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Internet Tax Imminent?
jhigh writes "Proposals to tax the Internet are gaining steam as state legislators see a giant pot of money just waiting to be dipped into. "At the moment, states and municipalities are frequently barred by federal law from collecting both access and sales taxes. But they're hoping that their new lobbying effort, coordinated by groups including the National Governors Association, will pay off by permitting them to collect billions of dollars in new revenue by next year.""
Now where have I seen this before? Oh yeah, here! And it's even a link to the exact same article...
This guy's the limit!
Is anyone honestly surprised that politicians want to dip government coffers into a network (series of tubes?) that generates billions of dollars annually? It's just a matter of time.
I already pay PST/GST on my net connection, and I pay taxes [or duties] on packages bought online. They want to tax on top of the tax I already pay?
How the hell do you tax email? What if you run your own server?
Step 1. Understand technology
Step 2. Legislate it
Step 3. Represent your constituents.
Tom
Someday, I'll have a real sig.
The less taxes, the better. Removing taxes removes money from the Government. Removing money from the Government removes power. A less powerful Government is always a good thing.
I wonder if I use bold in my signature, people will notice my posts.
I pay for access. My ISP pays taxes on their revenue. Does that not count?
My ISP pays the owner of lines they lease. The line owner pays taxes on their revenue. Does that not count?
My ISP pays other ISP's in access agreements. They all pay taxes. Does that not count?
The service providers make revenue. They pay taxes on the revenue. Does that not count?
On top of the services there are advertisers. They make revenues and pay taxes. Does that not count?
It seems to me the whole system is already covered.
When is the tea party?
Let's get businesses off of the Internet, and take it back to what it's supposed to be:
A global pornography repository.
It was a joke! When you give me that look it was a joke.
Question: Why are brick and motar stores better? it's less efficient to browse a huge store than to use the net and order from a warehouse. Why can't you have local stores run shops on the web?
I think given the choice of ordering from Ottawa, and ordering from Hong Kong, I'd rather order from Ottawa given the selection, price, and reputation are up to it. I doubt I'm alone in this thought process.
Tom
Someday, I'll have a real sig.
If they're taxing the tubes, does any commerce that goes through them get marked up, thus hiking prices for the consumer? I mean, fantastic, well done Uncle Sam - you've discovered a new and massive source of revenue, which incidentally buggers a large and growing element in your economy! Way to combat the national debt and fight the next dotcom bubble-burst.
And, more importantly, I'd like to know how this affects other countries. How many key internet services are run from or through the US? ICANN, DNS etc... all this and net-neutrality too. Why does the world seem slightly more fucked up every time you get up in the morning?
Sorry, I'm done. You can mod me down now.
Meta will eat itself
This is VERY good news. Just the other day I was complaining to my friends how I don't pay enough in taxes. I mean Federal, state, FICA, Medicare, sales tax, gas tax, car tax at purchase, car excise tax every year, property tax, car renewal tax every year, car inspection tax every year, tax on cell phone service, tax on cable service, tax on internet service, tax on food, etc. etc. This is not enough! I must be taxed more!
33% of every work week is worked just to pay the big 3 in taxes. I wonder what it is when you factor in all the above (and anything I missed). At some point something as got to give.
the most regressive tax there is!
Monstar L
You know what puts local businesses at a disadvantage when it comes to attracting me? Lack of selection. For example, if I want to watch a film, I add it to my Netflix queue. Too many times I go to Ballbuster or Hollywood Video and they don't have the films I want to watch. Same with books, music, beer brewing supplies, cooking accesories, etc. I live in a city of 50,000 but do a good portion of my shopping online --- and it isn't to dodge the sales tax. Screw the local businesses. They dont cater to me.
Deleted
Lots of crazy implications here by taxing online sales.
Watch the pendulum swing back toward brick-and-mortar stores. Previously I would go to the showroom or store to physically see/touch/learn about a product, then go back home and order it online (because it would invariably be cheaper). Taxing the product online makes me less inclined to take that additional step if I decide to make the purchase. YMMV.
