Bob Graham

Mr. GRAHAM

Mr. GRAHAM. So that is not an issue of controversy. And Roman numeral (v), which is the new language under discriminatory tax, is acceptable. Two-thirds of the amendment that is offered is not in contest, either because it is in existing law--so whether we adopt the amendment or not, it is still going to be in the legislation--or it is acceptable. All the controversy, therefore, focuses on page 3, lines 5 through 23, which is the language that has been referred to as the ``nexus'' language. This language essentially as presented in this amendment was before the Senate Finance Committee. It was reviewed by the Senate Finance Committee and, on the recommendation of both the majority and minority legal counsel, was stricken from the bill. What was the basis, Mr. President, that the Finance Committee made such a recommendation to strike what is now the essence of lines 5 through 23 from this bill? These are the arguments that the Finance Committee was persuaded by. It determined that the areas of nexus, which relate to the subject of how much of a presence does an entity such as a business have to have in a State to make it subject to that State's tax authority. It determined that the areas of nexus were sufficiently clear under today's law that it was inappropriate to include such standards in Federal legislation. The basis of nexus: As the Presiding Officer, who was a distinguished member of the State Senate of the State of Wyoming, knows and from his professional career as a CPA, nexus has traditionally been determined by State law, not by Federal law. Each State determines what is the necessary presence for taxation. There are, of course, limits as to State law under constitutional provision for interstate commerce. But within that standard, the States have been the determinative bodies. According to the Finance Committee staff, there has only been one other Federal law, and that was passed 40 years ago, in 1959, which relates to the issue of federalization of what those standards of nexus would be. So the essential position of the Finance Committee was, first, that this is a matter that was being properly dealt with at the State level, and that was not a compelling reason why we should federalize the issue of nexus. Second, they found that no State is currently attempting to enforce a tax collection obligation on the basis of the circumstances outlined in amendment; therefore, there was no necessity for this federalization, and that it would lead to potentially increased litigation over the nuances of this language. I am going to talk about that in a moment. Finally, that the enactment of this amendment would create special federalized rules for a very small subset of the retail community. And it is inappropriate--for a bill that is intended to cause a timeout, a pause, a moratorium, on State action to allow a commission to develop recommendations on appropriate rules for taxation--for us now to essentially preempt that whole process by federalizing a significant, albeit very niche, area of commerce. So those are the reasons that the Senate Finance Committee voted to eliminate this language in the bill. Certainly the Finance Committee was not adverse to the thrust of the bill, because it passed the bill on a 19-to-1 vote. The idea that by failing to include this language we would be ``gutting'' the bill is, in my opinion, an extreme overstatement. Mr. President, beyond those reasons that were given by the Finance Committee, there is also another set of concerns which have come to light as this amendment has been increasingly in the public attention. That is the fact that there are States which either are or are potentially in litigation with various providers within the Internet industry over the question of their tax liability to a State. We have been sensitive to that in this legislation by providing a grandfather clause, which essentially protects the right of those States. As presented, this nexus amendment clause is retroactive, as the discriminatory tax definition in this bill is not covered by the general grandfather clause, and would apply to past events. There is concern that the effect of this legislation would be to tilt the playing field in the courtroom of that litigation by making it more difficult on a retroactive basis for the States to make their arguments about an adequate nexus to the State as the basis of taxation of these Internet providers. I don't think that this Congress wants to get into the business of intruding itself into ongoing litigation which might involve the State of Mississippi, or the State of North Dakota, or the State of Arizona, or the State of Florida, or any other State. That is not our business-- to retroactively insert ourselves into that thicket of litigation. Mr. President, it is for those reasons that I believe this amendment is defective. This Senate has adopted rules that provide that, after cloture has been invoked, the only amendments that can be considered are those that are germane to the bill. The very fact that the sponsors of this amendment have filed what is a very unusual motion to suspend the Senate's rules as it relates to germanity is an indication that, first, they don't think it is germane; and, second, that under the rules of the Senate it should not be debatable in this postcloture environment. As the managers and sponsors of this bill, they have had ample opportunity to get this language included throughout this long and tedious process. They have not done so. Now, in the postcloture environment, they are asking us to waive a fundamental rule of the Senate, which is, after cloture has been invoked, the cloture which was filed by the primary sponsor of the bill, now they want to be able to take up what is tacitly admitted to be a nongermane amendment, an amendment which was rejected after thorough analysis by the Senate Finance Committee, a measure which I think would have the effect of injecting us into litigation and affecting potential litigation between the States and various Internet providers. Mr. President, I strongly urge my colleagues that we not adopt this motion, that we not change our rules, that we play by the rules that we have all agreed to, and that we play by the rules that have been in effect between States and the Internet industry in the past, and not retroactively reach back and adopt a provision which could interfere with the normal resolution of pending litigation. Having said all of that, Mr. President, it is my hope that while this discussion has been going on, there have been good-faith efforts made to arrive at a resolution of this issue, and it would be my suggestion to have possibly a brief period by suggesting the absence of a quorum so that we might see if in fact we have arrived at a resolution that would obviate the necessity of the several steps that would be required in order to further pursue this matter. I think that would be in everybody's interest. I suggest the absence of a quorum.

