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First, the setup…
Congress put a temporary ban on Internet access taxes in 1998 to nurture what was then a fledgling industry. The idea: an Internet free from a tax burden would grow more quickly, encouraging a more productive U.S. economy.
The ban has been extended twice and would have expired Thursday but for an 11th-hour compromise between the House and Senate that will extend the moratorium for seven more years.
Interestingly enough, there was little enthusiasm to impose taxes on Internet service. You enjoy a tax break here you don’t enjoy for access to other communications, such as telephone and cable TV. But this went down to the wire because the Senate wanted to make the ban permanent and the House wanted to extend it just another four years. The Senate OKd the compromise by voice vote last week and the House voted 402-0 to go along Tuesday. President Bush signed the extension Wednesday. […]
The compromise spells out what Internet services would be off-limits for taxes, specifically prohibiting taxes on e-mail and instant messaging services “that are provided independently or not packaged with Internet access.” That leaves the door open to taxes on VOIP (Voice-Over-Internet Protocol) service. That seems fair, because it competes with traditional telephone service, which is subject to taxes. Congress isn’t looking to block local governments from tax sources they already tap. “It’s important to make sure that state and local governments are not deprived of revenues raised on services that have nothing to do with accessing the Internet,” said Sen. Thomas Carper (D-Del.), a sponsor of the compromise.
Now, the question: Should the Internet remain “tax free”? Explain.
posted by Rich Miller
Thursday, Nov 1, 07 @ 9:47 am
Sorry, comments are closed at this time.
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It’s a major part of our economy and the shift from Internet transactions from non-Internet sales tax transactions is taking away a big chunk of money from the country’s pool of money.
Everyone wants low taxes but you have to pay for something people. The oldest generation of voters have been the least responsible group of voters in this country’s history. Politicians who promised tax cuts and no tax hikes while promising no program cuts or even worse new programs have crippled this nation’s economy to the point that the US dollar is in the toilet.
Add on to it voters supported politicians who voted for the Iraq War, the FIRST WAR IN AMERICAN HISTORY THAT DID NOT HAVE A TAX INCREASE, and these idiots are now just realizing that oh wait, you can’t avoid raising taxes and giving people benefits/protections all at the same time. I guess it makes sense that the Best Generation would give birth to the Worst Generation. Thanks, now people who are 20-45 are the &#^$@ed generation. Thanks a lot!
Oh, I’m sorry, where are my manors.
Good Morning to all!
Comment by No Thursday, Nov 1, 07 @ 9:58 am
The internet has been as dynamic and fast growing as it is because greedy local and state governments can’t #$%^ with it. I don’t want Todd Stroger to be able to tax my email.
Comment by Yes Thursday, Nov 1, 07 @ 10:03 am
Not tax free forever, but tax free for the next 50 years. What we are seeing is the creation of an entirely new way to express our freedom of consumer choice. So, it is far too soon to start hobbling it with taxes.
We need to continue discovering where we can go with the Internet, and it is best done by keeping it costs reflective of true market value. Governments can do nothing more than screw this up - and at the wrong time, too.
For over a decade, I have been seeing the Internet change our lives for the better. On the other hand, I have not seen many government leaders who understand any of this, fail to implement the Internet’s creativity, and often refuse to view the Internet as more than a digital peg board. These are not people who have enough of a clue to craft government policies on something as important as the Internet.
We cannot allow the Internet to be driven into the wrong direction by Luddites whose sole focus is gathering more cash for their broken and failed government programs.
Hands off!
Comment by VanillaMan Thursday, Nov 1, 07 @ 10:03 am
Yes. We are taxed enough. The problem is not the amount of revenue coming in from taxes. Our government has established too many programs. People are too reliant on government…
Comment by Holdingontomywallet Thursday, Nov 1, 07 @ 10:11 am
yes, it should remain tax-free, in regards to access. we’re already trying to figure out how to bridge the digital divide that would just make it worse. Children who don’t have access to the Internet are at a disadvantage at school and those in rural areas are have limited access if any in some cases.
no on taxing purchases. oh, that’s right you’re already supposed to pay it’s called use tax. what if you had a tax and nobody paid it? states need to be granted some type of enforcement mechanism other than just using the nexus rule
Comment by anonymous Thursday, Nov 1, 07 @ 10:23 am
No. Of course the internet should be taxed and taxed hard. Why should people too lazy to go to a store also get a tax break?
Comment by Bill Thursday, Nov 1, 07 @ 10:29 am
Short answer yes. Otherwise it will be overtaxed.
Also please keep in mind that the buing on the internet is not technically tax free. technically, the internet buisness is not being required to collect the tax for you. BUT, in Illinois you are supposed to report all such purchases and go pay the tax. The obvious compliance issue is why a buisness collects use/sales tax at time oif purchase instead of relying on consumers voluntary partiticipation.
Also keep in mind that the salaries and other operational aspects of these business generate income for states. And tax is collected on purchases made by employees locally etc. This raises the idea though that perhaps we should be taxing services as well. tax local services to recapture dollars when they are spent by the owners and employees.
