made by Mayor Kirk, seconded by
9 Mr. Lebrun. The question is: Shall the
10 Commission sustain the ruling of the Chair?
11 And now we'll proceed to vote.
12 MS. ROSENKER: Mr. Andal?
13 COMMISSIONER ANDAL: Yes. Aye.
14 MS. ROSENKER: Mr. Armstrong?
15 COMMISSIONER ARMSTRONG: Aye.
16 MS. ROSENKER: Mr. Guttentag?
17 COMMISSIONER GUTTENTAG: I had
18 asked Mr. Chairman to comment on this issue,
19 but you may have overlooked my signal. So
20 I'd like --
21 CHAIRMAN GILMORE: Mr. Guttentag,
22 you're out of order. Just if you would,
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1 please, just cast your vote. There will be
2 an opportunity, I'm sure, during the time
3 that Mr. Pincus has requested to address some
4 of these additional issues. But you're out
5 of order and called on to vote. Unless you
6 have a parliamentary inquiry?
7 COMMISSIONER GUTTENTAG: I would
8 like to explain my vote, Mr. Chairman. I
9 support Mayor Kirk's position.
10 CHAIRMAN GILMORE: Is that a no
11 vote, Mr. Guttentag?
12 COMMISSIONER GUTTENTAG: No. Yes.
13 MS. ROSENKER: Mr. Harris?
14 COMMISSIONER HARRIS: Aye.
15 MS. ROSENKER: Mayor Kirk?
16 MAYOR KIRK: No.
17 MS. ROSENKER: Governor Leavitt?
18 COMMISSIONER LEAVITT: No.
19 MS. ROSENKER: Ms. Jones?
20 COMMISSIONER JONES: No.
21 MS. ROSENKER: Mr. Lebrun?
22 COMMISSIONER LEBRUN: No.
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1 MS. ROSENKER: Governor Locke?
2 GOVERNOR LOCKE: No.
3 MS. ROSENKER: Mr. Norquist?
4 COMMISSIONER NORQUIST: Yes.
5 MS. ROSENKER: Mr. Novick?
6 COMMISSIONER NOVICK: No.
7 MS. ROSENKER: Mr. Parsons?
8 COMMISSIONER PARSONS: Yes.
9 MS. ROSENKER: Mr. Pincus?
10 COMMISSIONER PINCUS: No.
11 MS. ROSENKER: Mr. Pittman?
12 COMMISSIONER PITTMAN: Yes.
13 MS. ROSENKER: Mr. Pottruck?
14 COMMISSIONER POTTRUCK: Yes.
15 MS. ROSENKER: Mr. Sidgmore?
16 COMMISSIONER SIDGEMORE: Yes.
17 MS. ROSENKER: Mr. Sokul?
18 COMMISSIONER SOKUL: Yes.
19 MS. ROSENKER: Mr. Waitt?
20 COMMISSIONER WAITT: Yes.
21 MS. ROSENKER: Chairman Gilmore?
22 CHAIRMAN GILMORE: Yes.
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1 MAYOR KIRK: Mr. Chairman,
2 parliamentary inquiry.
3 CHAIRMAN GILMORE: Yes, sir.
4 MAYOR KIRK: Just so I
5 understand, is it the ruling of the Chair,
6 then, that falling short of a two-thirds vote
7 to be a finding or recommendation, that it
8 can only be a result of the Commission if it
9 gets a majority vote?
10 CHAIRMAN GILMORE: I'm sorry, Mayor
11 Kirk.
12 MAYOR KIRK: I'm not --
13 CHAIRMAN GILMORE: Not yet anyway.
14 MAYOR KIRK: It's Governor
15 Bush.
16 CHAIRMAN GILMORE: Not yet anyway.
17 MAYOR KIRK: That fella, you
18 were real fond of him a couple of weeks ago,
19 I think. And I think both he and the
20 vice-president prefer --
21 CHAIRMAN GILMORE: You may have an
22 opportunity soon.
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1 MAYOR KIRK: -- that I stay
2 a mayor for some period of time. No, I think
3 you'd probably agree I should stay a mayor
4 for awhile. You and my wife.