Mr. GRAHAM. Mr. President, I understand I only have 22 seconds. I want to say some positive things. I ask that I may be yielded----

Mr. GRAHAM. Mr. President, I appreciate that generosity, and I will not overly indulge. Let me say, we have reached an honorable resolution to this issue which, for those who have been listening to this arcane debate, I will summarize by saying a significant issue will be made prospective in its application and not have retroactive application. Reading the language we have agreed to add to the McCain amendment 3711, which makes a portion of the nexus language prospective, in combination with the definition of ``tax on internet access,'' which was agreed to earlier, this amendment should not interfere with litigation between States and internet service providers. With that agreement, that has brought the various parties of interest into concurrence. What I want to say, Mr. President, is the three people who have been particularly active on this issue, who are on the floor now--Senator McCain of Arizona, Senator Dorgan of North Dakota, Senator Wyden of Oregon--are three of the finest people with whom I have had the privilege to serve in public office. If America was going to judge the quality of its public officials, I would be happy to be judged by these three men. As the Senator from Arizona said, we have had some degree of controversy, but that is the nature of the democratic process. If this were a passive and tranquil process where everybody voted 400 to 0, that would be reminiscent of the way in which the Soviet Union used to operate its parliament, not the U.S. Senate. I think we have come to not only an appropriate resolution of this specific amendment, but I am proud where we are overall. We have achieved the purpose of having a reasonable period of timeout, with a thoughtful commission to be appointed to study some extremely complicated areas, the intersection of a legal system that is complex in areas of State-Federal relations, telecommunications and a highly complex new set of technologies. This is an appropriate area for us to stand back and ask for the assistance of some thoughtful citizens who can bring their wisdom and experience to bear and give us the framework of some policy that then will be returned to the Senate and to the House of Representatives for enactment, as well as to the various State legislatures for their consideration. I think we have, at the end of this process, arrived at exactly what our framers of this Constitution intended the legislative branch to do. I am proud to vote not only for this amendment but for the bill on final passage, and I look forward to the commission's work over the next several months and a return to these subjects in the year 2000 or 2002. Again, I thank my colleagues for their very significant leadership in bringing us to this position. Several Senators addressed the Chair.

Mr. GRAHAM. Mr. President, I also would like to take this opportunity to thank Mr. Russ Sullivan, who is legislative director in my office, and Kate Mahar, who has worked with him. They have been on a fast learning curve on these issues, fortunately, about 12 hours ahead of myself. I publicly thank them for their contribution to this final conclusion. Mr. WYDEN addressed the Chair.

Mr. GRAHAM. What is the position relative to debate on the motion to suspend the rules for the purpose of considering this amendment?

Mr. GRAHAM. I object to that request to modify and I raise again the point of order that the amendment is not germane.

Mr. GRAHAM. Further point of inquiry.

Mr. GRAHAM. Mr. President, point of parliamentary inquiry. Will there be a ruling on the motion of the point of order as to germanity?

Mr. GRAHAM. Mr. President, I raise a point of order that this amendment is not germane.

Mr. GRAHAM. Mr. President, I object to the modification of the amendment and raise a point of order that the amendment is not germane. Amendment No. 3711 (Purpose: To define what is meant by the term ``discriminatory tax'' as used in the bill.)

Mr. GRAHAM. Am I correct that there is not a request to modify this amendment?

