High Tech Legislative Update
To some degree, legislation regarding the high-tech industry appears to have cooled along with the Nasdaq. However, the change of control in the U.S. Senate does alter the political landscape for several pieces of legislation that would impact the high-tech industry.
One priority shared by the industry and several members of Congress has been to make permanent the current ban regarding the ability of federal, state and local governments to tax access to and transactions on the Internet. However, early last month, Republican Members of the House and Senate, Representative Cox (R-CA) and Senator Allen (R-VA), respectively, proposed a simple extension of the ban on Internet access taxes (the Internet Tax Freedom Act of 1998). While some legislators had sought a ban on the imposition of all taxes, including sales taxes, the most recent bill is viewed as confirmation of the difficulty of moving the broader bill. While President Bush has indicated that he supports an extension of a ban regarding taxes on Internet access, the President has never signaled his position regarding sales taxes. As a former governor, his silence has been viewed by industry as an indication of a pro-state-rights approach to the issue.
Currently, officials of 27 states have endorsed a proposal by which states would be allowed to tax Internet transactions under a simplified and uniform taxation system (see www.geocities.com/streamlined2000/ for more information). Prior to taking majority control of the U.S. Senate the Senate Democratic Policy Council, on April 5, 2001, issued an "E-Strategy" designed to spur innovation, design and economic growth (see www.democrats.senate.gov for full agenda). Part of that policy agenda included an endorsement of the permanent codification of the Internet Tax Freedom Act while also stating support for the right of states to tax Internet transactions under a simplified system. Senator John Kerry (D-MA), a Democratic leader on technology issues, has stated publicly a belief that sales taxes will be imposed. Currently, Senators Dorgan (D-ND) and Wyden (D-OR), other pro-industry members of the Democratic caucus, have been meeting to work out a comprise on their sales tax simplification bills, which could soon get an airing from soon-to-be Chairman Hollings (D-SC), another former governor, who now chairs the Senate Commerce Committee. Thus, it appears extremely likely that, while the moratorium on access taxes will be passed this Congress, the sales tax issue, given the fact that, as estimated by the National Taxpayers Union, almost 7,500 jurisdictions impose some type of sales tax on brick and mortar transactions, is far from resolved.
One area for potential bipartisan legislation in the extremely high-profile area of education. Senators Leahy and Hatch (R-UT) have introduced the TEACH Act, S. 487, to amend the copyright law in ways to protect copyright owners while also encouraging distance education. This bill recently passed the Senate and is now under consideration in the House of Representatives.
All legislation referred to, and the bill's current status, can be accessed at http://www.senate.gov/.