5 I'm just confused. I don't mean to
6 be argumentative. But my concern now,
7 Governor, is this, it seems to me that we've
8 ruled that, short of these findings -- I mean
9 one thing we have done, and I will tell you
10 it distresses me personally, we've just
11 changed the rules dramatically at the
12 eleventh hour, and now we've basically said,
13 through the most strange legal reading I've
14 ever seen, that you don't have to be a
15 finding, we're gonna get a report, and we're
16 gonna send it on, but the only way you get to
17 be in the report is if you have a two
18 thirds -- I mean, a majority vote. You have
19 to have to have two thirds to be fact and a
20 finding, but to be in the report as a result,
21 you have to have a majority vote.
22 CHAIRMAN GILMORE: Well, that's
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1 right.
2 MAYOR KIRK: That makes no
3 sense at all. If you call results, are the
4 results of the Commission, they should
5 reflect every vote irrespective of whether it
6 is two thirds -- it's a majority or not. And
7 I would ask that our counsel, if they would,
8 as expeditiously as possible, provide me
9 anything in our rules where we at all
10 inferred or entertained any notion that,
11 short of a two-thirds majority, that we would
12 have a report that would be adopted on a
13 majority vote to include only those items
14 that received a majority. If you could give
15 me any section of our rules that refers to
16 that, I would be most appreciative.
17 MR. GRIFFITH: I believe the letter
18 addresses that issue, and I'd be happy to
19 take it up with you, but --
20 MAYOR KIRK: I mean, I read
21 your letter pretty plainly that says that we
22 follow the rules of the statute. But you
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1 just said we don't.
2 MR. GRIFFITH: No, no, I don't
3 think that's what I said.
4 MAYOR KIRK: I can quote
5 you. I mean, this is your language, you
6 don't quote anyone else. You say: It's a
7 cardinal principle of parliamentary law that
8 a body acts by simple majority unless the
9 governing legislative authority provides
10 differently. Our legislative authority
11 provides differently. You come up with a
12 ruling that says, well, that really doesn't
13 apply to the report --
14 MR. GRIFFITH: Well, I guess that's
15 where we differ, Mayor Kirk. I don't believe
16 that the Internet Tax Freedom Act says that
17 it requires a two-thirds majority to issue a
18 report. In fact, it says nothing like that.
19 The two thirds language applies only to
20 findings or recommendations.
21 SPEAKER: Governor --
22 CHAIRMAN GILMORE: Is there a
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1 parliamentary inquiry?
2 COMMISSIONER LEBRUN: Yes, I have
3 one.
4 CHAIRMAN GILMORE: Mr. Lebrun.
5 COMMISSIONER LEBRUN: I think
6 Counsel agreed that before we can make
7 findings or recommendations, requires
8 two-thirds vote. I'm looking at Item 1A,
9 which has already been voted on, and there's
10 language in here that says, for example, no
11 new taxes shall be applied to electronic
12 commerce. What is that if it's not a
13 recommendation or a finding? And I can go
14 through every one of these sentences in both
15 Items A and Item 2, and they include
16 findings. What are they, if they're not
17 findings? What is that that I just read if
18 it's not a recommendation?
19 CHAIRMAN GILMORE: It's the
20 majority opinion of the Commission,
21 Mr. Lebrun.
22 The Chair is sustained by a vote of
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1 eleven to eight. We'll move on to the
2 agenda.
3 Item B of the agenda is the issue
4 of Domestic Issues. The Business Caucus
5 Proposal is the first matter up. A Proposal
6 for Internet Tax Reform and Reduction. Is
7 there a motion to adopt Item B1, the Business
8 Caucus Proposal?
9 COMMISSIONER ANDAL: So moved.
10 COMMISSIONER POTTRUCK: Second.
11 CHAIRMAN GILMORE: It is moved by
12 Mr. Andal, seconded by Mr. Pottruck. The
13 floor is open for discussion.
14 Oh. There are two amendments under
15 Roberts Rules, in fact, of my own that have
16 been placed in here. And I might mention to
17 the members that there are two amendments
18 that I have filed to this resolution. These
19 amendments deal with the question of the use
20 tax and my resolution that says that we
21 should make a recommendation to the Congress
22 to not have the use tax applied throughout
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1 the United States. I intend now to withdraw
2 these amendments and not take them up at this
3 time. In the event that Mr. Pincus's
4 resolution passes and we go to floor
5 amendments, it would be my intention to offer
6 them at that time.