This is going to hurt the online-only shops, as the taxes will dip into profits. Some small shops (and startups) are only in business because a physical shop (either buying, building or leasing) was simply not feasible, and taxation is not going to help.
How is this going to work if the collecting of funds and the supply-chain fulfillment happens outside of the taxing authority's jurisdiction? If I'm a US business setting up shop in the Bahamas and decide to sell goods made and warehoused in China, and drop-shipping from there back to US customers, what authority would anyone on US soil have to force me to pony up the taxes back to the States? (BTW, I'm just asking... I don't own or operate any business as of this writing.)
How would any government (State and/or Federal) plan to enforce any legislation it plans, with regard to online taxation? Seems I may not have a lot to worry about, given it's track record in reducing and regulating spam. (I don't know about you all, but last week's arrest of Robert Soloway didn't do much to unclog any of my Inboxes).
If successful, all this may do is make the small shops run away. Who will this help, anyway?
Did anyone think about the implications beyond "oooohhh... free money!"...?!
The problem with socialism is that they always run out of other people's money. - Margaret Thatcher
Combine that with the general incompetence of staff in real stores (e.g. Best Buy) and you have yourself the makings of a negative experience.
Like last night, I went to Zellers [Canadian ripoff of Walmart for all intents...]. They didn't have a SINGLE FAN in the entire store. It was 27C last night. The store stocks random assortments of "this and that" but rarely anything of substance. If the store wasn't a block from my house I'd never set foot in it. The nearest Walmart is a 5 min drive away. They at least have stock (for the most part) but they're limited to the most popular of items. And for little oddities like movies, soundtracks, music books, etc, I just gave up and order online.
It's so frustrating to not be interested in pop culture and try to shop around. Americans have it a little better, stores like [iirc] Fay's stock a good selection of CDs. Even managed to find some trance/techno [like DJ Tiesto, Armin Van Buuren, etc] which is unheard of in Canada.
Maybe if stores stopped cutting out the hardcore clients for the easy buck here and there they wouldn't lose out to online shoppers. I remember a time when I could get comp.sci books in Chapters. Now they're scarce and you have to order online (I use Amazon.ca out of spite, fuck you Chapters).
Tom
Someday, I'll have a real sig.
I come from North Carolina. We invented NASCAR raceing because we got bored from bootlegging. Outwitting revenuers has been a sport here for a century. If we get not just a sales tax on the connection, but a "connection tax," will my open AP "WardriversWelcome" become a bootlegging operation?
The government, here and elsewhere, has shown a great willingness to try and control access to and content on the internet. However, direct control will equal censorship, and will always be declared unconstitutional. But if the internet can be licensed and taxed, the states can effectively control who can get connections. Imagine taxing internet connections at the same level as alcohol, somewhere between 25-62% in NC. Just imagine how many people that could price out of the market, and how onerous the effect would be on the rest of us. Imagine a bandwith tax sold to curtail piracy, but effectively cutting off Linux distributions.
Maybe bootlegging will come back into fashion again. Instead of stills we'll have WAPs, but we'll still have the revenuers with the machine guns, dynamite, and axes.
Rather than just getting mad about extra taxes, my question is: for what will the revenue be used?
Will it offset other taxes? Will it improve infrastructure?
My guess is it will simply be used to continue or expand already-broken social programs. Note that I don't necessarily advocate the elimination of social programs, but I don't think, for instance, the way to "fix" health-care costs is to subsidize them. (I think the true fix has to do with limiting liability and removing barriers to entry, incidentally.)
That's my problem - currently there is nothing that the government doesn't have enough money to do for which I want to pay more. That is, the government already provides the services I want at the price I'm currently paying. I don't want to pay more for services I don't want or need.
