May 27 2014
The internet has provided unprecedented opportunities for entrepreneurs, including entrepreneurs who deal in journalism.
One reason the internet affords access to anybody with an idea is that the internet has operated beyond the grasp of the greedy hand of federal and state taxing authorities.
But unless Congress acts before November 1, this could change. Congress enshrined the idea of access without taxation in a 1998 piece of legislation. It has been routinely renewed since then but is facing opposition this time.
An editorial in the Washington Times explains what is at stake:
Unless Congress acts again before Nov. 1, however, more than 10,000 different state and local jurisdictions can begin feeding their greed by applying their favorite taxes to everyone’s favorite websites.
These communications taxes are usually preposterously excessive. The federal, state and local fees and taxes that clutter telephone bills add up to an average 17 percent, and it’s 12 percent for cable and video services — far more than the average general sales tax rate of 7 percent. These figures take on additional significance because studies suggest that cost is a significant factor in determining whether consumers utilize high-speed Internet services.
Enabling the imposition of communications taxes on the Internet will make the network slower; extending the tax moratorium will encourage innovation and economic growth. Would Mark Zuckerberg have created Facebook if he had faced a hefty tax to access the Internet from his dorm room at Harvard? Facebook, ebay, Google, Amazon, Twitter and a host of other major Internet-based companies can be run from a computer positioned anywhere in the world. They all chose to start in America for a reason: the guarantee of a tax-free Internet. Take away that advantage, and tomorrow’s competitors will pack their virtual bags and start the business in countries with friendlier tax policies.
We’ve seen over the last few years what taxes and regulations can do to the economy at large. It would be a shame if we see a slowing down of the internet, a place of unparalleled creativity, as a result of the taxman’s greed.
A Senate bill to make the internet tax ban permanent has been introduced by Democratic Senator Ron Wyden. Thirty Republicans and sixteen Democrats have signed on to Wyden’s bill.