In 2001, Rep. Cris Cox (R-CA) sponsored a one year extension
for an internet tax moratorium that generated almost $40
million in lobbying and soft dollar spending by internet
businesses.

The Internet Tax Moratorium

One more year, that’s all Congressman Cris Cox wanted. But why only one year?

Enacted in 1998, the Internet Tax Freedom Act blocked state and local governments from taxing electronic commerce. Any sale of goods or services over the Internet was tax-free as long as the buyer and seller were located in different states.

The Internet tax moratorium provided a huge boost for e-commerce. A multi-billion dollar internet-based economy was being born, and its tax-free advantages were vital to its success.

Local merchants were up in arms; they were losing sales to out-of-state websites. So were 47 governors; state revenues were dropping in the recession while Internet sales were skyrocketing.

But local storeowners and governors were no match for the conglomerates arrayed against them.

Walt Disney and Warner Brothers, Worldcom and Enron, Microsoft and Intel, AT&T Wireless and MediaOne were part of a virtual coalition that pumped $366,552,391 in political money through the Halls of Congress since 1999. 

In 2001 alone, the top dozen corporations in this virtual dog fight spent $32.9 million on lobbying and made $6.29 million in soft dollar contributions.

The real opportunity for honest graft came at critical points in the legislative process. On June 26, 2001, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law held a hearing on the Internet Tax Moratorium. On August 2nd, the subcommittee marked-up (or wrote the final version of) the bill. And on October 10th, the full committee reported the bill to the House floor for a debate and vote.

In the week before and after each of those three critical dates, members of the House Judiciary Committee collected $985,930 for their campaign committees from individuals.

The four campaign committees ÐÐ RNCC, RSCC, DSCC and DCCC ÐÐ sopped up a whopping $1,698,904 in those critical six weeks from members of the  virtual coalition supporting the Internet tax moratorium.

So, with all this political money sloshing around in the system, why did Cris Cox’s bill only provide for a one-year extension? 

When it comes to honest graft, time is money. Less time to legislate means more political money for a campaign.