Ban on Internet Access Tax Dies in Senate

Justen writes "The Associated Press is reporting (via Yahoo! News) that the bill to permanently ban federal and state taxes on the Internet, via the Internet Tax Freedom Act, has died in the Senate. 'The problem arose over the definition of 'Internet access' -- services that connect consumers to the Internet. The strongest proponents for a permanent ban want to make sure that all access technologies -- from phone lines to DSL to cable modems -- get equal freedom from taxation.'"

Comments

Short Sighted decison?

[tarzan353]

OK this may be a little controversial but I think that in the future a 'bandwidth tax' or some such thing may not be a bad idea. We supposedly moving into an age of the information economy. Some people through the Internet have more access to information than others, this information makes their life better. They can look for better jobs, be better informed on what is going on in the world and make more productive decisions accordingly. This situation will get worse as more and more services move exclusively online. The info poor will have fewer opportunities.

If you see tax as a way of re distributing wealth to help the less well off then you could conceivably charge a bandwidth tax and put the money into public net access. I know not everyone sees tax this way but it dosn't seem like that bad an idea to me

It could also be used to help fund Internet monitoring, which I know no one likes but the government is going to do it anyway so why shouldn't people who use more bandwidth pay a greater share of the cost?

Re:What the Heck?

[leerpm]

Well, according to a CNET article, some senators are saying they will be negotiating over the weekend and return to the topic next week. So maybe it's not quite dead yet.

Re:why a difference between net and non-net goods?

[Motherfucking Shit]

I know its unpopular, but shouldnt internet shoping and what not be taxed?

It already is, just the same as mail-order shopping (I'm posting from a US perspective, by your use of "bloody" I can't tell whether you are or not ;)

In the US, if you order something from a company which has a physical presence in your own state, you must pay state sales tax. This is true whether the purchase is made in a brick-and-mortar store, online, or via mail order catalog.

If you order something from a company which does not have a physical presence in your state, you are not required to pay sales tax to either your own home state or to the state of the purchase. In many states, you're supposed to pay a "use tax" or something similar in your home state. In practice, hardly anyone does this except in the case of significant purchases. Very, very few people even know that the "use tax" (or whatever it's called in your state) exists to begin with.

In any case, that isn't what this bill is about. It's about taxes on internet service, not internet shopping.

Re:They can't pass up a revenue stream

[HornyBastard77]

permanent in the political context does not mean absolute. laws can (and are) changed and reversed over time. the permanent implies that the next batch of elected representatives (and the batches thereafter) do not have to pass laws exempting internet related products and services from taxation. but theres nothing stopping them from approving new legislation that would then enforce taxes on said products and services.

Re:why a difference between net and non-net goods?

[leek]

The Quill Corp. v. North Dakota (1992) case is the decision most often cited when arguing that mail-order and internet companies without a "substantial nexus" in the buyer's state should not be required to collect the buyer's state's sales/use taxes.

Quill essentially affirms Bellas Hess.

There's a four-prong "Complete Auto" test which has been used as a criterion for the validity of state taxes on interstate commerce:

1. The tax must be applied to an activity with a "substantial nexus" with the taxing state
2. The tax must provide fair apportionment between the states
3. The tax must not discriminate against interstate commerce
4. The tax must be fairly related to services provided by the taxing state

Relevant quotes from the cases:

State taxation falling on interstate commerce ... can only be justified as designed to make such commerce bear a fair share of the cost of the local government whose protection it enjoys.

... The Court has never held that a State may impose the duty of use tax collection and payment upon a seller whose only connection with customers in the State is by common carrier or the United States mail.

... If Illinois can impose such burdens, so can every other State, and so, indeed, can every municipality, every school district, and every other political subdivision throughout the Nation with power to impose sales and use taxes.

The very purpose of the Commerce Clause was to ensure a national economy free from such unjustifiable local entanglements. Under the Constitution, this is a domain where Congress alone has the power of regulation and control.

Other references:

Annette Nellen's Home Page, especially Timeline Review of Activities Related to Discussions on Internet Taxation

Sales and Use Taxation of Internet Transactions

In other news, Barnes & Noble Inc. has offered to buy back the shares of BN.com -- could this eventually mean BN.com will have to collect sales taxes on internet sales to all states which have Barnes & Noble retail stores?