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Communications The Almighty Buck

Florida Ponders Communication Tax on LANs 406

victor_the_cleaner writes "Here in Florida, a little known tax provision may lead to LANs being taxed. According to the article, 'The provision was intended to make sure companies operating their own land line communication systems, which two decades ago was limited to large utilities and railroads, were paying the same taxes paid by those who rely on commercial phone carriers. About 10 companies (in Florida) pay more than $1.2 million annually based on that definition. However, the statute is so broadly worded that it could be interpreted to describe a local area network.' Internal auditors at the city of Tampa noticed a couple of years ago that the substitute communications service provision was still there and asked state officials why it wasn't being enforced. And now people like Sharon Fox, the city of Tampa's tax revenue coordinator are pushing for enforcement."
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Florida Ponders Communication Tax on LANs

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  • Home enforcement? (Score:5, Insightful)

    by wo1verin3 ( 473094 ) on Thursday April 15, 2004 @07:13PM (#8876204) Homepage
    I would guess that the people pushing for enforcement don't really understand what they're asking for and that it will cost their offices as well.
  • justification (Score:5, Insightful)

    by bersl2 ( 689221 ) on Thursday April 15, 2004 @07:14PM (#8876213) Journal
    I see one and only one way a tax on LANs becomes fair. That is if the tax money goes to improving the local and regional communications infrastructure
  • Won't work... (Score:5, Insightful)

    by Grant29 ( 701796 ) on Thursday April 15, 2004 @07:15PM (#8876220) Homepage
    Nowadays home LANs are pretty common. Try to enforce it on individuals and all hell will break loose. I expect them to go after the large companies first, and when they strike it down, the home users won't worry about having to fight it.

    --
    Retail Retreat [retailretreat.com]
  • by hoggoth ( 414195 ) on Thursday April 15, 2004 @07:16PM (#8876227) Journal
    The Florida Tax Revenue office is naming this new effort 'Why your business should leave Florida' and including helpful tips on moving your business to another state that doesn't do such stupid things as tax your internal computer network.

  • Re:Won't work... (Score:5, Insightful)

    by wo1verin3 ( 473094 ) on Thursday April 15, 2004 @07:16PM (#8876232) Homepage
    As silly and far fetched as this sounds.... I'm sure we remember when everyone said the RIAA will never really start going after individuals.
  • by bunyip ( 17018 ) on Thursday April 15, 2004 @07:16PM (#8876236)
    Well, first, I was giong to suggest, "Dude, April Fool's Day was, like, 2 weeks ago", but then I read the article.

    Clearly, companies that rely on LANs will go to places that don't tax LANs. Like neighboring states, or non-neighboring states, or non-neighboring countries. I'm sure the tax assessor is not thinking of the medium to long-term consequences.

    Do they tax LANs in India? Russia? Other countries?

    Alan.
  • by loraksus ( 171574 ) on Thursday April 15, 2004 @07:16PM (#8876241) Homepage
    in Florida, but is it just me or is every person who calls from that state dumb as a brick?
    Any other folks in tech support notice the same thing?
    Not quite off topic, it just seems that areas which have a zip code that begin with the digit "3" have, shall we say, limited computer experience.
  • by Froze ( 398171 ) on Thursday April 15, 2004 @07:17PM (#8876247)
    I really hate that the system thinks it is entitled to a tax when it is not providing the infrastructure. Sure, if the government is subsidizing a system, but when a company or individual acquires or builds something for themselves, what right does someone else have to came and lay claim to your efforts?