That's the fundamental problem with increasing taxes in the end: if people are not asking for additional services, then there should be no need for additional taxes. The problem is that some people do want more services, but the assumption is that everyone wants them. This is incorrect, as such things are usually typically very localized. I think the governments - federal and state - need to start paying more attention to geographical differences and stop trying to pass legislation that applies desires of people in one geographic or demographic region to all other geographic or demographic regions....
"There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
I agree. Making sales taxes apply to internet purchases makes sales taxes slightly less regressive than they already are. That is, if you spend 50% of your income on purchases subject to sales tax (as the poor are likley to do since things like food is a larger part of your budget) you pay a greater percentage of your income in sales tax than people who are more affluent. The wealthy spend a smaller percentage of their income on things subject to sales tax and are thus taxed at a lower rate.
For example:
Person X: $2000/month take home pay of which $400 is spent on things subject to a 5% sales tax. He pays $20/month in sales tax - or 1%.
Person Y: $8000/month take home pay of which $1000 is spent on things subject to sales tax. He pays $50/month in sales tax - or 0.6%.
So sales tax is inherently regressive. When sales tax doesn't apply to internet purchases, that means that those with internet access (the more affluent) pay less sales tax than the poor. So taxing internet purchases makes those who are more affluent (and more likely to purchase things from the internet) pay even less in taxes.
So I think this is EXTRA good!
Also, consider this: State governments are losing revenue to online purchases. If they don't collect it by taxing online purchases, they need to collect it some other way. Do you want to see 15% taxes on things you buy locally?
Actually I'd prefer that they just cut services. Or if they won't do that from the start, then fine, run up the sales tax, drive more sales onto the internet or into neighboring areas, wait for the local economy to collapse, and then cut services. I prefer the former path, but either one works.
There are a lot of states that haven't really been in a financial pinch in a while. This is unhealthy. You need some really lean years from time to time, so that you can actually make the hard decisions about what's worth spending money on and what's not.
I'm also a big fan of earmarking taxes for specific purposes, via referenda. If the voters approve a new tax for some specific purpose (e.g., we really need this new school, so we're going to tax x in order to pay for it), then that tax shouldn't be used for any other purpose. Once its original purpose is accomplished, the tax should evaporate.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Ron Paul is against taxation of the internet. If you don't want to pay extra internet taxes, vote for Ron Paul - first in the republican primary, then in the presidential election next year.
Sam has one liberty, which he sacrifices for one security. Can you tell me what Sam has now?
States seem to be able to survive without this extra tax. They don't need any more of our money. Maybe they should try working within their means instead of seeing their citizens as resources to be harvested for cash like crops.
It is by the juice of the coffee bean that thoughts acquire speed, the teeth acquire stains. The stains become a warning
You'll vote them out of office. You'll write a letter. You'll run for office. But than again you realize you are too lazy to do all that. It's hard. You've failed, again.
Sure you work hard, and then bury yourself in work so you wont have to think about it. You, American voters, would even allow them to tax your income without a fight. Once, long ago, you had a spine and got upset about a 3% increase in the tax of tea, based on how the money was going to be used. Now you allow yourselves to be taxed at an insane level that nullifies the concept of liberty almost completely, seeing as you are a slave for almost half a year to taxes. Liberty or death? That's a good deal of both.
Please wake up all you smart computer people. Why is it the collective forces of the internet can create amazing projects such as software, operating systems, and the odd Groklaw, but has yet to create a great project for "hacking", tweaking, and tuning government via an organized effort of lobbying, letter writing, and education?
Come on. You sit there and allow someone to take almost six months of your life per year with only the smallest whimper? If that's the case almost nothing will gain your outrage.
Once again your bluff is being called. What are you going to do about it?
-- Prepared at the direction of, or to be sent to Legal Counsel, in anticipation of litigation. Attorney Client Pri
Whenever this subject comes up I always marvel at the stupidity of suggesting a tax on e-mail. Not only is it unjustifiable, it's unenforceable.