7 The third one, amendment, is
8 Mr. Sokul's. Mr. Sokul.
9 COMMISSIONER SOKUL: Thank you,
10 Governor. I would follow the same procedure,
11 follow your lead and withhold my amendment at
12 this time to be taken up later. I think that
13 the Business Caucus plan, as everyone in this
14 room knows, is the centerpiece of the debate
15 in the past few weeks, and I don't want to
16 distract from that at this time.
17 CHAIRMAN GILMORE: All of the
18 amendments to this have been withdrawn, with
19 freedom to bring them up at a later time in
20 the meeting, depending upon the vote on
21 Mr. Pincus's resolution. In the meanwhile,
22 the floor is open for discussion of the
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1 Business Caucus Proposal. Mr. Pottruck?
2 COMMISSIONER POTTRUCK: Thank you,
3 Governor. I welcome the chance to present
4 the Business Caucus Proposal. Business
5 Caucus really represents a starting point for
6 Mike Armstrong, Dick Parsons, Bob Pittman,
7 John Sidgmore, Ted Waitt, and myself to try
8 to come together, which we did, following our
9 San Francisco meeting, in an effort to try to
10 develop a comprehensive proposal to coalesce
11 around and get beyond what up to that point
12 was essentially discussion of the views and
13 ideas of individual Commissioners. And it
14 was an attempt to try to move away from a
15 political process to build a bridge, and
16 rather than a barrier, to competing views and
17 see if we could come up with a middle-ground
18 proposal.
19 The objective from the start of
20 this effort has been to come up with a strong
21 set of recommendations to Congress that could
22 establish an environment that continues to
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1 foster the development of the Internet and
2 electronic commerce, to lead to a simple and
3 equitable system for state and local sales
4 taxes that would impose equal obligations and
5 costs on all sellers, local or remote,
6 regardless of sales channel or technology
7 utilized, be respectful of the privacy rights
8 of individuals and the sovereignty of state
9 and local governments, and attract, if we
10 could, the votes of thirteen or more
11 Commissioners, the amount required under the
12 statute, to make a formal recommendation to
13 Congress.
14 The proposal has been the subject
15 of numerous discussions with virtually every
16 Commissioner, and many, many interested
17 public sector groups. There's been a lot of
18 dialogue and a lot of effort toward reaching
19 a compromise consensus. Now, consensus
20 doesn't meant that everybody agrees with
21 everything or even agrees to the final
22 proposal for the same reasons. There's been
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1 a lot of debate and dialogue about this
2 proposal.
3 This is definitely a
4 no-new-taxes-on-the-Internet proposal. But
5 it's not a no-sales-taxes-ever-on-the
6 Internet proposal. Our statement even has
7 the following language, it says: We do not
8 presume that the collection of sales and use
9 taxes on Internet transactions is an
10 inevitability. And we make that statement
11 because we recognize that simplification is
12 an absolute precursor for any effort to
13 create a level playing field or the remote
14 collection of sales taxes. We've tried to
15 present a fairness proposal. A proposal that
16 lays out the ground rules for simplification
17 and the ground rules to create a playing
18 field that is fair, regardless of sales
19 channel taken. We say the following in our
20 proposal. By eliminating any disparate
21 burden on interstate commerce, states will
22 have a pathway toward a system that extends
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1 their collection of existing state taxes to
2 remote sellers.
3 Concepts alone are not sufficient
4 to provide adequate guidance to Congress and
5 would not reflect the significant effort that
6 has been extended by all Commissioners
7 throughout the existence of this Commission.
8 Thus, the Business Caucus Proposal is
9 intended to satisfy two goals. One, portray
10 a broader consensus, and two, provide
11 sufficient specificity to be useful to
12 policymakers who will draft legislation.
13 The following items comprise the
14 general principles that are the basis for the
15 detailed recommendations in the Business
16 Caucus Proposal. First, we do not see the
17 Internet as a target for new taxes, nor do we
18 want to endorse any action that would expand
19 the digital divide, i.e., reduce the
20 availability of the Internet to those
21 Americans at the bottom of our socioeconomic
22 ladder. Accordingly, it's our recommendation
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1 that the temporary moratorium on taxes on
2 Internet access be extended permanently. One
3 of the principal areas of agreement among
4 virtually all Commissioners was that it is in
5 our national interest to eliminate all
6 barriers to Internet access.
7 Second, we do not believe there
8 exists any compelling reason to impose taxes
9 exclusively targeted at electronic commerce.