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I rise today to introduce legislation designed to aid millions of American families with one of their most pressing needs--child care. This legislation would make child care more accessible to millions of families who find it not only important, but necessary, to work. In the ideal world, most parents, I believe, would prefer to have their children raised by at least one parent at home. However, for a vast majority of families in America, this ideal is not possible. And for the working poor and many in the middle class of our society, this ideal is a luxury that they cannot afford. The legislation which I am introducing today would not solve the child care needs of American parents. However, it would serve to provide a much needed incentive--a jump start--to promote employer provided child care, particularly among our nation's small businesses. The legislation I am introducing today would offer a tax credit to those employers who undertake the responsibility of assisting their employees with child care expenses. This bill--the Worksite Child Care Development Center Act of 1998--would modify that part of the Internal Revenue Code of 1986 which relates to business tax credits. It would do so by providing child care tax credits to employers for-- A one-time 50 percent tax credit, not to exceed $100,000, specifically for facilities start-up expenses, which includes expansion and renovations of an employer-sponsored child care facility; A 50 percent tax credit, not to exceed $25,000 annually, for those expenses related to the operating costs of maintaining a child care facility; and A 50 percent tax credit, not to exceed $50,000 annually, specifically for those employers who provide payments or reimbursements for their employees' child care expenses. One may ask, ``Why is this legislation important to American employers and employees?'' Mr. President, I submit to you that there are four compelling reasons for the Congress to pass this legislation. First, child care is a major concern for American families. We should be concerned about child care because it has become one of today's most pressing social issues. Ask working parents today to identify their top daily concerns, and a large proportion will most certainly identify quality, affordable child care as one of them. On June 1st of this year, I hosted a Florida statewide summit on child care, which was attended by over 500 residents of my state who shared with me their concerns, and sometimes their frustrations, about this issue. The feedback that I received from my constituents covered a myriad of issues reflecting the high level of concern that parents have regarding access, quality, and the level of investment we are making in child care. We had five panel sessions moderated and staffed by 25 of Florida's most distinguished professionals in the field of child development and human services and education. The panels covered a wide range of issues from affordability and access, to quality of care, to public-private partnerships between government and businesses. I am pleased that I was able to hear from my constituents and from experts regarding the extent and nature of the problem. One participant summed it up well, ``The issues addressed in the summit today are concerns that need to continue to be addressed until the needs are met; however, the needs are going to continue to grow as our preschoolers and school-agers go into middle schools.'' Mr. President, it's no wonder that there is so much interest in the issue of child care. Child care, when it is available, is provided to a child at one of the most important times in that child's life. Indeed, recent research has confirmed what many of us had always believed--that quality child care can positively influence cognitive and social development. Current scientific research tells us that the most crucial period in children's brain development and brain readiness--which determines so much of the course for the rest of their lives--is that time between birth and the age of three. Second, America's workforce is changing. The work place has changed dramatically over the past fifty years. In 1947, just over one-quarter of all mothers with children between 6 and 17 years of age were in the labor force. By 1996, the labor force participation rate of working mothers had tripled. The Bureau of Labor Statistics reports that 65 percent of all women with children under 18 years of age are now working. This percentage is not expected to decrease--it is expected to grow. As we enter the 21st century, women will comprise 60 per cent of all new entrants into the labor market. A large proportion of these women are expected to be mothers of children under the age of six. The implications for employers are clear. Employers understand well that our nation's workforce is changing rapidly. Those employers who can attract and hold onto the best employees are likely to be among the most competitive. Many of our larger corporations and government agencies have recognized this and are already moving in that direction. For example, our nation's military is often cited as having a model child care program for its personnel. Military leaders know well the relationship between a parent's peace of mind and satisfaction with good child care and job performance. In my State of Florida, several major firms have taken similar steps to invest in their employees. I recently visited Ryder Corporation's Kids' Corner child care center in Miami where more than 100 children are cared for in a top-notch day care program. Ryder has received many accolades, including being recognized as the Best Employer of Women in the State of Florida by the Florida Commission on the Status of Women. Ryder now plans on extending the care that it provides to the children of employees by establishing a charter school on-site. Similarly, NationsBank, formerly Barnett Bank, in Jacksonville, operates a state of the art child care facility for its employees. According to Ms. Mari White, the Senior Vice President of Work Environment Integration at NationsBank--and a member of my informal Advisory Committee on Child Care--this program makes good business sense. She views the availability of child care at the work site as a workforce retention tool for NationsBank as well as a great recruitment tool for new employees. In addition to its day care center, NationsBank also operates a Satellite Learning Center--a charter school for employees' children. I commend Ryder Corporation, NationsBank, and the many other corporations in Florida and throughout the nation, which have taken the important step forward in providing child care for its employees. I submit to you that small businesses, which do not have the resources to undertake such efforts, ought to have the ability to offer similar benefits to its employees. My legislation is intended to make it easier for them to do so. Third, child care is important for the success of Welfare Reform. This legislation is an important component to our national welfare policy. While most American families struggle with child care, this problem is most acute among the working poor and the middle class. In 1996, Congress and the President changed welfare as we knew it. We made fundamental changes to the policies, and the social expectations, relating to work and welfare. The federal government has asked our business community and governmental agencies to work in partnership in keeping the working