    That a tax of this nature was initiated in Florida is just one more reason why I will never willingly choose to live there.
  • by DarkkOne ( 741046 ) on Thursday April 15, 2004 @07:19PM (#8876273) Homepage Journal
    I mean, what next, a tax for using a remote control to change channels as opposed to standing up and doing it physically? The law may be in place, but they can't honestly expect it to stay so... If it's to tax businesses who put a network in place on their own instead of using telcos, they could just define it as "between multiple sites" or something like that... anything that leaves the building, basically. *shrugs* I certainly hope common sense wins the day. If it applies to network data transfer, is it wired or wireless only? Floppys and CDs are data transfer to... how specific is the method? Bah.
  • by DAldredge ( 2353 ) <SlashdotEmail@GMail.Com> on Thursday April 15, 2004 @07:20PM (#8876276) Journal
    The gov doesn't pay taxes. They don't have to pay to register their cars, they don't have to pay gas tax and they don't have to pay a host of other fees.
  • by trmj ( 579410 ) on Thursday April 15, 2004 @07:21PM (#8876282) Journal
    So they are taxing people who use network based communication systems not run my outside companies.

    On the surface, it seems like it's taxation without representation: the networks are privately built and maintained. And what do those networks run over for companies that have multiple offices? Outside phone lines, which the Gov't helped build. Ok, it can be argued that there is representation here.

    But think about it: if those lines are already running to the buildings and being used, then the taxes are already being paid on them, in the form of basic service fees.

    It seems like this law was made to make companies that run their own lines to pay taxes on them, which is taxation without representation. Now it's being applied to people who are already paying the service fees and taxes on them, and are now going to be taxed again for using said lines.

    This is going to do one of two things:
    1) Make a lot of criminals
    2) Be challenged and not stand up in court.

    Feel free to tell me I'm an idiot and don't know what I'm talking about, just back it up with reasons and facts, please.
  • Re:Won't work... (Score:2, Insightful)

    by PretzelBat ( 770907 ) on Thursday April 15, 2004 @07:22PM (#8876301)
    Try to enforce it on individuals and all hell will break loose.

    You mean like if a big company tried to used copyright laws to extort money from their customers?

    You mean like if the government passed a law that makes it possible for them to examine anyone's library records?

    You're right. Here in America, we are STRONG. We stand up for our rights. You can't push the average American cizizen around and get away with it. ...

    Oh, wait.
  • by macdaddy ( 38372 ) on Thursday April 15, 2004 @07:22PM (#8876307) Homepage Journal
    It's not that they don't understand (which they don't); it's that they don't care. All they see is yet another unharnessed source of income. I bet you that the law is so vaguely worded that it could describe the connection between you and your provider (DSL), you and your cable company for TV or cable modem, cordless multi-unit telephones (like the pair Sam's sold last X-mas that could have more handsets added to the setup), and even the datalink between your PDA and your desktop. Hell I bet it could even be applied to your USB hub and devices. I bet this law is that vague. They really don't care what the impact is. They just want more money.
  • WANs perhaps (Score:2, Insightful)

    by complexmath ( 449417 ) on Thursday April 15, 2004 @07:25PM (#8876336)
    Haven't found the legal code to peruse, but I think the writer of the article has made a mistake. It sounds to me like the tax was for dedicated lines between offices rather than wires built into a single establishment. Were this not the case, PBX phone systems which are used by nearly all businesses and schools in the US would be taxed as well, and these systems have been in place forever. If my guess is correct, then individuals and most busineses would be exempt, as it's not common even today for many businesses to have dedicated WAN lines, and these are the same businesses that should already be paying this tax.
  • won't happen (Score:3, Insightful)

    by randyest ( 589159 ) on Thursday April 15, 2004 @07:26PM (#8876339) Homepage
    Even Florida isn't dumb enough to tax LANs. According to the article:

    The upper legislative chamber is expected to propose a temporary suspension of its enforcement and then look for ways to limit the provision's application without undermining its original intent.

    ...

    No one knows exactly how much more would be collected by enforcing the broader definition of the tax. The rate varies statewide, ranging from 9.17 percent to 18.07 percent depending on local option assessments.

    Stargel predicts it would be hundreds of millions of dollars annually, while some business lobbyists say it would easily exceed $1 billion.