E-mail removes revenue from the post office, but who cares? The USPS can hire fewer mail carriers as their volume decreases. E-mail runs mostly (if not entirely) over private infrastructure. There is no justification for an e-mail tax, because the government is not providing any significant e-mail related services. Even if you like the idea of Internet access taxes and Internet sales taxes, a tax on e-mail is simply unjust.
And how would we implement an e-mail tax? Even if we decided that it made sense for some reason - if we thought it would make spam uneconomical, for example - it's all over private infrastructure. How could we force SMTP servers to fairly account for the number of SMTP transactions they perform? E-mail server providers like Microsoft and Novell can be forced to build immutable, proprietary reporting into Exchange and Groupwise and other products, but the most common SMTP server is open source. If you are charged a cent per 100 messages you could easily recompile the SMTP daemon to be more generous. And what's to stop people from setting up new servers for unlimited e-mail? A tax on e-mail is unenforceable. I'd be surprised anyone is talking about it, if I didn't know as much about Congress as I do.
That's more an issue of military waste, rather than military funding. We have the Pentagon wasting billions on obsolete, cold-war era equipment (F-22, B-2, Crusader, etc.) while not funding body armor and new mine-resistant vehicles. Its not that the military doesn't have enough money, its that they're not spending it in a productive fashion. Historically, the Army and Marines have always been screwed when it comes to funding whereas the the Navy and Air Force consistently get funding for new billion dollar toys. Throwing more money at the military is not going to fix this issue.
We all know what to do, but we don't know how to get re-elected once we have done it
Good. The sooner, the better. I can't wait to see the consumer-whores freak out over not being able to dodge sales tax at the expense of their local communities! Bring back local businesses. Make Net businesses compete on the same level as their brick-and-mortar counterparts.
Thank you, my luddite friend.
Internet retailers are more efficient and usually pay their employees more than local businesses. They require fewer employees and serve more customers.
The thing is: The middleman shouldn't exist in the first place, if you think about it. The internet has middlemen competing and makes their role in the process less and less prevalent.
I used to work for one. I made 20% more than the average best buy employee starting, and I had nothing more than a high school diploma. I worked my way up to supervisor and could have even had health benefits if I had actually been full time. The place I worked for, in spite of all this, pays its employees less than most warehouses.
This new tax will help some local businesses. However, for the most part, the internet will continue to replace these businesses even on a 'level playing field'.
And on a slightly less related note: Is anyone else annoyed that the government pursues any possible source of revenue? People do not want to pay taxes, and the government makes more than enough money to do everything it should be doing. The solution to the budgetary crises across the US should be obvious: Cut spending. I guess it's a lot harder to shrink government than to steal more money from the people. Sales taxes are especially bad because they disproportionately tax the poor (poor pay a higher % of their income to a sales tax than others do).
Latewire
If they do attempt to tax e-mail, or create a per-e-mail fee, or tax Internet use...they would essentially be double-taxing us. We are already taxed for the price of the Internet service...which includes fees and taxes for whatever line you get for your service.
If the government really wanted to put a per-use tax on services like the Internet or e-mail...then they have to completely overhaul how we pay for the service in the first place (which again, is ALREADY taxed).
Mind you, I vote independent, and I'm sure there are plenty of Democrats for this measure, so I'm not trying to defend them. That said, what people tend to forget is that a large number of Congressional Republicans are no longer in favour of small government, and low taxes. Most people with that mentality went to the Libertarian party.
You know that "Firehose" bit at the top of the page after you've logged in? It looks like /. readers who don't flag stories as dupes in the firehose are those to whom we should assign blame.
"Those who believe in telekinetics, raise my hand" - Kurt Vonnegut, Jr.
Two possibilities here....
GreyPoopon
--
Why is it I can write insightful comments but can't come up with a clever signature?
Make Net businesses compete on the same level as their brick-and-mortar counterparts.
They'll still win. The state will just get its (un)fair cut of the transaction.
Online, I can search for exactly what I want, find a few highly rated variants of that product, and pull up the specs on each in seconds. I can search for negative reviews about them to see if they look good on paper but don't live up to expectations. I can then "shop around" to get a good price (even repeating the "negative reviews" check for the vendor I choose, if I've never dealt with them before) and place my order.
