William Roth

Mr. ROTH

Mr. ROTH. Mr. President, I rise today--along with Senator Breaux and others--to introduce a bill to repeal the telephone excise tax. It is a tax that is outdated, unfair, and complex for both consumers to understand and for the collectors to administer. It cannot be justified on any tax policy grounds. The federal government has had the American consumer on ``hold'' for too long when it comes to this tax. The telephone excise tax has been around for over 102 years. In fact, it was first imposed in 1898--just 22 years after the telephone itself was invented. So quickly was it imposed that it almost seems that Uncle Sam was there to collect it before Alexander Graham Bell could put down the receiver from the first call. In fact, the tax is so old that Bell himself would have paid it! This tax on talking--as it is known--currently stands at 3%. Today, about 94% of all American families have telephone service. That means that virtually every family in the United States must tack an additional 3% on to their monthly phone bill. The federal tax applies to local phone service; it applies to long distance service; and it even applies in some cases to the extra amounts paid for state and local taxes. It is estimated that this tax costs the American public more than $5 billion per year. The telephone excise tax is a classic story of a tax that has been severed from its original justifications, but lives on solely to collect money. In truth, the federal phone tax has had more legislative lives than a cat. When the tax was originally imposed, Teddy Roosevelt was leading the Rough Riders up San Juan Hill. At that time, it was billed as a luxury tax, as only a small portion of the American public even had telephones. The tax was repealed in the early 20th century but then was reinstated at the beginning of World War I. It was repealed and reinstated a few more times until 1941, when it was made permanent to raise money for World War II. In the mid-60s, Congress scheduled the elimination of the phone tax, which had reached levels of 10 and 25 percent. But once again, the demands of war intervened, as the elimination of the tax was delayed to help pay for Vietnam. In 1973, the phone tax began to phase-out, but one year before it was about to be eliminated, it rose up yet again--this time justified by the rationale of deficit reduction--and has remained with us ever since. This tax is a pure money grab by the federal government--it does not pass any of the traditional criteria used for evaluating tax policy. First, this phone tax is outmoded. Once upon a time, it could have been argued that telephone service was a luxury item and that only the rich would be affected. As we all know, there is nothing further from the truth today. Second, the federal phone tax is unfair. Because this tax is a flat 3%, it applies disproportionately to low and middle income people. For example, studies show that an American family making less than $50,000 per year spends at least 2% of its income on telephone service. A family earning less than $10,000 per year spends over 9% of its income on telephone service. Imposing a tax on those families for a service that is a necessity in a modern society is simply not fair. Third, the federal phone tax is complex. Once upon a time, phone service was simple--there was one company who provided it. It was an easy tax to administer. Now, however, phone service is intertwined with data services and Internet access, and it brings about a whole new set of complexities. For instance, a common way to provide high speed Internet access is through a digital subscriber line. This DSL line allows a user to have simultaneous access to the Internet and to telephone communications. How should it be taxed? Should the tax be apportioned? Should the whole line be tax free? And what will we do when cable, wireless, and satellite companies provide voice and data communications over the same system? The burdensome complexity of today will only become more difficult tomorrow. As these questions are answered, we run the risk of distorting the market by favoring certain technologies. There are already numerous exceptions and carve-outs to the phone tax. For instance, private communications services are exempt from the tax. That allows large, sophisticated companies to establish communications networks and avoid paying any federal phone tax. It goes without saying that American families do not have that same option. With new technology, we also may exacerbate the inequities of the tax and contribute to the digital divide. For example, consider two families that decide it's time to connect their homes to the Internet. The first family installs another phone line for regular Internet access. The second family decides to buy a more expensive, dedicated high speed line for Internet access. The first family definitely gets hit with the phone tax, while the second family may end up paying no tax at all on their connection. I can't see any policy rationale for that result. Speaking of complexity, let me ask if anyone has taken a look at their most recent phone bill. It is a labyrinth of taxes and fees piled one on top of another. We may not be able to figure out what all the fees are for; but we do know that they add a big chunk to our phone bill. According to a recent study, the mean tax rate across the country on telecommunications is slightly over 18%. That is about a 6% rise in the last 10 years. In my little state of Delaware, the average tax rate on telecommunications now stands at 12%. I can't control the state and local taxes that have been imposed, but I can do my part with respect to the federal taxes. I seek to remove this burden from the citizens of my state--and all Americans across the country. The technological changes in America have increased productivity and revolutionized our economy. As members of Congress, we need to make sure that our tax policies do not stifle that economic expansion. We should not adhere to policies that are a relic from a different time. In 1987, even before the deregulation of the telecommunications market, the Treasury Department concluded that there were ``no strong arguments in favor of the communications excise tax.'' In today's economy, the arguments for repeal are even stronger. Earlier this year, the National Governors Association issued a report concluding that ``policymakers need to create a telecommunications tax structure that more accurately reflects the new economic realities of the market and to ensure that current state tax policy does not inhibit growth in the telecommunications industry.'' Moreover, the Advisory Commission on Electronic Commerce, which Congress established to study the issue of Internet taxation, appears to have reached near unanimous agreement that the phone excise tax should be repealed. Mr. President, it is time to end the federal phone tax. For too long while America has been listening to a dial tone, Washington has been hearing a dollar tone. This tax is outmoded. It has been here since Alexander Graham Bell himself was alive. It is unfair. We are today taxing a poor family with a tax that was originally meant for luxury items. And it is complex. Only a communications engineer can today understand the myriad of taxes levied on a common phone bill and only the federal government has the wherewithal to keep track of who and what will be taxed. Mr. President, it is time we hung up the phone tax once and for all. I urge my colleagues to join me in supporting its repeal.

