Letter to the editor: Internet Tax Is an 'UnfundedMandate'

Posted on April 15, 2005

Your Oct. 29 editorial chastises those of us who oppose Congress's latest attempt to tell state and local officials how to pay their bills. On Sept. 27, 1994, 300 Republican candidates stood on the U.S. Capitol steps and announced their 10-point plan to reform, among other things, "unfunded mandates." They pledged, "If we break this contract, throw us out." In March 1995, the new Republican Congress enacted the "Unfunded Mandates Reform Act" to stop new federal laws and regulations that impose costs or duties on state and local governments without sending federal money to pay the bill. Sixty-four senators still serving today voted for that bill. Now Congress wants to take away $80 million to $120 million that states are collecting in taxes on Internet access. The Congressional Budget Office says this is an unfunded federal mandate under the 1995 law. It's a familiar Washington, D.C., story. Special education for children with disabilities - but you local folks pay the bill. High standards for roads - you pay for it. New standards for highly qualified teachers - you pay for that too. It's especially galling since state and local governments balance budgets, while Congress prints money. Of course it sounds good for Congress to say it is banning a state tax. But what it is really doing is favoring one local tax over another with the decision made in Washington. Take away Tennessee's ability to pay its bills with a tax on Internet access, and you increase the chances it will impose a new income tax or a higher tax on food or medicine. You argue that the interstate commerce clause in the U.S. Constitution justifies this unfunded mandate. But many state taxes are on items in interstate commerce, such as telephones, cable, gasoline and electricity. Sen. Lamar Alexander (R., Tenn.)
Washington