10 The Commission's issues and options paper
11 proclaims, quote, it is in the national
12 interest to establish an environment that
13 continues to foster innovation and
14 technological advancement in the development
15 of the Internet and electronic commerce, end
16 quote. Discriminatory taxes on electronic
17 commerce will not create such an environment
18 and will simply further expand the digital
19 divide. Accordingly, we believe the current
20 moratorium barring multiple and
21 discriminatory taxes should be extended for a
22 period of five years.
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1 Third, there's a widespread belief
2 among Commissioners that the current myriad
3 of taxes applied to telecommunications puts
4 an unnecessary compliance burden on that
5 industry, creates a competitive disadvantage
6 internationally, and ultimately increases the
7 cost to consumers. The oldest of these
8 taxes, the federal excise tax on
9 telecommunications, was enacted to pay for
10 the Spanish-American War and no longer serves
11 the policy purpose. It should be repealed.
12 The telecommunications tax system should be
13 reformed to reduce the overall tax burden on
14 consumers and simplified so that consumers
15 can have lower access costs to the nation's
16 information highway.
17 Fourth, we come to the issue of
18 privacy. There is enormous sensitivity
19 around this topic. The administration of any
20 tax system that includes large, multi-task
21 computers collecting information about the
22 spending habits of Americans creates
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1 significant trepidations for most
2 Commissioners. Individuals harbor great
3 fears that such information will be used in
4 ways that impinge upon their privacy.
5 Consumer privacy rights must be protected,
6 even though such protection could provide
7 significant obstacles to the formation of any
8 new approach which requires remote sellers to
9 collect sales taxes. Our recommendations are
10 mindful of this concern.
11 Fifth, the difficult issue of
12 collection of taxes on remote sales over the
13 Internet must be addressed. If the debate
14 and dialogue in this Commission has made
15 anything clear, it is the need for a
16 structured process that will lead to the
17 substantial simplification and reform of
18 state and local sales tax systems. Our
19 proposal recommends that this be accomplished
20 by adherence to a set of guidelines that
21 includes uniform rules and procedures, equal
22 burdens on all sellers and no interference
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1 with the innovation and technological
2 advancement of Internet and electronic
3 commerce. The need to do this is tied
4 directly to the fact that at some point in
5 the not-too-distant future, bricks and mortar
6 retailers will be completely transformed into
7 clicks and mortar retailers. In such a
8 world, we cannot let the tax system drive
9 business structure, perpetuating the type of
10 contempt and non-compliance that exists
11 today.
12 Now, if the states ultimately
13 succeed with their effort toward
14 simplification, creating an ability for
15 remote sellers to collect sales taxes, it is
16 not our intention to create a tax receipt
17 increase. Our proposal states the following:
18 Because we do not believe that any party in
19 the debate has sought to increase tax
20 revenues through more taxes, we believe it is
21 appropriate for states whose overall sales
22 and use tax revenue collections increase as a
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1 result of use tax collections on remote sales
2 to make substantial and proportional
3 reduction in their overall sales tax rates,
4 thus maintaining revenue neutrality in
5 overall sales and use tax collections.
6 The taxation of remote sales does
7 not appear to be a problem demanding a
8 solution instantly. Electronic commerce is
9 still a very small percentage of our total
10 commerce. In addition, the Center for the
11 Study of the States recently released a
12 report indicating that total sales tax
13 revenues were up 7.4 percent in the fourth
14 quarter of '99, and further strong gains are
15 likely this year.
16 But I just got a report from some
17 very authoritative sources which quote
18 Forrester, a research group that studies the
19 Internet, and here's what they had to say,
20 which I thought was particularly important.
21 75 percent -- 75 percent of the 16 to
22 22-year-olds who go online buy online.
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1 Forrester predicts that on-line sales of 170
2 billion in '99 will jump to 3.2 trillion in
3 2003. More liberal estimates forecast 10
4 trillion in a mere four years. This is an
5 important issue that needs to move toward
6 some new approaches.
7 Importantly, as states work toward
8 a simpler tax system, our proposal attempts
9 to clarify perhaps the most litigious and
10 uncertain area of tax law compliance for
11 businesses that operate in multiple states,
12 and that's the issue of nexus. We attempt to
13 draw some bright lines in the nexus area by
14 listing factors that in and of themselves
15 will not result in the imposition of
16 collection obligation on sellers or the
17 imposition of business activity taxes.