Mr. ROTH

Mr. ROTH. Mr. President, I rise today--along with Senator Breaux and others--to introduce a bill to repeal the telephone excise tax. It is a tax that is outdated, unfair, and complex for both consumers to understand and for the collectors to administer. It cannot be justified on any tax policy grounds. The federal government has had the American consumer on ``hold'' for too long when it comes to this tax. The telephone excise tax has been around for over 102 years. In fact, it was first imposed in 1898--just 22 years after the telephone itself was invented. So quickly was it imposed that it almost seems that Uncle Sam was there to collect it before Alexander Graham Bell could put down the receiver from the first call. In fact, the tax is so old that Bell himself would have paid it! This tax on talking--as it is known--currently stands at 3%. Today, about 94% of all American families have telephone service. That means that virtually every family in the United States must tack an additional 3% on to their monthly phone bill. The federal tax applies to local phone service; it applies to long distance service; and it even applies in some cases to the extra amounts paid for state and local taxes. It is estimated that this tax costs the American public more than $5 billion per year. The telephone excise tax is a classic story of a tax that has been severed from its original justifications, but lives on solely to collect money. In truth, the federal phone tax has had more legislative lives than a cat. When the tax was originally imposed, Teddy Roosevelt was leading the Rough Riders up San Juan Hill. At that time, it was billed as a luxury tax, as only a small portion of the American public even had telephones. The tax was repealed in the early 20th century but then was reinstated at the beginning of World War I. It was repealed and reinstated a few more times until 1941, when it was made permanent to raise money for World War II. In the mid-60s, Congress scheduled the elimination of the phone tax, which had reached levels of 10 and 25 percent. But once again, the demands of war intervened, as the elimination of the tax was delayed to help pay for Vietnam. In 1973, the phone tax began to phase-out, but one year before it was about to be eliminated, it rose up yet again--this time justified by the rationale of deficit reduction--and has remained with us ever since. This tax is a pure money grab by the federal government--it does not pass any of the traditional criteria used for evaluating tax policy. First, this phone tax is outmoded. Once upon a time, it could have been argued that telephone service was a luxury item and that only the rich would be affected. As we all know, there is nothing further from the truth today. Second, the federal phone tax is unfair. Because this tax is a flat 3%, it applies disproportionately to low and middle income people. For example, studies show that an American family making less than $50,000 per year spends at least 2% of its income on telephone service. A family earning less than $10,000 per year spends over 9% of its income on telephone service. Imposing a tax on those families for a service that is a necessity in a modern society is simply not fair. Third, the federal phone tax is complex. Once upon a time, phone service was simple--there was one company who provided it. It was an easy tax to administer. Now, however, phone service is intertwined with data services and Internet access, and it brings about a whole new set of complexities. For instance, a common way to provide high speed Internet access is through a digital subscriber line. This DSL line allows a user to have simultaneous access to the Internet and to telephone communications. How should it be taxed? Should the tax be apportioned? Should the whole line be tax free? And what will we do when cable, wireless, and satellite companies provide voice and data communications over the same system? The burdensome complexity of today will only become more difficult tomorrow. As these questions are answered, we run the risk of distorting the market by favoring certain technologies. There are already numerous exceptions and carve-outs to the phone tax. For instance, private communications services are exempt from the tax. That allows large, sophisticated companies to establish communications networks and avoid paying any federal phone tax. It goes without saying that American families do not have that same option. With new technology, we also may exacerbate the inequities of the tax and contribute to the digital divide. For example, consider two families that decide it's time to connect their homes to the Internet. The first family installs another phone line for regular Internet access. The second family decides to buy a more expensive, dedicated high speed line for Internet access. The first family definitely gets hit with the phone tax, while the second family may end up paying no tax at all on their connection. I can't see any policy rationale for that result. Speaking of complexity, let me ask if anyone has taken a look at their most recent phone bill. It is a labyrinth of taxes and fees piled one on top of another. We may not be able to figure out what all the fees are for; but we do know that they add a big chunk to our phone bill. According to a recent study, the mean tax rate across the country on telecommunications is slightly over 18%. That is about a 6% rise in the last 10 years. In my little state of Delaware, the average tax rate on telecommunications now stands at 12%. I can't control the state and local taxes that have been imposed, but I can do my part with respect to the federal taxes. I seek to remove this burden from the citizens of my state--and all Americans across the country. The technological changes in America have increased productivity and revolutionized our economy. As members of Congress, we need to make sure that our tax policies do not stifle that economic expansion. We should not adhere to policies that are a relic from a different time. In 1987, even before the deregulation of the telecommunications market, the Treasury Department concluded that there were ``no strong arguments in favor of the communications excise tax.'' In today's economy, the arguments for repeal are even stronger. Earlier this year, the National Governors Association issued a report concluding that ``policymakers need to create a telecommunications tax structure that more accurately reflects the new economic realities of the market and to ensure that current state tax policy does not inhibit growth in the telecommunications industry.'' Moreover, the Advisory Commission on Electronic Commerce, which Congress established to study the issue of Internet taxation, appears to have reached near unanimous agreement that the phone excise tax should be repealed. Mr. President, it is time to end the federal phone tax. For too long while America has been listening to a dial tone, Washington has been hearing a dollar tone. This tax is outmoded. It has been here since Alexander Graham Bell himself was alive. It is unfair. We are today taxing a poor family with a tax that was originally meant for luxury items. And it is complex. Only a communications engineer can today understand the myriad of taxes levied on a common phone bill and only the federal government has the wherewithal to keep track of who and what will be taxed. Mr. President, it is time we hung up the phone tax once and for all. I urge my colleagues to join me in supporting its repeal.