I can do all of that it considerably less time than it would take me to drive to a local store, find the general type of product I want, settle for one of the three models they carry with no information beyond what the box says, and check-out with no idea of what this product sells for elsewhere (or I can waste even more time by visiting a few other stores, on the unlikely chance they carry the exact same model).
And I don't need to deal with traffic. I don't need to deal with annoying salespeople. I don't need to deal with crowds, or for that matter any other customers with their strange smells and who-knows-what contagious diseases (don't mothers still teach people to cover their damned mouths when coughing?). And most delightfully, I don't need to tell the cashier where to stick their extended warranty.
Yeah, "level playing field"... Suuuuure.
The current situation where brick and mortar stores must pay state taxes and on-line stores do not is clearly wrong and must be remedied. Tax loopholes like this create unintended public policy pressure. I just bought a bike from performance Bike shop. If I had bought it a week earlier I would not have had to pay sales tax. But that week the e-tailer opened a brick mortar store 200 mines away from me in my state. Suddenly I can't shop on-line from that company just because they have a store in the state that's too far from me to be practical. Liewise for apple products. These are unintended artifacts of this botched internet tax free zone law.
All internet retailers should have to pay the appropriate state taxes. Even this will not be perfect, since given differences in how states tax it's not clear how to tax an e-tailer that operates out of a property tax driven state when they sell to a customer in a sales tax driven state. But this is a much lesser evil to remedy than the current situation.
Now let's turn to the peril. Right now we have an easy to apply rule. No taxes on internet sales unless there is a brick and mortar presence in the state. Once we get rid of that then legislators may covet levying all sorts of other taxes on internet sales. Sort of like how our phone and other telecom bills get larded up with hard to spot taxes and "fees". Some states might adopt protectionist provisions to protect local stores from national ones. That's not neccessarily bad in it self--it's a state's prerogative to do so short on interfering with interstate commerce. But that tort of meddling is likely to leave open all sorts of tax abuse opportunities.
Thus the parent poster is totally wrong that more taxes are bad. Indeed the more ways to tax people the more possible it is to work out fair tax structures than minimize artifactual consequences. But the parent poster's paranoia is justified. given more ways to tax states sometimes will tax more. The solution to the latter problem is quite simple. have the state set a maximum tax revenue figure that is the combination of all sources. then the state is left to argue over how to distribute that figure over the sources of taxes rather than rasing the final sum.
Some drink at the fountain of knowledge. Others just gargle.
Well, for one thing, there are the ethical implications of not doing so. Believe it or not, there are people in our society who cannot take care of themselves through no fault of their own. Why should we allow people to needlessly suffer and die when we have it within our means to not?
For another, ethical concerns aside, we as a society have a vested interest in making sure that our population is a healthy and productive one. If some members of it aren't, we should do what we can—for the sake of ourselves, if for no other reason, since we also benefit from their future productivity—to ensure that they have a chance to become so again.
Now, I know what you're thinking, that everyone on welfare and other government programs are leeches sucking off the teat of our hard-earned pay. And yes, there are a few people out there like that. But as weird as it may seem, the vast majority of people on government programs don't want to be. They'd love to be in the middle class, or even wealthy.
The problem is that most of these people either 1) don't know how to do so, or 2) have gotten so depressed with a society that systematically prevents them from making more of themselves because everyone is so damned greedy that they figure it's not worth their time and effort. They figure that they'll just end up right where they are now, just shorter of breath and one day closer to death. What's sad is that we as a country used to not be so much this way, but that these people are for the most part correct now.
Do I think that government is doing a spectacular job of helping people to help themselves? No, because it's become rather corrupt with greedy bastards who don't really care about you or me and just want to enjoy the lavish lifestyle of a Congressman. But do I think that one of the reasons government exists is to provide for the general welfare of society by doing things like providing assistance to those who need it? Yes, I most wholeheartedly do.
