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Internet Connection Tax Held Off for A Few More Years
Christopher Blanc writes "The ban on taxing Internet connections was set to expire at the end of October, but thankfully the US Congress has acted. Last night, a Senate bill was passed that extends the 1998 Internet Tax Freedom Act for seven more years. There are still some details to work out (the House's bill only extends it for four years), but it's clear both houses of Congress are looking to keep taxes out of the picture for the near future. 'Sen. Ted Stevens (R-AK) is excited at the prospect that Americans will be able to continue filing the tubes of the Internet tax-free. "The Internet has provided a powerful economic boost to our nation, and has become an important everyday tool for millions of Americans," said the senator. "By keeping Internet access tax-free and affordable, Congress can encourage Internet use for distance learning, telemedicine, commerce and other important services."'"
Meanwhile, food is taxed, energy is taxed, clothing is taxed, health is taxed, labor is taxed, trade is taxed, wealth is taxed, inflation hedging is taxed, mail is taxed, building is taxed, savings are taxed.
Fortunately sex and the internet are still untaxed. Cool.
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If Congress really wanted to assure affordable internet access, they'd set about removing the "Universal Access Fee" (a/k/a "e-Rate" or the "Gore Tax") which has long since fulfilled it's stated purpose of subsidizing internet access to rural schools. (According to the FCC, 99% of public schools are connected to the Internet). And while they're at it, they can shut down the Universal Service Administrative Company, which is a bureaucracy set up to administer these funds.
It should be easy, right? A school asks for funds to help establish internet access, an application is reviewed and funds transferred... well, here's a little link to a flowchart showing how out-of-control a government agency can become in only a few years:
http://www.usac.org/_res/documents/sl/pdf/application-process-flow-chart.pdf
Nobody likes paying more money for anything, so the first instinct is to say HOORAY! I'm not going to be taxed!
But I have to wonder. What kind of inequities are being created that aren't solved by the "free market" because of what economists call externalities, or put simply benefits/costs not given to the party who produces the service?
Access to high speed internet at reasonable prices in rural, or outlying areas is certainly a concern. I don't really know if that's still a problem or not. But if it is, one solution is a.. yes, that dirty word, a... tax on internet service to support paying for "rural internetification" (to bastardize the program in the 30s, "rural electrification".
AccountKiller
When reality sets in. Sure, great that internet tax is held off for a few more years, god knows the cable companies and telcos don't need any help. This is an election year-ish, so taxes will be a big issue soon. The trouble is that the wars of choice for Bush are going to have to be paid for some how. I'm reasonably certain that the Bill Gates of the world are not going to donate their personal fortunes to pay for it, so that means that you and I (if you live in the US) will end up having to pay for it. Any guesses as to how? yes, that's right, in the form of taxes.
... Telcos or cable companies. If it gets taxed, one of them will make out terribly well as it will open the gates to applying taxes to VoIP and other such services. We'll have monthly bills that even Enron accountants couldn't figure out.
We could legalize/regulate/tax the sale of pot... no, that won't happen.
We could tax the monetization of religions... no, that won't happen, Xenu won't let it.
We could tax gasoline... that will happen
We could tax food stuffs... that will happen
The list continues with all the stuff that you cannot live without
So be wary of any politician that promises to reduce taxes, even if they manage to not tax internet access.
Truthfully, the only reason that this has worked is that they are still trying to figure out who will give the best backhanders
If that sounds cynical, think about it for awhile, the truthiness of it will settle in.
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Commerce and income? WTF? Income is the ONLY thing that is fair to tax! And I'm OK with B2B taxes as well.
But property tax is the most evil of all taxes. A freind I had about 20 years ago's parents lost their house. These folks were retired, had spent 30 years paying it off, and owned the house free and clear. When they bought it, they probably paid something like $20k for it, with payments maybe $50 per month.
So these poor folks are retired, on a fixed income (social security and maybe a small pension). Forty years after buying it, real estate prices have skyrocketed, as have valuations. Suddenly the annual tax on their HOME is equal to six months income. No way in hell they can afford that, and they lost their home.
That's just evil.
Not nearly so bad is sales tax, but sales taxes are regressive. Poor people live from meager payroll check to meager payroll check, working their asses off in two jobs with no disposable income, no cushion, no way to save money. 100% of their income is for purchases, so 100% is taxed. Meanwhile Richey Rich spends 5% of his income and banks the rest. Only 5% of his income is taxes on sales. And he's probably getting his income on capital gains, interest, and other investments, sitting back watching football and eating caviar while his income isn't taxed as income like the poor working man's is, but at a far lower rate. And he has numerous deductions.
The poor man has a vote, the rich man has a campaign contribution.
-mcgrew
mcgrew's razor: Never attribute to stupidity that which can be explained by greedy self-interest
Funny how Congress attaches expirations to the things that protect us from taxation but you don't see these things on the ugly stuff like the DMCA or PATRIOT Act.
I'm not arguing for socialism. Where did you come up with that?
Nor am I saying all rich are idle rich; although the rich seem to have the opinion that the poor are all the idle poor.
Nor am I saying unearned income isn't taxed; it is. But it is taxed at a lower rate than the average workers' income, at least by the US Federal government.
I agree that charging a set amount is unfair. The vehicle registration taxes you mention are an excellent example.
A flat tax would be fair IF, and it's a big if, there were no deductions. But there always are deductions, and they always favor the rich against the poor.
The renter (an note I'm a homowner) pays propery tax when he pays his rent. The landlord (most of whom aren't rich) then deducts that tax, plus any interst he is paying if a mortgage is held on the rental property. The renter should be able to deduct his rent, but can't.
An example of a truly regressive tax is Social Security tax. It's capped at $75k, so Joe Schmoe who is by no means rich and his employer are is paying the same amount every year as Larry Ellison and Sun on Ellison's paycheck. Then the government takes this regressive tax, "borrows" it to pay for the Iraq war, and whines that Social Security will go broke in X years. Well DUH, make Ellison and Sun pay the same 15% SS tax I and my employer do instead of the <1% they pay now, and Social Security will be solvent longer than anyone now alive will live.
And the more money one has, the more benefit one gets from government.
mcgrew's razor: Never attribute to stupidity that which can be explained by greedy self-interest