Senator Warns of Email Tax This Fall

cnet-declan writes "State and local governments in Washington this week began an all-out lobbying push for the power to tax the Internet, according to our article at News.com. A new Senate bill would usher in Internet sales taxes, and the Federation of Tax Administrators (representing state tax collectors) advised senators at a hearing on Wednesday not to renew a temporary moratorium limiting broadband taxes that expires in November. One irked Republican senator warned that unless the moratorium is renewed, we could start seeing email taxes by the end of the year. Former House Majority Leader Dick Armey blames it on the Democrats taking over, as do Yahoo and eBay lobbyists. Is this a non-hoax version of bill 602P?"

Comments

Fine: Define email

[panxerox]

They still don't get it, the Internet is not this easily defined thing that you can wrap thier minds around, its not about formats or drm or even email its about information. Anything thats describable as 1's and 0's can be transmitted over the internet, its like saying everytime you call a cab over a landline phone you have to pay a tax, uh no. How many ways can you now transmit info over the net now (?) its nearly infinite.

Re:Fine: Define email

[AKAImBatman]

I stand corrected. Still, a single throwaway line about email taxes doesn't seem like it should be eclipsing the real taxation issues. Those issues are the possibly taxation of goods sold across state lines as well as the taxation of internet connections themselves. Internet access is expensive enough already without the government trying to skim off the top, and shipping fees already wipe out any savings realized by a lack of taxes and "brick & mortar" overhead on goods.

I can't see how allowing internet taxes would do any good other than to have states fight over who should collect the taxes on an item shipped over state lines.

Re:Fine: Define email

[Kadin2048]

The thing is, the constitution is clear on this. The states don't have a right to charge taxes on stuff shipped across state lines. Why are we even having this discussion?

You are correct -- the states can't charge tax on goods shipped across their borders. I.e., they can't have a "California import tariff," as if they were a separate nation from the rest of the country, or something.

However, the Court has allowed states to charge tax on goods used or consumed in their state. This is how sales tax works: they don't charge the tax when the widgets cross the border from the neighboring state -- that would be illegal due to the Constitution -- but they charge the tax on the sale when it occurs in the state, or on the use of the item if you bought it elsewhere and are using it in the state. (Most people don't realize this, but if you buy something via mail order and use it in a state that charges sales tax, you're legally obligated to pay the same tax rate on it, only as a "use tax" instead of a "sales tax." All states that have sales taxes also have use taxes.)

That's how they get around the unconstitutionality. If it seems like hair-splitting, I'd probably agree with you, and there's a chance that if states really started getting obnoxious with their tax structures, to the point where it was interfering with commerce between states, then the USSC could step in and basically say that they have de facto violated the Constitution by creating barriers to trade ... but I wouldn't hold your breath.

Re:Fine: Define email

[DragonWriter]

The thing is, the constitution is clear on this. The states don't have a right to charge taxes on stuff shipped across state lines.

The Constitution does nothing to limit the ability of states to tax goods sold from their state irrespective of whether or not they cross state lines, or tax goods bought from their state irrespective of whether or not they cross state lines. It does not permit import or export duties, but that is not the issue, here. The issue is sales taxes, not special taxes specific to imports.

Re:Fine: Define email

[Shakrai]

The states don't have a right to charge taxes on stuff shipped across state lines

Sure about that? New York State imposes a self-reported "Sales & Use" tax on our income tax returns. We are supposed to report any purchases of taxable items made out of state or over the internet where NYS Sales Tax wasn't paid.

Granted, I just put "$0" down each year, but still.... it's there.

Re:Fine: Define email

[shaitand]

Yes, and your phone company pays taxes per minute on any call that crosses a LATA line. Hence the original poster was correct in saying that taxes are charged per minute.

Re:Fine: Define email

[hurfy]

And the reason WA state is so keen on this.