Comment by Ghost Thursday, Nov 1, 07 @ 10:34 am
Yes if the government put a penny tax on every $3.00 transacted over the Internet, that would rock the Internet to its very core and it would cease to exist. Please, very few taxes could cripple the Internet at this point. If you think we shouldn’t tax the Internet, then you probably also think we shouldn’t tax new brillant inventions like the Personal Computer, or PC as the young kids like to call it. You must be against taxing cell phones too. Anything invented in the past 50 years should go untaxed because we worry about the Luddites. Get a grip and join the 21st Century some of you.
I for one am not talking about funding new programs. I’m talking about funding the programs we already have in place like public school education, health care, the justice system, and mass transit. You no-tax people have to be some of the stupidest heads in the sand bunch of people the world has ever seen. This isn’t the late 70’s, 80’s or 90’s. You guys won the tax race. In fact, once you crossed the finish line, you forced the entire system to keep on going to the point of exhaustion. You are too blind to see it though. You keep on running because it’s the only thing to do and even though your feet have been eroded off from overuse, you keep on going because the only thing you know how to do is say “No taxes!”
Thanks to you we have a massively underfunded school system, an aging road infrastructure, terrible emergency relief, cracks in our port securities, a terrible health care system, and the worst debt this country has ever seen. You are so blind that you can’t put two and two together even when report after report on the failing public school system comes out, bridges collapse, hurricanes and wildfires have maximum damage, reports of fake bombs getting through airports, story after story of healthcare mismanagement, and the dollar falls to 1/1.40 versus the Euro, all you can say is “See, the government doesn’t know what it’s doing! They have messed it up. Cut taxes” instead of taking a deep look at the problem and coming up with a solution.
The solution is not just raise taxes on the Internet, but when people are doing almost of their Christmas shopping online and not at their local stores, the fund shortfalls just continue. Meanwhile, you live in your isolated box that is about to fall and say “Yipee, I saved $10 in taxes on my new Iphone”!
Comment by I see the light Thursday, Nov 1, 07 @ 10:37 am
No to the internet tax. Why should we just tax everything? For what? What will I get out of it? It would be a disincentive for people purchasing items on the internet, and it could collapse internet-only companies.
Sales tax is bad enough. Hotel taxes are worse. But internet taxes would be the coup de grace of bad taxation.
Comment by Team Sleep Thursday, Nov 1, 07 @ 11:04 am
Let’s see…they recently wanted to tax parking spaces in Chicago. Why isn’t it a jump that in 10 years a website is considered a “parking space” and we have to hear about proposals of government taxing our websites. Local municipalities are pusjing hard for internet taxes because local busineses that do the majority of their primary business online don’t pay taxes to local taxing bodies. So local governments want this opened up to them because they see the trend going more toward online commerce. In the end we have to find a way to break the governments quest to tax anything that moves. I say start with the internet.
Comment by Mark Johnson Thursday, Nov 1, 07 @ 11:05 am
They already tax my income when I earn it. I have always considered anything else as double taxation.
Comment by Already taxed. Thursday, Nov 1, 07 @ 11:23 am
Tax expansion is a bad deal for all. The losses being whined about are overstated.
I use VOIP services and I do pay a tax for my phone lines. Similar services such as telephone and cable should and as far as I can tell do pay the same traditional taxes and franchise fees as the older services.
The internet is still evolving. I my opinion, there will be a further convergence of the on-line experience and the storefront experience which can be exemplified by the Best Buys and Circuit Citys of the world where you can buy your product on line and either come into your local store for pickup and service or have it shiped. All sales taxes are collected. Ultimately that marriage of services provides the best customer experience and over time will become the winning model.
When I buy a Dell computer on line, I pay a sales tax and suspect that most of the major manufacturers collect a sales tax.
I believe the no tax exemption is warranted and once the intenet finishes its evolution, it will be collecting all the taxes that current commerce produces.
A quick aside as far a taxation is concerned. Telephone taxes are the most regressive things out there. On the lower levels of service taxes can approach 30% of the bill. Why do our liberal bretheren cry incessantly about the regressivity of our tax code, but seem to overlook this corner of the tax world? I can argue that a telephone line is very important to our seniors and poor, so why do they have to pay such a large tax on this lifeline?
I wil repeat that there is a continuous search for new tax revenues with no search for operation efficiencies in government. The days of palatable tax increases are gone. The choices now are that of the least bad. But governental spending goes on unabated. The Lake County community of Gurnee is already noted for the largest number of municipal vehicles being taken home by their employees. i.e. the taxpayers are footing the bill for their communing costs as well as their comfortable salaries. Their next week’s agenda is asking for that number to go UP by two vehicles. More than 5% of their workforce take municipal vehicles home and apparently the employees are allowed to run personal errands and ferry their children around at taxpayers expense. Is that an example governmental efficiency or just a further reach into the taxpayers pocketbooks.
Comment by plutocrat03 Thursday, Nov 1, 07 @ 11:46 am
No it shouldn’t be taxed for a variety of reasons.
