News From . . .  U.S. Representative Christopher Cox          California

Repealing the Spanish-American War Telephone Tax

Repeal of the Spanish-American War telephone tax was a recommendation of the Internet Tax Commission created by Chairman Cox's Internet Tax Freedom Act.  

H.R.3916, entitled the Telephone Excise Tax Repeal bill, passed the House of Representatives on May 25, 2000, by a vote of 420-2.  Photos below show House Majority Leader Richard Armey (R-TX) and House Policy Chairman Christopher Cox (R-CA) at a Capitol ceremony celebrating the repeal of the tax with President Teddy Roosevelt's Rough Riders. The bill awaits a vote in the Senate.

STATEMENT BY THE HON. CHRISTOPHER COX

The Capitol, Washington, District of Columbia

May 25, 2000

    I’m pleased to join my colleagues today in strong support of repealing the Spanish-American War Tax. In preparing for this measure, I have reviewed the record of how this tax was enacted.

    In the Report issued on April 26, 1898 from the Committee on Ways and Means, Representative Dingley (that’s Dingley, not Dingell; my friend from Michigan may be the dean of the House, but he has not been around that long) writes of his bill on “Revenue to Meet War Expenditures,” H.R. 10,100, that “all of these additional taxes are war taxes, which would be naturally repealed or modified when the necessitates of war and the payment of war expenses have ceased.”

    It is interesting to note that even more than a century ago, when the Senate debated this tax on May 19, 1898, some of the same issues of discriminatory tax treatment that are raised today were raised then. The issue then was how to account for the differences between data transmitted by telephone companies and telegraph companies:

    “It is a discrimination against the telegraph company,” Senator Allison said of a proposal placing a 1-cent tax on every 15 cents of telephone company receipts, compared to a flat 1-cent tax on every telegraph message, no matter the length. In the tradition of tax complexity, Senator Wolcott responded, “we let messages that cost less than 15 cents go by telephone for nothing.”

    Well, as it turned out, the tax became a 3 per cent tax on what was then considered a luxury good—the instant transmission of information. Today, when our goal is to let more people participate in the information revolution, this regressive tax on the on-ramp to information superhighway is particularly obnoxious.

    This tax was created to fund a war a century ago in which General Douglas MacArthur’s father, a prominent commander in his own right, capped his career. Half a century ago, his son stood in the chamber of the House of Representatives upon his own retirement and said “old soldiers never die, they just fade away.” Well, old taxes rarely die or fade away. But in this case, more than a century after Spain and the United States signed a peace treaty in Paris on December 10, 1898, ending the justification for this tax, we will finally comply with the intent of our predecessors and kill it.