Where I Stand — Mike O’Callaghan: Problems for Congress

Tuesday, Sept. 4, 2001 | 8:41 a.m.

Mike O'Callaghan is the Las Vegas Sun executive editor.

CONGRESS IS GOING BACK into session and by now many Americans have been alerted to some of the damage that was done earlier. We can be thankful that some of the damage done by the House can be corrected by the Senate in upcoming conference committee meetings. It would take several columns to touch on all the upcoming problems, but let's take a look at a couple of them.

Personally, the actions of the GOP House amazed me and many Americans when evaluating the bill passed in the name of protecting medical patients. Instead of building a floor of protections the House has put a federal ceiling on the quantity and quality of patient protections when dealing with HMOs. The law allows for the federal minimums to override state laws providing greater protections. So much for the rights of states.

Republican Frank M. Fitzgerald, Michigan's insurance commissioner, told Robert Pear of the New York Times, "If that becomes law, I would have real concern about the ability of people to get an appropriate and adequate review of adverse decisions by HMOs. In regulating insurance and health care, it's critical to strike an appropriate balance between the rights of states and the role of the federal government."

Democrat Gov. Gray Davis of California told Pear, "The federal government is diminishing the health care rights of Californians. Congress should adopt minimum standards and allow states to exceed them. But instead, it's rolling back rights that we accorded to patients in a package of 20 separate bills that I signed in 1999."

Before I forget it, let me remind Nevadans of the Silver State's reliance on sales taxes for its fiscal health. Gov. Kenny Guinn knows that we are in financial trouble after being in office for two do-little legislative meetings in 1999 and 2001.

So what's the answer? We know that allowing Internet sales to cut into this tax base can only make the situation worse for Nevadans. At this time there is no way for states to recapture sales tax losses to Internet sales that can't be taxed. The House wants to extend the moratorium on Internet sales and has no plans to allow for the states to meet the challenge. Many GOP leaders want to make the moratorium permanent.

Almost two years have passed since this column pointed out that if the retail buying over the Internet continues to grow at the present rate, it can cut deeply into Nevada's sales tax collections. As a matter of fact the study done by professors William Fox and Donald Bruce point to the Silver State as one of the 12 states to be most seriously affected by a permanent ban on Internet taxation. The economist for the National Conference of State Legislatures believes that sales on the Internet cost states $1 billion in lost revenues in 1999. By the year 2003 this state revenue loss could jump to $14 billion.

That estimate of a $14 billion loss in 2003 has now jumped to $20 billion in recent estimates. Not only does this harm state budgets, it may require higher sales tax levels or new taxes. This will, in the long run, do even greater damage to households with less than $27,500 annual incomes where 3.5 percent of their earnings are already paid in sales taxes. Also, these people aren't the Americans buying on the Internet where sales taxes can't be levied.

The financial damage to local retail stores where the sales taxes are paid is almost unbelievable. These local businesses are the backbone of community services and are participants in social, educational and youth activities. It's time for members of Congress to think about their constituents and states and vote against extending the Internet tax moratorium. Yes, they are the people who should receive benefits, and not punishment, when elected officials vote for and against laws.