poor off of the welfare rolls. If we are to see the reforms of 1996 succeed, we must ensure that the means to succeed are provided. The working poor--particularly those formerly on welfare--face major challenges associated with staying off of welfare. These challenges include their ability to: (1) get to and from work; (2) obtain the job training they need to get and hold onto their job; and (3) access to affordable and quality child care. Although States spend millions of dollars each year on subsidized child care, at any given time there may be up to twice as many children eligible who are not enrolled in the system. These children are on child care waiting lists. In the State of Florida for example, as of July of this year, there were 29,744 children on the state's wait list for these services. Many of these families on waiting lists do not receive temporary cash assistance because they work in low-wage jobs, such as in the retail sector, hotel and motel business, fast food restaurants, nursing homes, and child care centers. They earn too much money to qualify for many government programs, yet they earn too little money to have real choices about their child care. This is not an issue of whether they should stay at home or work-- they must work. In other words, for them child care is not an option, it is a necessity. I am reminded of a letter that I recently received from Ms. Ruth Pasarell-Valencia, the Commissioner at the Housing Authority of the City of Miami Beach, in which she states, ``We need to wake up from the nightmare of child care neglect. In this era of Welfare Reform and cuts in many public assistance benefits, we have to be very careful not to hurt our children in the process of making adults self-sufficient.'' By addressing our citizens' child care needs, particularly that of our working poor, the federal government has an opportunity to contribute to the success of welfare reform. This legislation offered today would be one part of the federal government's response to this need. Fourth, small businesses need this support. Mr. President, I believe that the provisions contained in my legislation will be a boon for American small businesses. According to the Small Business Administration, small businesses in America employ: Fifty two percent of all private workers; Sixty one percent of private workers on public assistance; and Thirty eight percent of private workers in high-tech occupations. Small businesses have contributed virtually all of the net new jobs which have been created during these recent years of job growth. And small businesses represent 96 percent of all exporters of goods leaving the United States. Small businesses are truly a big piston in the engine of our nation's economy. Yet, we know that the owners of small businesses struggle to make ends meet. That is why initiatives like the one I propose are important for strengthening the vitality of our small business community. For small businesses, resources are limited and survival in a competitive world market is difficult. Think of the impact on a small business when one of its employees is absent for the day to care for his or her child because that employee's day care worker is sick that day with the flu. According to the U.S. Department of the Treasury, employers surveyed reported positive benefits associated with providing child care to its employees. The Treasury Department's data indicates: Sixty two percent reported higher morale; Fifty four percent reported reduced absenteeism; Fifty two percent reported increased productivity; and Thirty seven percent reported lower job turnover. Providing child care to employees can be a major step-up for small businesses. My legislation would provide tax credits to the employers who make investments to help their businesses and their employees with child care, or back-up child care when their regular services are not available. Mr. President, in concluding, I would like to thank the 30 members of my Informal Children's Development Advisory Committee in Florida which has provided invaluable support to me, my staff, and Floridians throughout the state. This group of dedicated individuals, who hail from a wide variety of professions, were instrumental in organizing the Child Care Summit which we held in South Florida in June of this year. They have worked with child care professionals, parents, and business groups to raise awareness on this issue, and have supported my efforts to draft this important legislative proposal. To them, I offer my deepest thanks for the assistance they have provided me and for all of their hard work on behalf of the welfare of children in Florida. I would like to quote Ms. Janet Ndah, the Dean of Students at the Punta Gorda Middle School in Punta Gorda, Florida, who says of my legislation: ``As an educator and a working parent, care for children is definitely a priority and a challenge. Therefore, I am extremely supportive of this child care act and in particular, the tax credits that employers would receive as they begin a site-based child care facility.'' Ms. Phyllis J. Siderits, who works at the Florida Department of Health--and who has served as a member of my Advisory Committee--also has written to me of the benefits of this proposal: ``This Act is of benefit to employers as well as employees. For too long, I have witnessed the inability to maintain qualified and competent employees because of child care issues, whether those issues were ones of compensation, scheduling and work time difficulties, or caretaker concerns. It is especially gratifying to know that this act would be of benefit to employees who have children with special needs and allow the employees to have closer contact with their children during the day where employer-sponsored child care facilities exist. We have not supported single-parent or dual-parent families who work and have tremendous difficulties obtaining child care. The ideal solution is an employer-sponsored child care facility. I think this proposed legislation offers all of the incentives to create a win-win solution for employers and employees.'' Mr. President, I am disappointed that it seems that the Administration's child care initiatives will not pass Congress this year. That comprehensive proposal outlined by the President at the start of this year would have provided much needed support to American families in this vital area. However, I believe that the legislation which I am introducing today would make a valuable contribution to the quality of life and care for families; the success of Welfare Reform; and the strengthening of our small business community. On July 30, 1998, I introduced, with 20 of my colleagues, a Senate Resolution which would designate October 11, 1998 as National Children's Day. That legislation now has 52 cosponsors and is awaiting passage by this Congress. It is only fitting that I am introducing this child care legislation just days prior to that date which the United States Senate is designating as ``National Children's Day.'' Mr. President, it is in recognition of our commitment to the children of our nation that I introduce the Worksite Child Care Development Center Act of 1998. Our children and their families deserve our support. Mr. President, I ask unanimous consent that the text of S. Res. 260 and a list of the members of the Advisory Committee be printed in the Record.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I ask unanimous consent for 2 minutes for the purpose of a colloquy.