However, first of all, I believe this legislation only dealt with taxes on access, that is an access tax on your bill to SpeakEasy or NetZero or whoever is your access provider. Or a surcharge on your email messages or your IM conversations. I sure hope they don’t put a per word charge on IMs–the shorthand is already almost undecipherable. So this legislation doesn’t seem to have dealt with the issue of sales tax on purchases.
The internet today is very much a modern library with all the schlock, dross, and gold that that entails. Plato’s Republic? Yep, available for free, txt or html format. Some airhead’s “thoughts” on a third tier politician and his UFO abduction story–yep, it’s available there too. Movies and vidcasts from Nasa’s spitzer telescope–yep, that’s there too. So the internet is an incredible educational tool. I wouldn’t think anyone would want to stifle that in any way.
The internet also provides an incredibly fast way for people and businesses to communicate in order to actually do the work of business. That’s a great benefit that allows people to work from home rather taking a day off, so the business still enjoys some productivity out of that employee. It allows people who travel for their business to stay in touch back with the office much easier. It’s a real boon to business to have this tool and again, I don’t think we want to hobble our businesses with taxes on this tool.
The internet is also still evolving and taxation could hobble that evolution. Take vidcasts. I recently downloaded miro (http://www.getmiro.com/) and have been downloading free (not illegal) media content from the net directly through the player. Or think about Youtube which has even grown to affect our politics. I think we need to let the technology get past its teenage years before we strangle it with taxation.
Comment by cermak_rd Thursday, Nov 1, 07 @ 11:47 am
The internet should remain untaxed.
Transactions, on the other hand, can be taxed — as in sales tax of goods purchased. Why is this not happening already?
Comment by Shadoobie Thursday, Nov 1, 07 @ 11:47 am
I think some commenters here are confusing two issues. The question really is should access to the internet be taxed (no is my answer). As for collecting sales taxes from all purchases made over the internet my answer is yes. The problem is many people (and far too many congressmen) confuse the two, which is why local and state sales tax revenues continue to erode as people shift their buying habits to online retailers who flaunt this loophole.
Comment by Bluefish Thursday, Nov 1, 07 @ 11:49 am
The only way I’d be either for or against an internet tax is if they can make it tangible to tax people who use the internet. It makes sense to tax a person using an ISP. It may even be feasible to tax people using a service such as an internet retailer.
Comment by Levois Thursday, Nov 1, 07 @ 12:12 pm
“Should the Internet remain “tax free”?”
1) It occurs to me that the “tax-free” status of internet purchases serves to subsidize shipping services including the United States Postal Service. i.e., a certain percentage of USPS package shipments are due to the fact that tax-free purchasing makes shipping-costs a wash.
I wonder if tax-free internet purchases offsets the USPS’s loss of postal correspondence business and thus helps maintain universal postal service in the US.
2) Does the tax benefit of the internet exemption make the tax system more regressive? Are poor people able to take advantage of tax-free purchases on the net or is its benefit exclusive to relatively well-off folks like ourselves.
3) My knee jerk response is no tax on internet.
– SCAM
Comment by so-called "Austin Mayor" Thursday, Nov 1, 07 @ 12:46 pm
Yes, the Internet should remain tax free. Lets see where it can take us before we stifle it’s growth with taxes. After all, the many industries that have sprung up because of the internet more than compensate government in taxes they pay, in just about every city in the nation. Tax stupidity, politicians, and Paris Hilton.
Comment by Justice Thursday, Nov 1, 07 @ 1:54 pm
Yes! For God’s sake, can’t we have just ONE thing that they DON’T tax??? I’d like to see a study done of how much each American ACTUALLY pays in taxes out of each dollar: income taxes, FICA, Medicare, state taxes, sales taxes, “access” taxes (phone, utilities, etc.), and the taxes of corporations which they pass off to us in the purchase price of goods and services. I’d bet we’d be lucky to have a dime left!
Comment by Snidely Whiplash Thursday, Nov 1, 07 @ 10:38 pm
Sheesh, I forgot: real estate taxes, vehicle plates & stickers, etc. BTW, they’re already indirectly taxing the internet, in the form of our telephone “use” taxes for our dial-up or DSL lines; if you use mobile broadband, same thing. Can you say, “double taxation?”
Comment by Snidely Whiplash Thursday, Nov 1, 07 @ 10:41 pm
Absolutely the internet should be tax free, as should food, gasoline, goods and services, income, property, estates…let’s see. Am I missing anything? What a question. Sort of like the Trib’s “should we be able to recall governors”.
Comment by steves schnorf Thursday, Nov 1, 07 @ 11:33 pm
Yes, the temporary ban on taxing purchases over the Internet served it’s purpose. The businesses established on the Internet are now well-established and healthy. They should now start paying their fair share of taxes like the Mom & Pop bricks & mortar businesses that are struggling to survive. It is the only fair and equitable way to handle the situation.
Comment by Aaron Slick Friday, Nov 2, 07 @ 6:30 am