    This is an interesting case of reasonable tax laws made dumb and potentially dangerous by advances in technology, but otherwise pretty much a non-issue that will go away quietly within a few weeks.
  • by cryptochrome ( 303529 ) on Thursday April 15, 2004 @07:29PM (#8876363) Journal
    I know they're a big cash cow [wired.com] for the state and all (why do you think they're so high) but now they're getting in the way of communication. Screw the state governments, they'll have to deal with the loss of revenue some other less sneaky way. Even the much-ballyhooed rural service fee is no longer justified. There are cheaper ways of communicating from the middle of nowhere than stringing copper out there. They pay less to live out in the middle of nowhere, why should the rest of us pay more to support their choice?

    Viva la VOIP!
  • Re:justification (Score:2, Insightful)

    by bwy ( 726112 ) on Thursday April 15, 2004 @07:30PM (#8876373)
    Well, what if we spend the tax money on a $20,000 toilet seat for the shitter of some government employees involved with the improvement of the local and regional communications infrastructure?

    Or maybe I could interest you in a $1000 hammer? I've yet to see a good ROI for my tax money. Based on that, I'd say the less taxes/less forced goverment services, the better.
  • by Hamster Lover ( 558288 ) on Thursday April 15, 2004 @07:33PM (#8876386) Journal
    How would the tax apply to a company that has internal networking? What about a PBX telephone system, would taxes be due? If not, then LANs must also be logically excluded.

    More importantly, most LANs integrate with some form of WAN, of which a relationship must exist with a telecommunications company that pays these state taxes already.

    From what I read in the article, the tax was only created to level the taxation benefit that large companies would reap from having a private phone system. Even in 1985, the year this tax was implemented, many companies had some form of internal networking to cover such devices as computers, computerized cash registers, etc. and they were not taxed.

    Doesn't make sense.
  • by MacDork ( 560499 ) on Thursday April 15, 2004 @07:33PM (#8876389) Journal

    but when a company or individual acquires or builds something for themselves, what right does someone else have to came[sic] and lay claim to your efforts?

    Happens all the time. Property taxes.

  • by Migrant Programmer ( 19727 ) on Thursday April 15, 2004 @07:35PM (#8876410) Journal
    Your new need for fire protection, police protection, fresh water, road access, sewage service, educational facilities, and hospital facilities raised your taxes. Not your effort and expenditure.

    Did I miss anything?
  • by whoever57 ( 658626 ) on Thursday April 15, 2004 @07:41PM (#8876460) Journal
    I bet you that the law is so vaguely worded that it could describe the connection between you and your provider (DSL), you and your cable company for TV or cable modem, cordless multi-unit telephones (like the pair Sam's sold last X-mas that could have more handsets added to the setup), and even the datalink between your PDA and your desktop
    And if it is so vague, it probably applies and always applied to PBXs, which did exist and were common when the law was written.

    So either it has a specific exclusion for PBXs, or I really doubt that it covers LANs anyway. In any case, just sling a couple of VoIP phones on the LAN and call it a PBX system!

  • by $n1per ( 322712 ) on Thursday April 15, 2004 @07:50PM (#8876533)
    Taxing internal LANs will have Florida seeing what California and Silicon Valley is now, all the major corporations in their state crossing the border.
  • by Anonymous Coward on Thursday April 15, 2004 @07:52PM (#8876550)
    This is probably a troll, but I'll bite.

    No, there aren't really cheaper ways of communicating from the middle of nowhere. Many areas of the midwest and west there is no reliable cell coverage (if at all), for instance. And how do you propose those people get internet access? If you're so sure there are cheaper ways, name one that will work in Middle-of-Nowhere, NE.

    Also, it may "cost less" to live in the middle of nowhere (that's debatable), but incomes are also significantly lower. And, where do you think the farmers are _going_ to live?

    Further, to turn the tables a bit, why should people in rural areas have their tax money used to pay for interstates in urban areas? You choose to work in a city, why should the rest of us pay more to support your choice?
  • by afidel ( 530433 ) on Thursday April 15, 2004 @07:56PM (#8876576)
    Yes and that agenda is obviously to drive all profitable businesses from the state....
  • Security (Score:3, Insightful)

    by Tony ( 765 ) on Thursday April 15, 2004 @08:11PM (#8876678) Journal
    Property taxes are based on the assumption that the government is the only thing standing between you and somebody else taking your property. The more property you have, the more the government protects for you, ergo, the more you pay in taxes.