Mr. GRAHAM. In answer to the question, the Quill opinion gave to the Congress the responsibility to authorize the States to require the distant seller to collect and remit the tax. Thus far, as Senator Bumpers' long, valiant, but thus far unsuccessful attempts illustrate, Congress has been unwilling to do so. I suggest that indicates what is the likely political result of this new issue of how we are going to tax the Internet.

Mr. GRAHAM. Thank you, Mr. President. Mr. President, I go back to the same point that I have made on two or three occasions in the debate of this legislation. That is to remind us what we are doing. We are doing quite an exceptional thing. We are telling to 50 States and multiple local jurisdictions that their legal authority to establish what is the appropriate fiscal policy for their citizens is going to be preempted. We are telling them for this purpose that they will be precluded from exercising a judgment that they might otherwise feel is in the interest of their residents and citizens. We are doing this in order to provide a pause, a time-out, a brief period in which to sort out the application of public policy, particularly as it relates to tax policy, and the new technology of the Internet. I think that we ought to accept the fact that the presumption should be that that preemption of our brethren at the State and local level should be respectfully as brief as possible. We should not easily or excessively indulge in this kind of behavior, particularly when the consequences of this behavior are so obvious and perverse. I have used the analogy, and I will use it again, of what we are doing to that Main Street merchant, as if to say that Main Street had a north side and a south side. On the north side, all the people who come to buy their hardware, their clothes, their shoes would be responsible for paying the legislated State and local sales tax, and they would be responsible for collecting it and then remitting it back to the appropriate tax collection authorities. That is not adding a new tax; that is the administration of a tax which the democratic processes in Little Rock or Tallahassee or Salem or any other State capital have prescribed as a means of funding the essential responsibilities of local and State government. We are saying that on the north side that collection has to take place. But on the south side, which is a virtual south side because it doesn't really exist other than in cyberspace, because it is reached through the Internet, there is not such a responsibility to collect on exactly the same hardware, shoes and clothing that we now ask the north side merchant to collect. That is a fundamentally unfair proposition. We would be shocked and appalled if someone were to suggest that as a de novo proposition. But that is what we are doing with this Internet Tax Freedom Act. The second consequence that we are accepting as a result of this legislation is that we are about to drive a major hole into the ability of local governments and States to finance their most basic responsibility--police who secure our neighborhoods, fire officials who protect us in times of emergency, and most specifically our schools. I will talk in a moment about what has happened to education during this 105th Congress, but I suggest that of all the things we have done or we have not done, the most important education bill that we are going to consider in 1998 is the one that is before us today. Now, the question that I ask, and I hope that we receive a response, is why 4 years? I was reticent to object to the unanimous consent to call for a vote at 5:30, but I felt that we ought to allow enough time for the proponents of the 4 years to make the strongest case they could to overcome what I think should be the very strong presumption against making this moratorium excessive, against lengthening by an unnecessary day, week, month or year the time in which we will allow this unfairness in the marketplace and this threat to the ability of State and local governments to carry out their fundamental functions to remain in existence. Let's talk about what had been some appropriate times for major tasks. Well, we find in Genesis, chapter 1 and chapter 2, that God created Heaven and Earth in 7 days: ``In the beginning, God created the Heaven and the Earth, and the Earth was without form and void and darkness was upon the face of the deep, and the spirit of God moved upon the face of the waters.'' And 6 days later Earth, the oceans, the mountains, the valleys, the streams, all of the fishes, the animals, and finally man and woman themselves had been created by God--in 7 days, according to Genesis, chapter 1 and 2. And yet it is going to take us 48 months to figure out what the appropriate tax policy should be for bits and bytes and all of the terminology of the Internet. We have some more recent examples that have already been cited. Senator Kerrey said the commission which was responsible for looking at the Internal Revenue Service, clearly one of the most complex agencies administering one of the most complex set of laws that man has ever known, was able to conduct its work in 15 months--3 months less than its original charter, and its work was so good that it formed the basis of the Congress this year enacting the most significant reform of the Internal Revenue Service since it was created. So the fact that they had an 18-month charter to accomplish this very complicated task did not degrade the quality of the ultimate recommendations and the receptivity of Congress to those recommendations. We have currently at work a commission studying Medicare. That commission, which was created by this Congress in 1997, was given 18 months to do its work. Medicare is one of the largest and most complex programs that this Congress has ever created. It serves to finance the health care of over 35 million Americans. It is a significant part of a health care industry which represents approximately one-seventh of our gross domestic product. We decided that 18 months was the appropriate time to study the complex Medicare system, and yet it is going to take us 4 years, according to this amendment, to decide what should be the appropriate way for the State of North Carolina to levy taxes on Internet activities that affect the citizens of the State of North Carolina. The almost absurdity of this 4-year period leads one to suspect--and we are not by nature a suspicious, certainly not a cynical people, but to suspect--that there are motivations here other than allowing a sufficient amount of time, the amount of time that we normally anticipate would be required to get a undergraduate degree from one of our great colleges or universities, why it would take 4 years in order to study this issue. Let me suggest what I think some of the motivations might be. One is that it is going to provide an extended period of freedom from taxation during which there will be new technological applications of the Internet which will have the effect of further widening the gap between Main Street and cyberspace and further exposing local and State government to an erosion of their tax base. I spoke yesterday about the new technology of Internet telephony, using the Internet as the means of making long distance telephone calls rather than the traditional line system that we use today. The effect of that is going to be that that Internet telephony will now escape both Federal as well as State taxation for the period of this moratorium. I read a statement yesterday by a research group which estimated that by early in the next century potentially 10 percent or more of long distance telephone calls would be made through Internet telephony. A second reason for the 4 years might be to develop a political coalition. There are going to be a lot of folks who are going to find it is awfully nice and convenient to not collect this tax. It is awfully nice to have your sales explode, as it was stated that Amazon.com's book sales are exploding. They surely ought to explode. They have a 6- or 7-percent market advantage over that independent bookseller in Fayetteville, AR. They ought to beat the pants off the bookseller. And now we have the situation where the publishers, not going through any intermediary, are going to be selling directly on line. That is great for the American consumer. They are going to have access to a lot of literature and other books at a very attractive price, but the price that society is going to pay is imbalance in the commercial marketplace and a degradation of our police, fire and educational services. We, also, as a consequence of this, are going to frustrate local choice. I said this morning that the morning newspaper was filled with articles which are relevant to this debate. This is one that might be of particular interest to our good friend from Arkansas, Senator Bumpers, in which there is, apparently in Arkansas today, an effort being made--and, by the polls, a pretty effective effort--to repeal the property tax in Arkansas and to substitute for the property tax a significant increase in the sales tax. It appears on page A-3 of the Washington Post of October 7 under the headline, ``Grass-roots Group Takes Aim At Arkansas Property Tax.'' I don't know whether this is a good idea or bad idea, for Arkansas to be suggesting this. Apparently the Governor and a lot of other folks think it is a bad idea. But I think we might agree, whether the idea is good or bad, that it ought to be an Arkansas idea, as to how Arkansas wants to organize its State and local taxation. We are about to say in this bill that we are going to make it more difficult for States to have that range of choice. As we erode the base upon which the sales tax is applied, the opportunity for States to do what Arkansas is considering, substituting sales for property tax, is going to be much more difficult because there will be less to substitute with. So we are embarked along a path which is not just a temporary one but has the potential of driving a permanent wedge between the Federal Government and States as we rather casually preempt their traditional political choices of how to organize their tax base. But those consequences, I think, pale in terms of the final one to which I have already alluded. That is that this is the most important education bill of 1998. Mr. President, 1998 started with a lot of enthusiasm for education. The President in his State of the Union talked about reducing class size, particularly in the primary grades, so that children would not have to go to excessively overcrowded classrooms. That was an issue that struck home directly to me. My third daughter, Suzanne Gibson, was a wonderful kindergarten teacher. The last year she taught kindergarten at a new elementary school in Miami, Dade County, FL, there were 38 students in her class-- 38 students in a kindergarten class. My daughter is a wonderful teacher. She now is the mother of triplets, so she is getting to apply what she learned with those 38 students in her class, but I defy anyone to educate thirty-eight 5-year-olds. You may provide custodial services but you do not educate thirty-eight 5-year-olds. So we started this year in Washington with a hope and some expectation that the Federal Government might reach out in a hand of friendship and partnership to States and school districts and millions of young boys and girls, and help them with their educational needs. We did not pass the bill that would have allocated an additional 100,000 teachers with Federal assistance in order to reduce class size at the primary grades. Although we had a good experience with a similar action with community police, where we are helping to finance 100,000 community police in a very positive contribution to enhance law enforcement, we did not do that as it relates to primary education. Then the President had another proposal for the Congress to assist in helping school districts be able to build enough schools and maintain the old schools so that we could have the classrooms that would be required to significantly reduce class size, particularly in the primary grades. We did not pass that bill either. So, now on the 7th of October, with some 2, 3, or 4 days left in this session, we are coming to the most important education bill we are going to pass. What is it going to do? Is it going to help States and local school districts carry out their most important responsibility? No. What it is going to do is to undercut their existing revenue and make it even more difficult to even keep class sizes down to the 38-to- 1 level in the kindergarten of Miami, Dade County, FL. So, I believe there is absolutely no justification for making this moratorium a day longer than is required to carry out what is a fairly straightforward task. This certainly is no reason to argue it is going to take 4 years, but I look forward to the argumentation that maybe will persuade me as to why 4 years are required for this task when God created Heaven and Earth in 7 days and we reformed the IRS in 15 months. Mr. President, I want to vote for this bill because I believe that there is a persuasive argument that a brief moratorium, with the time used by an intelligent group of people who represent all the interests involved, and against a charter which allows them to look at all the relevant improvements, could play a useful purpose. But I could not support a 4-year moratorium, with all the pernicious effects it would have, without any contribution to a greater understanding of the issues involved in Internet taxation. So, I urge defeat of this amendment. I urge adoption of the position taken, thoughtfully, by the Senate Finance Committee, which was for a 2-year study. If that is the provision, I will support this legislation. Otherwise, I fear for the consequences.