We don't have an income tax, thus we don't even send out a form to put the "0" on ! How many people do you suppose will track down the right form to pay, hehe. Also means we are more dependent on the sales taxes :(

I would go along with them if they can figure out how to implement some kind of simplified tax structure. WA is also one of those with a diferent tax code/rate for every damn city, county and bus district. Over 330 codes at last count :O And you should know whether an address is within city limits or in the transit district to figure the correct tax. Luckily from within WA you use the ship point so we only have 2.

Makes a real mess from an IT standpoint. We do both ID and WA and diferent items are taxable in each state. WA depends on ship point while ID goes by destination. Some non-taxable items are taxable if going to a Veterinarian instead of patient or doctor. Computers don't seem to like the 'sometimes' and 'maybe' answers to TAXABLE (Y/N)?

Wait...

[dreddnott]

So they plan on taxing things that don't make anybody any money? Or are they only taxing commercial e-mail?

New protocol could kill spam

[Lt.Hawkins]

If one protocol is taxed, we can push another protocol to take over. Imagine, if email is taxed, having the entire industry shift to a better system that is not regulated, and having the opportunity to design much-needed controls and authentication in to eliminate spam.

Re:One doesnt justify the other

[LWATCDR]

"Right now ALL retailers and people are required to pay sales tax on out of state items (depending on your state)"
Ummm... Huh?

States are forbidden from taxing interstate commerce. In some states if you buy something from out of state you the customer are supposed to pay the tax.

How can ALL the Retailers be required to pays sales tax on out of state items (depending on your state)?
1. I don't think you know what the world ALL means.
2. It isn't true. You must pay sales tax if you have a presence in that state. If you have a store, sales rep, office, or warehouse.

Re:The problem...

[allscan]

You're both wrong. The problem is the majority of Americans just don't give a damn anymore. Look at the percentage of citizens in Iraq that went to vote and then the percentage of Americans that vote. Remember the Iraqis were threatened with death if they showed at polling locations.

I saw/read something where a commentator mentioned that Americans have 24 hour amnesia, meaning they wake up in the morning and remember jack about the last day. Learn some of America's history and for God's sake vote (or don't bitch as was mentioned in a previous reply).

Typical Political FUD

[lord_mike]

If the moratorium expires, one ardent tax foe is predicting taxes on e-mail. A United Nations agency proposed in 1999 the idea of a 1-cent-per-100-message tax, but retreated after criticism.

"They might say, 'We have no interest in having taxes on e-mail,' but if we allow the prohibition on Internet taxes to expire, then you open the door on cities and towns and states to tax e-mail or other aspects of Internet access," said Sen. John Sununu, a New Hampshire Republican. "We need to be honest about what we're endorsing and what we're opposing."

When reality doesn't side with your politics, you just make stuff up or pull it out of your behind.... Kudos to the senator's staffer who found an 8 year old story and make it sound like an "impending threat of dire circumstance!" when it is complete fiction.

None of these proposals "tax"... The two issues are whether sites like Amazon.com should collect sales taxes for out of state sales (like any major catalog company like Sears has been doing for generations), and whether municipalities can tax internet access like they do phone and cable... The original moratorium was designed to encourage greater participation in the Internet. that goal has been accomplished, and further subsidizing it probably makes little sense.

Yes, it sucks.... no one likes paying taxes, but the roads don't get built by themselves, and the cops don't protect your house for free. The money has to come from somewhere.

Thanks,

Mike

Don't complain

[Arthur B.]

Either you oppose taxes or your don't. There's no middle-ground, every tax is irrational. Taxing dividends, gas, the internet, cheese consumption is ethically similar.
If you complain about email/internet taxes but think income tax, wealth tax, consumption taxes or social security are OK, you are just bitching for your own petty particular situation. If you want to be consistent (and ethical), you should reject *any* tax.

This story is just another example that the government will try and tax whatever it can for the purpose of ever increasing its power. Not only does it allow them to 'legally' control the internet, it provides them with the financial mean to do so...

Well Folks....