It sounds like it. Take a look at your landline phone bill. Mine $50 + $25 in taxes. This is part of what's driving internet phone. I think the phone companies are just looking for internet users to subsidize their rates and then of course the state gets their cut.
By the way check with your locality. Most cities get a cut of your cable bill too. Cary, NC gets about 15% of Time Warner's billable off the top as an 'access fee'. So you're being taxed at least twice and now maybe three times. By God I love living in a Red State that hates the guldurn gubmint and them thar commie taxes.
I mean isn't the parking meter approach to everything specifically a Libertarians' wet dream? Everything is pay as you go. Sounds to me that the complainers are being a tad disingenuous.
You're joking, right? Every dollar I spend at retail goes through at least three rounds of taxation: federal income tax, state income tax, and sales tax. And God help me if I manage to save one of my twice-taxed salary dollars, rather than spend it immediately; the interest I earn is taxed by the same gang of thieves all over again.
"...other taxes may zoom upward instead, warned Sen. Michael Enzi, a Wyoming Republican, at a Senate hearing on Wednesday. "Are we implicitly blessing a situation where states are forced to raise other taxes, such as income or property taxes, to offset the growing loss of sales tax revenue?" Enzi said. "I want to avoid that.""
How about we impose new fiscal responsibility laws on government instead.
The pursuit of absolute tolerance leads to the most rigorous and ludicrous intolerance. - REX MURPHY
Comment removed based on user account deletion
What I'm saying is that I don't trust the government to use this new revenue for any productive purpose. Certainly not for body armor for the troops. (And this is setting aside that the 'internet taxes' that are really at issue here are State taxes; I'm speaking hypothetically about new Federal taxes.) And most certainly not productively enough to offset the cost and inherent inefficiencies that arise when you forcibly take resources away from someone and reallocate it elsewhere, rather than letting them spend it as they would have otherwise.
I might have a different opinion on some hypothetical tax, if the tax were firmly earmarked for a specific purpose, in such a way so that the money couldn't be reallocated later, and that once that purpose had been served, it would have to effectively disappear.
However, since I don't think that's the case of the example we were discussing, I have zero faith in the Federal -- or even in my State -- government to do anything useful with any additional revenue that might be generated.
My point regarding body armor is that, compared to the size of the Federal budget, the cost of doing it would be so small, that the simple fact that it's not already done, indicates that it is very far down on the government's list of priorities. And I believe that further up on their list of priorities, are goals and programs that are so impossible to achieve that they're veritable black holes for money, time, and scarce resources -- meaning that even if you gave them many times more resources than they have now, they'd probably still never get around to it. (Unless, perhaps, there was some sort of ulterior motive; e.g. paying back a quid pro quo from some manufacturer of body armor somewhere.)
You say "There's more than enough money to buy food to feed, clothe, and house every person on Earth. There's more than enough money to put a colony on Mars. There's more than enough money to cure cancer." I appreciate your optimistic outlook and apparent faith. I think there's probably enough resources to do those things too, with truly well-meaning and effective leadership, which is right up there with saying 'it's possible if aliens come and help us.' Before I give the current system access to more resources, I'd want some assurance that they're not going to just pour it down one more bottomless pit, which is what I feel they do with a giant portion of the resources made available to them without many strings attached.
(An aside: The U.S. Government is a near-complete cesspool of waste, bureaucracy, and incompetence. However, I'm also not sure that there are any better models, any better extant examples, for what they're trying to do. Every day, the Federal government gets slightly bigger, in terms of the resources that it has under its jurisdiction. And in so doing, every day, despite the unfathomable quantities of waste it creates, it does something that's never, in the history of human civilization, been done before. In some ways, it's a little surprising that the whole thing works at all. There's no easy solutions there; I certainly don't have some magic bullet. But that said, I'm unconvinced that just scaling the thing bigger and bigger is a good idea, and that's what new taxes do.)
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."