Mr. GRAHAM. I yield another minute for the question.

Mr. GRAHAM. The answer is no, that the discrimination is the fact, that currently the local Main Street merchant is required to collect the tax, but the distant remote Internet seller is not, and we are about to make that a 4-year institutionalized--

Mr. GRAHAM. If a person in Florida has a sales and use tax, could it require Amazon.com to collect from a Florida resident, who ordered a book in Seattle, the Florida sales tax?

Mr. GRAHAM. Mr. President, I have no extended remarks. I still don't think we have heard the answer to the question of why does it take 4 years to do this study. The fact is that when this report is available, whatever time, the principal recipient of that report will not be the individual 50 State legislatures, it is going to be us, because in order to implement the recommendations that would allow States to hold the distant seller responsible for collection, we know it is going to require action by the U.S. Congress. We are in session just about all the time. So whatever date we set for this report to be submitted, we will likely be here, or close to being here, to receive it and to commence the process to deal with it. I still have not heard any rationale as to why we should continue beyond the minimal time necessary for the inequity of the Main Street merchant and the vulnerability of State and local governments' capacity to finance their police, fire, and schools that an extended moratorium implies. Thank you.

Mr. GRAHAM. I yield back the remainder of my time.

Mr. GRAHAM

Mr. GRAHAM. Point of personal privilege.