Mr. ROTH

Mr. ROTH. I thank the Chair. (The remarks of Mr. Roth and Mr. Moynihan pertaining to the introduction of S. 2277 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent that the legislation be printed in the Record.

Mr. ROTH. I think the sooner we can move on it, the better off we are. I expect this legislation to be adopted with overwhelming bipartisan support.

Mr. ROTH. Mr. President, I rise today for myself and Senator Moynihan to introduce legislation that will make normal trade relations with the People's Republic of China permanent when China accedes to the World Trade Organization. The legislation I am introducing is the same as that sent up by the administration. It is a clean bill, and I believe we should keep it that way. Last year, the Chinese made a series of bold commitments to United States negotiators to open their market in return for WTO accession. In sector after sector--and by a date certain--the Chinese have pledged to open their markets to foreign goods, investment and services. These openings represent an unparalleled opportunity for U.S. farmers, manufacturers, and service providers to expand their exports into a rapidly growing market. Those commitments will help move the Chinese economy toward a rules- based system and end many forms of state control. In essence, China has conceded that its future depends on the replacement of its communist- style economy with an open, market-oriented system based on the rule of law. Indeed, in a number of sectors, economically backward China will be more open to American exports than some of our developed-country trading partners in Asia and Europe. What must the United States give away in terms of access to our market in return for China's pledge to enact these sweeping reforms? The answer is as striking as it is simple: absolutely nothing. The cost of our access to China's market is simply to comply with our own WTO obligations. Indeed, for the United States to reap the benefits of China's open markets once it joins the WTO, the only act necessary is passage of this legislation. This legislation will thus end the annual normal trade relations renewal process required by the Jackson-Vanik provisions in current trade law. Some believe we must retain the annual renewal process because it gives us leverage in checking China's conduct on a number of fronts. But the annual debate on renewing normal trade relations has not been a very effective means of achieving any of the goals we all share with respect to China: peaceful settlement of the Taiwan question; enhanced human rights, religious freedom and stronger worker rights for the Chinese people or curbing China's irresponsible behavior on security matters. But the active involvement of United States firms in China can only help open that society and reinforce the changes already under way in China toward free markets and a rules-based society. The enormous benefits of enacting permanent normal trade relations, on the other hand, are clear. Just as clear is the huge cost of failing to do so. In passing PNTR, American workers, farmers and exporters will gain access to market-opening concessions the Chinese made to our negotiators after 13 long years of hard negotiations. If we fail to pass PNTR, then every member economy of the World Trade Organization will gain such access except the United States. Our European, Japanese and Asian competitors could not hope for a more lucrative gift, and all at the expense of our farmers and workers. Here is what Leonard Woodcock, many years the President of the United Auto Workers, had to say in support of PNTR 2 weeks ago: American labor has a tremendous interest in China's trading on fair terms with the U.S. The agreement we signed with China this past November marks the largest single step ever taken toward achieving that goal. The agreement expands American jobs. And while China already enjoys WTO-based access to our economy, this agreement will open China's economy to unprecedented levels of American exports, many of which are high-quality goods produced by high-paying jobs. With that sentiment I most strongly agree. What about the rights of Chinese workers themselves? On this point I agree with Mr. Woodcock, as well. To be sure, nothing in the U.S.-China trade agreement requires that free trade unions be formed in China. Yet the WTO does not require this of any of its 136-member countries, and the WTO is the wrong instrument to use to achieve that goal. We should, instead, be asking a more important question: Are Chinese workers better off with this agreement? The answer is a resounding yes. With so little to lose in ending the annual renewal process and so much to gain by enacting PNTR, I would hope this body will pass this legislation overwhelmingly.

