The Non-Hoax Version of Bill 602P
By The Directors Posted in Congress — Comments (19) / Email this page » / Leave a comment »
You've probably received an email chain letter once about Bill 602P, a fictional House Bill to tax emails. The email and the referenced bill were hoaxes. What's not a hoax is that some Democrat leaders in Congress are close to letting the Internet Tax Moratorium expire, opening up the possibility that thousands of states and localities could tax your Internet access (Blackberry use, emails, etc.).
Yesterday, Senators including John McCain, John Sununu, Gordon Smith, Wayne Allard and others gave interviews and held a press conference seeking an extension of the Internet Tax Moratorium. Only after their public challenge to the new majority party did Democrat leaders react. Senators Reid and Inouye issued statements saying they may move an extension. But that may be only for two years — enough time for a Democrat to get in the White House, they hope.
Let's not mince words here. If the Congress does not extend the Internet Tax Moratorium — and there is a good chance the Democrats will not do it in time for the October 31 deadline — that would create, in effect, the first broad, federally-imposed consumer tax in a decade, a tax estimated to be $4 billion a year.
The Internet Tax Moratorium expires on Halloween. That means more taxes beginning November 1. Unless we get behind John McCain, John Sununu and like-minded leaders on this issue, we might soon find our broadband Internet connections taxed and our e-commerce purchases subject to multiple or discriminatory taxes. Better send those emails and complete those downloads and text messages before it’s too late!
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The Non-Hoax Version of Bill 602P 19 Comments (0 topical, 19 editorial, 0 hidden) Post a comment »
I don't care who's whining about something being unfair. Why should I?
Nothing's stopping them from going online themselves, well, unless maybe they're just not capable of competing on that higher competition market.
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In fact, it is irresponsible to give the government money.
Envisioning when all that is Left is the Right.
If the feds ban taxation over the interstate Internet medium, then how is it legal for a state to impose taxes on transactions across it?
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and I don't think it would hold up well if it was.
Taxes are the life blood of governments, and therefore both the feds and the states are guarnateed the ability to tax in the Constitution. The Feds are granted authority to govern interstate commerce so that no state may impose taxes that adversely affect other states in the Union with respect to trading across the state border. What that gets us in practice is that a state may impose a sales tax on all goods sold within, so long as it does not preferentially treat goods the state itself produces. At the time all of this came about it was well and good because the transaction was taxed wherever it occured, and since it occured in a physical location, determine which state collected the tax was readily determinable. This changed with the advent of catalog sales, which made the location of the sale not readily determinable. And of course the states all began trying to collect sales taxes with the result being that catlog vendors were being told to pay taxes not only to multiple localities, but effectively for both the location from which their goods were shipped. When the vendors managed to get their case into court, what SCOTUS eventually held was that because of the number and complexity of tax laws a vendor would need to comply, it produced an unreasonable burden which inhibitted interstate commerce and therefore states could not attempt to collect the sales taxes for catalog goods sold to their citizens of their state unless the sales company had a physical location within the state. The States responded by enacting laws which required the purchaser to pay the tax (again, never challenged as far as I know), but which are effectively uneforceable on a large scale. So what was held unconstitutional was not double taxing the catalog good, but forcing the vendor to pay the tax, because of the unreasonable burden. With the advent on computers, the internet, and multi-national corporations, it does not to me seem unreasonable to assert that the burden is no longer unreasonable, particularly with regard to internet sales which necessarily require the use of the very items which make it a reasonable burden to collect the taxes.
As internet supplants brick and motar stores as a medium of trade, I think we will reach a point at which it will be untenable to continue insisting that it remain a tax free zone. State governments depend on sales tax revenue in some form or another for a measurable part of their income, and therefore the internet will be taxed. The real question is how do we manage the transition to taxing it in a manner that is fair to the states, the businesses, and the consumers. The Democrat approach of simply allowing the current law to expire does not strike me as even an oddball Turing engine sort of solution, let alone a prudent one.
They already tax our incomes, our cars, our gasoline, our food, our utilities, our real estate, our employers, you name it.
The fact that they lose one revenue stream makes me happy, and the bureaucrats can suck it up.