Mr. GRAHAM. Mr. President, I am sorry, my good friend from Arizona has on several previous occasions made statements that have become, I think, excessively personal and not factually correct. I am prepared to vote on this bill right now, and I will vote for the bill in its current form. What the issue is, is offering an amendment that I question as to its germanity to this bill and that I might raise a point of order on that germanity. I don't consider that to be an inappropriate or even a particularly hostile act. That is a matter of the rules of the Senate. It either is or is not germane in this postcloture environment. I do not accept the characterization that I am, in some malicious way, standing in the way of the bill. I am perfectly prepared to vote at this time.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, first let us come back to what we are fundamentally about. What the Internet Tax Freedom Act says is that there shall be a moratorium, a pause, in the State and local governments' exercise of their otherwise legal authority to impose a tax on access to or transactions consummated over the Internet. That is an unusual action. For the Congress of the United States to preempt State and local governments from their otherwise lawful responsibilities to establish what they feel to be appropriate policy for their citizens is an unusual act for the Congress and one which we should only take after careful consideration. Why should we exercise such care? Because the consequences of this action, of establishing a moratorium on the taxation of one form of commerce as opposed to all forms of commerce, is to create or to continue a competitive disparity. In this case, it is the comparative disparity between the Main Street retailer, the person who is selling hardware on Main Street and is legally responsible for collecting a sales tax from those who purchase hammers and saws, and those who buy the same hammers and saws over the Internet where they are not subject to the requirement to pay, and the seller to collect, that same sales tax. That is a level of obvious inequity that we would, only under exception circumstances, impose. Second, at a time when we are underscoring our commitment to fundamental activities such as law enforcement and education, we are about to drive a major hole in the ability to do so of those levels of government which have the primary responsibility for law enforcement and education, which are our colleagues at the State and local level. I will be giving some current examples, as recently as today's newspaper, of the potential that we are about to open up. So it would only take an extremely persuasive argument to convince the Congress of the United States that it ought to inflict that inequality in the marketplace and the threat to the ability to deliver fundamental police, fire, and educational services at the local level as this legislation does. What is that rationale? The rationale: This is a new, rapidly evolving technology and we need to have this pause so we can assure that whatever tax policies are developed are developed with uniformity, with nondiscrimination, with predictability, so as not to interfere with the natural growth and evolution of this very important part of our commerce at the end of the 20th century that no doubt will play even a larger role as we go into the 21st. That is the argument for the discrimination and threat to State and local governments for which we are about to be asked to vote. I will personally support the basic proposition of a pause. But I will only do so if that pause is for a reasonable period of time, that period of time that we would consider necessary to carry out this review and recommendation as to uniform, nondiscriminatory, predictable tax policy, and, second, that we have a commission, which is going to be making this study, which will represent all of the diversity of interests on this matter and will have a charter broad enough to look at all the questions that are relevant to establishing proper policy for the Internet. The argument here is a direct clash between what the Senate Finance Committee found and what the authors of this amendment support. The language which I support is the language which is in the bill that was reported by the Senate Finance Committee with 19 favorable votes. If you will look in the bill that appears on our desk, starting on page 22, which is the beginning of the issues to be studied, as stated by the Senate Finance Committee, on page 23, under paragraph (d), the Finance Committee, under the leadership of Senator Roth, who advocated this language, states that: . . . there will be an examination of the efforts of State and local governments to collect sales and use taxes owed on purchases from interstate sellers, the advantages and disadvantages of authorizing State and local governments to require such sellers to collect and remit such taxes, particularly with respect to electronic commerce, and the level of contact sufficient to permit a State or local government to impose such taxes on such interstate commerce. That is the essence of the language that the McCain-Gregg-Lieberman amendment is going to strike. Mr. President, I ask my fellow colleagues, is that unreasonable for a commission we are going to set up to study the effects of Internet taxation on State and local governments and on fairness in the marketplace? Is that language unfair? I do not believe it is. The McCain amendment would strike that language. Senator Hutchinson of Arkansas, who has worked very diligently on this issue--and I commend him for his leadership on this matter and his deep understanding of the implications of this issue--has offered a second-degree amendment to the McCain amendment which essentially inserts the same concept of Senator Roth's language that was in the Finance Committee. His amendment would provide for ``an examination of the effects of taxation, including the absence of taxation on all interstate sales transactions, including transactions using the Internet, on local retail businesses and on State and local governments, which examination may include a review of the efforts of State and local governments to collect sales and use taxes owed on in- State purchases from out-of-State sellers.'' That is the amendment that Senator Hutchinson has offered which I think is as eminently reasonable as the language which was offered by Senator Roth in the Finance Committee. So I strongly support Senator Hutchinson's very thoughtful and significant amendment and would go on to say that current events are underscoring the urgency of this look at all forms of remote sales. One of the purposes of the underlying bill is to eliminate discrimination. That raises the question, Discrimination in relationship to what? If we end up with a bill that says that the commission cannot even look at the taxation and the effect of that taxation on fairness in the marketplace and on the ability of State and local governments to support their police and fire and schools, we are already guaranteeing that the commission will give us a report that, in order to be nondiscriminatory, the Internet should not be subject to taxation. That would make it the same as catalog sales. That would be a result with very serious long-term implications. If, on the other hand, we are able to adopt the language that either was in the underlying bill or the language that Senator Hutchinson has offered, then the commission is going to look at the taxation of all forms of remote sales and will be able to come back with a set of policy regulations that will in fact meet the test of uniformity, nondiscrimination, and predictability, which is the whole purpose of this exercise. I said the issue is one that is as topical as today's paper. I refer you to the Washington Post of October 7, on page C-10, which carries a story, ``Publisher, Bookseller Join Forces.'' I will not read the whole article but let me just give you a flavor of what it says: Taking direct aim at Amazon.com, publishing conglomerate Bertelsmann AG said [yesterday] it will spend $200 million to buy half of the online book service of Barnes & Noble. So, what we have is a major bookseller which already has an on-line service, where they are selling through the Internet as well as through their Barnes & Noble megabookstores; now they have sold half of their on-line service to yet another publisher, the publisher who has well known book houses such as Random House, Doubleday, and Bantam Publishing. They now together own an on-line bookselling firm which is going to try to compete with Amazon.com. Why are they doing this? While still a tiny segment of the book retailing marketplace, on-line sales are exploding in popularity. I underscore ``exploding in popularity.'' Seattle-based Amazon.com, founded three years ago, had revenues of $204 million in the first six months of 1998. The implications of this to the independent bookstores in Helena, MT, or in Concord, NH, are obvious. In addition to the other benefits of convenience of the Internet, we are now going to have a situation where, if you buy a copy of your book at the Main Street independent bookstore, you are going to be paying the State and local sales tax, but if you buy it over the Internet, you will not be paying the sales tax, and, thus, we are institutionalizing a significant competitive disadvantage. Why we would want to adopt the policy that puts the Main Street seller at a disadvantage to cyberspace is beyond me. It also happens to be beyond a number of important organizations, whose letters I will ask unanimous consent be printed in the Record immediately after my remarks, beginning with the National Home Furnishings Association, which states: The home furnishing industry has struggled with the issue of whether there is an obligation for remote sellers to collect and remit sales/use taxes to the state in which the purchaser resides on sales of furniture, long before the first sale was made on the Internet. It goes on to say: In addition to the lost revenue to the state, the in-state retailer is placed at a distinct disadvantage. There is, of course, the differential in the customer's total cost reflecting the sales/use tax. . . . Indeed, many times they serve as the unwilling ``showroom'' and sales adviser for the remote seller, as customers visit their store, discuss a purchase with the sales staff, scribble down model numbers and then call the remote seller. That is an example of the kind of institutionalization of competitive disadvantage we are about to enact. I also ask to have printed immediately after my remarks a letter from the Newspaper Association of America representing 1,700 newspaper members. This organization has supported the Internet Tax Freedom Act, but they state: . . . I am writing to express support for your efforts to amend the Internet Tax Freedom Act to ensure that the advisory commission examines the tax treatment of all remote sales. . . . The major thrust behind the Internet Tax Freedom Act is to ensure that the Internet is not subjected to unfair, discriminatory and inconsistent taxes at the state and local level. Proponents of the legislation--including NAA--have argued that business transactions and services should be treated similarly regardless of whether they are offered through electronic means or through existing channels of commerce. However, if the commission is not directed in the legislation to examine all remote sales, a discriminatory tax structure could be established that treats one form of remote sales--the Internet--differently from other forms of remote sales. Therefore, we believe a comprehensive approach works best. Mr. President, I ask unanimous consent that the letter from the National Home Furnishings Association and the Newspaper Association of America be printed in the Record immediately after my remarks.