Mr. ROTH. I say to the distinguished leader, it is my intent to bring this up at least within a month.

Mr. ROTH

Mr. ROTH. Mr. President, I rise today for myself and Senator Moynihan to introduce legislation that will make normal trade relations with the People's Republic of China permanent when China accedes to the World Trade Organization. The legislation I am introducing is the same as that sent up by the administration. It is a clean bill, and I believe we should keep it that way. Last year, the Chinese made a series of bold commitments to United States negotiators to open their market in return for WTO accession. In sector after sector--and by a date certain--the Chinese have pledged to open their markets to foreign goods, investment and services. These openings represent an unparalleled opportunity for U.S. farmers, manufacturers, and service providers to expand their exports into a rapidly growing market. Those commitments will help move the Chinese economy toward a rules- based system and end many forms of state control. In essence, China has conceded that its future depends on the replacement of its communist- style economy with an open, market-oriented system based on the rule of law. Indeed, in a number of sectors, economically backward China will be more open to American exports than some of our developed-country trading partners in Asia and Europe. What must the United States give away in terms of access to our market in return for China's pledge to enact these sweeping reforms? The answer is as striking as it is simple: absolutely nothing. The cost of our access to China's market is simply to comply with our own WTO obligations. Indeed, for the United States to reap the benefits of China's open markets once it joins the WTO, the only act necessary is passage of this legislation. This legislation will thus end the annual normal trade relations renewal process required by the Jackson-Vanik provisions in current trade law. Some believe we must retain the annual renewal process because it gives us leverage in checking China's conduct on a number of fronts. But the annual debate on renewing normal trade relations has not been a very effective means of achieving any of the goals we all share with respect to China: peaceful settlement of the Taiwan question; enhanced human rights, religious freedom and stronger worker rights for the Chinese people or curbing China's irresponsible behavior on security matters. But the active involvement of United States firms in China can only help open that society and reinforce the changes already under way in China toward free markets and a rules-based society. The enormous benefits of enacting permanent normal trade relations, on the other hand, are clear. Just as clear is the huge cost of failing to do so. In passing PNTR, American workers, farmers and exporters will gain access to market-opening concessions the Chinese made to our negotiators after 13 long years of hard negotiations. If we fail to pass PNTR, then every member economy of the World Trade Organization will gain such access except the United States. Our European, Japanese and Asian competitors could not hope for a more lucrative gift, and all at the expense of our farmers and workers. Here is what Leonard Woodcock, many years the President of the United Auto Workers, had to say in support of PNTR 2 weeks ago: American labor has a tremendous interest in China's trading on fair terms with the U.S. The agreement we signed with China this past November marks the largest single step ever taken toward achieving that goal. The agreement expands American jobs. And while China already enjoys WTO-based access to our economy, this agreement will open China's economy to unprecedented levels of American exports, many of which are high-quality goods produced by high-paying jobs. With that sentiment I most strongly agree. What about the rights of Chinese workers themselves? On this point I agree with Mr. Woodcock, as well. To be sure, nothing in the U.S.-China trade agreement requires that free trade unions be formed in China. Yet the WTO does not require this of any of its 136-member countries, and the WTO is the wrong instrument to use to achieve that goal. We should, instead, be asking a more important question: Are Chinese workers better off with this agreement? The answer is a resounding yes. With so little to lose in ending the annual renewal process and so much to gain by enacting PNTR, I would hope this body will pass this legislation overwhelmingly.