18 And finally, our recommendations
19 recognize that the burden and responsibility
20 of reform lies with the state and local
21 governments. Clearly there is a national
22 interest in ensuring that interstate commerce
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1 flows freely. In designing a process to
2 produce this system, we recognize that while
3 there is a national interest in creating an
4 environment that fosters growth of electronic
5 commerce and ensuring any taxing system does
6 not unduly burden interstate commerce, we
7 also recognize the need to be mindful of the
8 sovereignty of state and local officials in
9 setting policies for their electorate. We
10 believe our proposals strike the appropriate
11 balance.
12 I put forward this proposal.
13 CHAIRMAN GILMORE: Further
14 discussion? Mr. Norquist?
15 COMMISSIONER NORQUIST: Yeah, I'd
16 like to speak in favor of the proposal. I
17 think it puts together a very coherent
18 overview on how government, federal, state
19 and local, should look at the Internet. I
20 was put on this Commission to fill the slot
21 for the representative for consumers, and
22 looking at it from the standpoint of
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1 consumers, I think we make a real step
2 forward in the recommendation to get rid of
3 the 3 percent federal excise tax.
4 As has been pointed out, that is an
5 excise tax that was put in to fund the
6 Spanish-American War more than a hundred
7 years ago. It was put in when it was a tax
8 on the rich, and it was sold that way. Only
9 a hundred thousand people had phones at the
10 time and were paying taxes. It was presumed
11 to be a temporary tax because of that. And
12 it has unfortunately lasted for a hundred
13 years.
14 I have a resolution later looking
15 to sunset the Gore tax, the E-rate tax, once
16 its goal of wiring all schools has been
17 achieved. And the reason for that is, if we
18 don't sunset that that we could be paying --
19 our grandchildren could be paying the Gore
20 tax long after schools have been wired and
21 many other things have come to pass, but the
22 tax could last forever.
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1 In addition to the importance of
2 abolishing the 3 percent telecommunications
3 tax, and I hope people are aware that there's
4 been legislation introduced both by
5 Mr. Tauzin of Louisiana, and Mr. Portman
6 of Ohio to do this.
7 So I think Congress has been
8 listening to us as we've discussed this
9 issue. On the 3 percent in particular.
10 We've had several, I don't know, test votes
11 here where everybody except the
12 Administration representatives supported
13 those efforts.
14 But in addition the simplification
15 and reduction of state and local excise
16 taxes, I think, is also particularly
17 important. As people testified during the
18 hearings here, the average tax, excise tax,
19 sales taxes on telecommunications is 14
20 percent, and it gets to 25 and 30 percent in
21 some states and localities. The average
22 sales tax in the country is a lot closer to 5
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1 or 6 percent. We have a discriminatory tax
2 structure that discriminates against
3 telecommunications.
4 I understand how we got there, and
5 that's that telecommunications used to be a
6 government granted monopoly and a government
7 regulated monopoly, and because local
8 governments and state government could pass
9 on taxes that went just to their local
10 consumers, it was as if they were passing a
11 tax on the people who lived in their city or
12 their state. But today with real competition
13 between telecommunications, states or cities
14 that add additional taxes on
15 telecommunications as if they were immobile
16 and couldn't move, as if they were government
17 monopoly, I mean, we are taxes what is
18 becoming increasingly a competitive market as
19 if it was a monopoly. And I think the
20 recommendations to clarify those taxes, to
21 simplify those taxes is extremely important
22 for consumers, because I don't think -- the
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1 gist is there's been a nationwide movement to
2 fight against the high excise taxes on
3 automobiles. And Governor Locke in
4 Washington state, the voters voted almost two
5 to one to cut those discriminatory excise
6 taxes.
7 Governor Gilmore, you've taken a
8 lead in fighting for reducing discriminatory
9 excise tax on automobiles. American
10 consumers are beginning to look at their
11 phone bills and seeing similar overburdensome
12 taxes there. And I think from a consumer
13 standpoint, this is a very strong proposal.
14 I personally would propose -- would
15 have preferred to put a permanent ban on
16 taxation of electronic commerce starting now
17 and into the future. But I think in terms of
18 building a majority consensus for this, I
19 think this is a very good staring point, and
20 I'm delighted that the leadership in Congress
21 has already said that they're looking forward
22 to receiving this proposal.
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1 CHAIRMAN GILMORE: Thank you,
2 Mr. Norquist. Having looked around the room
3 and not seen a hand raised, I'm going to take
4 a moment and address it myself, if I could.