Mr. GRAHAM. Mr. President, parliamentary inquiry. Is there a time limit on this amendment?

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I am pleased today to support, along with my colleague, Senator Mack, legislation to honor former Congressman Dante Fascell by naming the Biscayne National Park Visitors Center after the ex-Congressman of Florida. I had the pleasure to begin my political career as an intern in Congressman Fascell's office and am proud to have had the opportunity to serve with one of Florida's greatest representatives. Congressman Fascell's long history of public service began in the Florida House of Representatives after his service in World War II. He was elected to the Eighty-fourth Congress and spent the following thirty-six years in office. During this time Congressman Fascell was influential in both foreign and domestic policy. While in Congress, Dante Fascell influenced U.S. foreign policy by co-authoring the War Powers act and chairing the Committees on Foreign Affairs and Arms Control, International Security and Science. In 1969, Congressman Fascell led House action to establish the Department of Housing and Urban Development. This legislation was the first step in efforts to develop economically healthy communities and affordable opportunities for numerous families throughout the nation. He was also a devout supporter of both law enforcement and education on narcotics abuse. During his years in Congress, Dante Fascell was an outstanding environmental activist and improved the quality of Florida's natural habitats and wildlife. He battled to protect South Florida's national parks and led the successful effort to establish the national marine sanctuary in the Florida Keys during the 101st Congress. The Biscayne National Park visitor center introduces local, national and international visitors to the resources of the Biscayne National Park at Convoy Point, Florida. Its museum features exhibits simulating the park's four main ecosystems: the mangrove forest, Biscayne Bay, the Florida Keys, and the coral reef. The naming of this visitor center will serve as a lasting tribute to Congressman Fascell's persistent efforts to protect the environment for future generations. I ask for your support today for our bill which will pay tribute to the service of the former Florida Congressman, Dante Fascell. The committee amendment was agreed to. The bill (S. 2468), as amended, was considered read the third time and passed. The title was amended so as to read: ``A bill to designate the Biscayne National Park Visitor Center as the Dante Fascell Visitor Center.''.