[flyneye]

Well folks,we get the government we deserve.
We started out as a Republic that collected tariffs on imports,constitutionally allowed so that the government could run a post office,protect the borders and make sure commerce ran smoothly interstate.
Times changed,corruption took its toll and now we have almost a complete reversal of Constitutional intention that empowers the corrupt.
What can I say? Vote Libertarian and urge others to do the same.It's the closest we can come to fixing the wrongs.
This internet tax bill is a crock of fertilizer as is any taxation on the citizens of the several states and their business.
Throw out the clowns(Republicans and Democrats)and fix it as it is dissapearing faster than the environment and is more urgently valuable.Freedom,use it or lose it.

A bit of perspective from Blighty..

[FreudianNightmare]

Really, what's the problem here? I'm in the UK and admittedly, we don't really have the issues with sales tax you guys have (no states, one national rate, called VAT, charged at 17.5%), but it seems quite simple. Options: a) Don't charge sales tax on internet sales, to ease operations. Bit unfair on bricks and mortar retailers, and hardly defensible b) Pay tax in the state in which the goods are deemed to have been sold. Head office, or dispatch point. Its up to you. Add the tax to the price charged, collect from retailer (as for bricks and mortar). Its not like you'd go into a hardware store in Ohio and say "Hey, I'm from Montana, can I not pay the tax please?" c) Pay tax in the state from which the purchase was made As decided by the delivery address, or billing address (again, your choice) Not as fair and one suspects that a store in one state would feel fairly aggrieved about having to pay taxes to another state entirely (though really the tax is on the purchaser, so its actually just admin). With either b) or c), its hardly a complex technological solution. You do only have 50 states. Check one location against a table of 50 states, work out the tax, and make an entry in the appropriate record. NOT HARD. Of course, if you think ALL sales taxes are unfair to start with... well thats a different debate.

E-mail already illegal in the US

[Random832]

http://www.law.cornell.edu/uscode/html/uscode39/us c_sec_39_00000601----000-.html
(a) A letter may be carried out of the mails* when--
(1) it is enclosed in an envelope;
(2) the amount of postage which would have been charged on the letter if it had been sent by mail is paid by stamps, or postage meter stamps, on the envelope;
(3) the envelope is properly addressed;
(4) the envelope is so sealed that the letter cannot be taken from it without defacing the envelope;
(5) any stamps on the envelope are canceled in ink by the sender; and
(6) the date of the letter, of its transmission or receipt by the carrier is endorsed on the envelope in ink.

*in context, "out of the mails" means any form of delivery other than the US postal service

NONE of these are satisfied by typical emails.

Re:Vote for Ron Paul

[dr_dank]

He voted against the Patriot Act.

I thought Russ Feingold was the only congressman to vote against the Patriot Act.

Let it happen...

[mi]

you can count on at least a few lesser jurisdictions (states, municipalities, etc.) to attempt to impose come crack-brained e-mail tax (or something similar)

But what if it is to benefit poor children? I can see it already: "Why is idontgno opposing help for the most vulnerable members of our society?!!" Uh-oh...

I say, a locality should be allowed any such idiocy (if its voters want it — via their elected representatives) — if only to prove, it is, in fact, an idiocy.

Municipal Wi-Fi comes to mind.

Re:Vote for Ron Paul

[iminplaya]

He's a great big cipher.

He most certainly is. And an even bigger mystery is who is responsible for all the media attention? What is motivating it? Oh, damn, now I'm becoming all wrapped is the "who" thing. Anyway, I consider him completely untrustworthy, as shown by his voting record. I don't why you don't like Kucinich. He's a real stand up guy when it comes to individual freedom, or he's putting on very good show. I like Mike, but he's got a bit of a Ross Perot aura about him. I can't quite tell if he's all there. And he doesn't look long for this world. He could keel over any second now. I need somebody willing to insure equal protection under the law for everybody in the custody of the authorities or under their influence in any way, no matter who they are or where they are from. Ron Paul will not offer that. I honestly don't know if Kucinich would either, but he didn't knock himself off the list the way Paul has. Kucinich has a bit of a protectionist streak when it comes to industry. I don't know how much of that carries over into individuals. I believe in "people first", not "America first".