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That was very interesting and provided some background I wouldn't have known otherwise. It seems to me this presents an opportunity. I am proud to say I'm no lawyer, but it seems to me that there should be some underlying justification for taxation. If over the internet a person buys something that is from another state, what justification does a state have to collect the taxes? The mere fact that it is now technologically feasible seems insufficient.
It also seems to be a gross overstatement to say that internet sales will supplant non-internet sales as a medium of trade. I spend my time on the internet, and I am an internet professional. The continued rise of the internet for business is a good thing for me. But even I have no expectations of supplanting offline commerce. I'm on my way to the mall tonight, in fact, to pick up some birthday gifts for my 5 year old.
I'm with Neil, the states currently have adequate means of taxation. If indeed internet sales were to replace in-state offline sales I could see them looking to make up taxes (sort of), but I find it hard to credit that idea as realistic. Even going by reduction I can't see the reduction being dramatic enough to serve as adequate justification if indeed it is the only justification.
It all basically sounds a little too much like a "because we can" argument.
absentee
"Besides, many states such as mine (California) already require us to pay sales tax on on-line purchases."
That doesn't sound right. Surely that is with regard to in-state online purchases only?
absentee
No, a lot of states require their citizens to admit, report, and pay sales taxes for purchases online.
Rarely does anyone do it.
I think New Hampshire has a nice solution to this "problem". They have no state sales tax.
Besides that the shipping charges also come out to be higher than the sales tax charges so I have trouble buying this complaint.
And brick and mortar shops have advantages over online vendors. It's easier to window shop for example.
The internet is what it is thanks to no government intervention, no government sanctioned monopolies, no government hoops for new startups to jump through, and no taxes to create a drag on growth.
We should be applying the same mindset to the real world.
Evil prevails only when good men do nothing.
Republicans should trumpet this issue as much as possible and try to saddle the Democrats with wanting to tax the internet. Americans love the tax-free internet, and it effects nearly all Americans, not just one economic class.
Reducing taxes is one of the few issues Republicans have such broad support, they would be fools not to seize on this golden opportunity.
"Back in the thirties we were told we must collectivize the nation because the people were so poor. Now we are told we must collectivize the nation because the people are so rich. "
William F. Buckley, Jr.
This is NOT about sales tax. This is about taxes specific to the internet. An access or bandwidth tax or a special tax to cover internet purchases would be prohibited under this. Think of your phone bill, with about 1/3 of the price of a telephone line dedicated to various taxes. The moratorium exists to keep your internet access bill from ending up the same way.
There's nothing here to prevent the collection of sales tax. Every online retailer has to collect sales tax on shipments to any state where they have established nexus (which basically means they have any operations at all within the state). If the retailer does not collect the sales tax because they don't have nexus with your state, you may be liable for it anyway come tax time. Individuals generally don't report their tax free purchases online, but businesses do... and if you are making a big purchase (like a $100,000 item), you probably want to report it. Individuals have been busted for big ticket purchases like that.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
access fee. But there's so much more..
Congress is eying taxing VOIP, email, the various types of internet access (DSL, cable, fiber, dial-up), online VTC, online services, online commerce, and all online data traffic.
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"Enlightened statesmen will not always be at the helm." -- James Madison
This moratorium has no effect on that. All it prevents them from doing is having a special tax that only applies to internet stuff. There's nothing stopping them from imposing their existing taxes on those purchases, so long as the business has a nexus with the state. My Vonage bill before I canceled ended up being 25% tax... almost like a regular landline bill. A good chunk of those taxes were imposed by my state.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Congreess is looking at adding Federal Excise Taxes to all internet services, data feeds, etc.
This was discussed under the Congressional Joint Committee on Taxation (JCT).
This is a seperate issue from state sales taxes applying to internet commerce and would be added to taxes already in place.
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"Enlightened statesmen will not always be at the helm." -- James Madison
I like my tax-free online purchases as much as the next guy. But I'm hard pressed to come up with a counter-argument when brick-and-morter shops argue they are at an unfair disadvantage.
Besides, many states such as mine (California) already require us to pay sales tax on on-line purchases. Its just on the honor system...which probably makes 99% of the state's population tax cheats.