Mr. ROTH. I say to the distinguished leader, it is my intent to bring this up at least within a month.

Mr. ROTH. I think the sooner we can move on it, the better off we are. I expect this legislation to be adopted with overwhelming bipartisan support.

Mr. ROTH. Mr. President, I ask unanimous consent that the legislation be printed in the Record.

Mr. ROTH

Mr. ROTH. Mr. President, we yield back any remaining time.

Mr. ROTH. Mr. President, I move to reconsider the vote.

Mr. ROTH. Mr. President, first let me thank and congratulate my distinguished colleague, the senior Senator from New York, for his leadership throughout the years on this most important domestic program, Social Security. There is no program of greater importance and interest to the American people than Social Security. The distinguished Senator, Mr. Moynihan, as I said, throughout his career has played a critical role in the development, the preserving, and the strengthening of this important program. I thank him and congratulate him. As Senator Moynihan pointed out, the Senate is now turning to the vote to repeal the Social Security earnings limit, an important step in preparing Social Security for the 21st century. This repeal is good for seniors, it is good for America, and it is good government. As we have heard, the Social Security earnings limit was enacted 65 years ago to encourage older persons to retire during the Great Depression. But today, with Americans living longer, and the tightest labor market in 30 years, this rule is not only outdated, but it harms both our senior citizens and the economy. Repealing the earnings limit will help improve the retirement security of seniors by giving them the choice to work longer and to save more. Abolishing the earnings limit will allow us to protect the Nation's economic gains of the past 17 years by encouraging our Nation's most experienced workers to continue working, not only for today but into the future. Finally, repealing the earnings limit is just plain good government. It will save the Social Security Administration money and reduce very common, frustrating mistakes in calculating benefits. So let me say, I urge each Senator to support this bill. I am happy to yield the remaining time to the distinguished assistant leader of the majority.

Mr. ROTH. Mr. President, I ask for the yeas and nays.

Mr. ROTH. Mr. President, I thank the distinguished ranking member, Senator Moynihan, for his kind and gracious but too generous remarks. I know we were able to get this accomplished through his leadership. As I said earlier, I do not only want to congratulate him for his role today, but for his continuing role in his many years of service in the Senate. I thank him for his leadership, for his contribution, and for his steadiness on this most important matter. I also say to my distinguished colleague that it is important we recognize the staff who worked so hard on this historic measure on the majority side. I thank Frank Polk, Alec Vachon of the majority staff; on the minority side, David Podoff and Jon Resnick. I also thank David Koitz of the Congressional Research Service, Ruth Ernst of the Senate Legislative Counsel, and Kathy Ruffing of the Congressional Budget Office. Frankly, if it had not been for their hours of long staff work, this historic bill would not have been possible. Mr. President, I yield the floor.

Mr. ROTH

Mr. ROTH. Mr. President, on behalf of the majority leader, I object to further proceedings on these bills at this time.

Mr. ROTH. Mr. President, I understand there are two bills at the desk due for their second reading.

Mr. ROTH

Mr. ROTH. Mr. President, today the Senate will immediately begin the final 15 minutes of debate on H.R. 5, the Social Security earnings bill. By previous consent, the Senate will proceed to a vote on final passage of the bill at approximately 10 a.m. Following the vote, the Senate will begin a period of morning business of 2 hours with the time controlled by Senators Byrd, Murkowski, and Durbin. For the remainder of the time, the Senate is expected to begin debate on the crop insurance legislation. However, negotiations regarding amendments and debate time are ongoing, and if no agreement can be made, the Senate may turn to any Legislative or Executive Calendar items available for action. I thank my colleagues for their attention.

Mr. ROTH

Mr. ROTH. Mr. President, what is the order of business?

Mr. ROTH

Mr. ROTH. Mr. President, let me briefly describe the managers' amendment. This amendment would fix a technical problem with the House bill that would inadvertently impose a more stringent earnings limit on certain Social Security beneficiaries age 64 than provided under current law. I ask unanimous consent that a description of the amendment be printed in the Record.

Mr. ROTH. Mr. President, what is the order of business?

Mr. ROTH. Mr. President, I yield back all time on this side.

Mr. ROTH. Mr. President, I submit a managers' amendment on behalf of myself and Senator Moynihan and ask for its immediate consideration.

Mr. ROTH. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.