5 I think everybody on the Commission
6 is aware that my position has been that we
7 ought to work towards a proposition that
8 eliminates Internet taxes on E-commerce to
9 the greatest possible extent that we can.
10 I've listened very closely to the kiosk
11 argument that was so eloquently made by
12 Governor Locke last time, and believe that an
13 issue like that can be addressed by banning
14 sales on remote -- banning taxes on remote
15 sales as opposed to the downtown sale. And I
16 believe that we can minimize any impact,
17 which I think is undemonstrated, to states
18 and localities by doing this elimination with
19 respect to business to consumers. And that,
20 of course, would minimize that impact. But
21 I've listened very closely over this past ten
22 months to the issues of impact upon
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1 localities and states, impact upon
2 traditional retail, and the evidence just
3 isn't there. But what is there is an
4 opportunity to do something that's good for
5 consumers. So having looked at the business
6 proposal, it not being, certainly, my
7 proposal, but having looked at it, what is
8 contained within it, and I want to explain
9 why I'm going to vote for this.
10 It does extend the moratorium on
11 internet sales. I have been a critic of this
12 moratorium in many ways, but it is a good
13 start, to extend this moratorium at least
14 five years. It does define nexus, which
15 means that businesses that are going to be
16 setting up in this country in order to do
17 business will have some clear picture about
18 what they can and what they can't do before
19 they are subjected to taxes or the collection
20 type of obligations with respect to
21 consumers. It does contain an elimination of
22 the 3 percent telecom tax, which is very good
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1 for the working men and women of this country
2 that I've been trying to watch out for in
3 this process. It calls for the elimination
4 of access taxes on taxes onto the internet.
5 And furthermore, one of the difficulties with
6 the current moratorium is that it
7 grandfathers in those taxes which currently
8 exist with taxation of access to the
9 Internet. This proposal eliminates that and
10 says we will not tax access to the Internet.
11 It does have a full call for
12 simplification. The people on this
13 Commission have a different idea about
14 simplification. There are people on this
15 Commission that want simplification so that
16 they can find a pathway to new taxation of
17 the Internet, and I acknowledge that. And
18 there are people, such as myself that want
19 simplification because they think it's better
20 for business and for the consumers of this
21 country, and I am for that. And so I can
22 support this.
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1 It does have the ability here for
2 an extended period of time for the National
3 Conference of Commissioners on Uniform State
4 Laws, NCCUSL, I believe its designation is,
5 to go forward and try to draft some uniform
6 statutes. Having worked with Mr. Lebrun, I
7 am confident that NCCUSL will do a wonderful
8 job with this, if it becomes a part of that.
9 It calls for a new commission to monitor all
10 of those developments as it goes along, and
11 reduces taxes on telecommunications, which I
12 think is good for working men and women. So
13 I think this will go a long way, and that's
14 why I have come to support this and will
15 continue to on the vote that is coming
16 immediately.
17 Next individual, Governor Leavitt.
18 COMMISSIONER LEAVITT: Thank you,
19 Governor. I would like to ask Mr. Pottruck
20 some questions related to his presentation,
21 and to say how much I have appreciated the
22 very good spirited sense of work that you
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1 have done over the course of the last several
2 weeks. I know you've put an enormous amount
3 into this effort, and I want to, as a person
4 who really is not involved in retail
5 commerce, I think you've done an
6 extraordinary service.
7 Couple of questions, if I could.
8 The first is, you mentioned a statement that
9 we do not presume that the collection of
10 sales and use tax on Internet transactions is
11 inevitable. In other words, are you saying
12 that this -- it would be unfair to
13 characterize this as an anti-tax proposal?
14 COMMISSIONER POTTRUCK: There were
15 several negatives there, Mike, I want to make
16 sure I have it right. Say that one more
17 time.
18 COMMISSIONER LEAVITT: Well, as you have characterized this to me in our conversations, you've indicated
19 that this is not designed to be a
20 "anti-Internet -- anti-tax proposal." Is
21 that a fair characterization?
22
23 COMMISSIONER POTTRUCK: Well, I think
22 different people support it for different
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1 reasons. I think Governor Gilmore may support
2 this proposal for reasons different than the
3 ones I support it. We all see -- it's a
4 compromise. We seek different things in it
5 that we particularly like. From my
|