    In practice, it's a bit different, of course; often property taxes are used to fund schools, which seems it should be based on the number of kids you have rather than the amount of property you own; but I don't complain, since a good education system is required for the future of any socieity.

    Of course, there are many good education systems in the world. And then there's what we have. Different issue, though.

    Anyway, property taxes are understandable.
  • Bogus tax? (Score:2, Insightful)

    by Mudd Guy ( 716972 ) on Thursday April 15, 2004 @08:15PM (#8876725)
    I can understand taxation of usage of the telephone network because the government subsidized the original construction of this network and continues to subsidize it's maintenance. I don't understand how one can justify taxing a company's private telephone network, let alone their computer network. The government provides no infrastructure for either! Sounds like a blatant revenue grab to me.

    Are they going to tax home LANs, too?
  • Tangible Tax (Score:4, Insightful)

    by taumeson ( 240940 ) * on Thursday April 15, 2004 @08:22PM (#8876769)
    Sure, if the government is subsidizing a system, but when a company or individual acquires or builds something for themselves, what right does someone else have to came and lay claim to your efforts?

    Besides having business income taxes, Florida also has a tangible tax system, which says that all business must pay taxes based on their assets. So if you have 10 computers, a router and a switch, you already have to pay taxes SIMPLY BECAUSE YOU OWN THEM.

    Florida is king of the weird taxes.
  • by DerekLyons ( 302214 ) <fairwater@@@gmail...com> on Thursday April 15, 2004 @08:42PM (#8876888) Homepage
    It's not that they don't understand (which they don't); it's that they don't care. All they see is yet another unharnessed source of income.
    That they see nothing but an unharnessed source of income comes from two forces;
    • Inflation - A dollar simply does not go as far as it used to.
    • The public - Who keep insisting that the goverment provide ever more services (without somehow increasing taxes).
  • by steveha ( 103154 ) on Thursday April 15, 2004 @08:51PM (#8876943) Homepage
    This is exactly why I want to see government pushed as low on the stack as possible. Don't do something at the federal level if you can do it at the state level. Don't do it at the state level if you can do it at the county or city level.

    Right now we are looking at Florida doing this. If Florida is stupid enough to pull this, people and businesses in Florida at least have the option to go to a different state. Imagine if it were a Federal tax law.

    This is also a great example of why laws should be clearly written. A few years back, there was an initiative in Washington state with some vague provisions. The anti- guys pointed out that with some broad interpretation, the initiative would give some really broad powers to the government; the backers of the initiative said "Don't be silly, no one would ever interpret the law that way." Oh, really?

    Vague laws are ticking time bombs.

    steveha
  • Re:justification (Score:5, Insightful)

    by Aardpig ( 622459 ) on Thursday April 15, 2004 @09:10PM (#8877059)

    I've yet to see a good ROI for my tax money.

    Sometimes, it is wrong-headed to judge ROI in purely financial terms. Both the Lincoln and Washington monuments were funded using public money; yet I don't think you will find many arguing that this money was wasted. There are areas where public funding can meet a need, for which there is no private-enterprise motivation to address.

  • Re:Security (Score:2, Insightful)

    by Trepalium ( 109107 ) on Thursday April 15, 2004 @09:28PM (#8877156)
    It's also for roads, maintaining the sewage system, fire dept, etc. Most of these things would be too expensive to let people 'opt out' of. If you don't pay your fire dept fees, and your building catches fire, the fire dept would only be making more work for themselves if they let your building burn to the ground, because it would contantly be threatening the neighbouring buildings. Likewise, it makes more sense for there to be one authority on the construction material, width, etc of the road around your property, and the sewage system needs to all be hooked up properly. It may be hard for libertarians to believe, but sometimes there are things that central control via a government just works better.

    I'd hate to think of how a privately owned road system would work like. Death of a thousand paper cuts seems to spring to mind.

  • by JCMay ( 158033 ) <JeffMayNO@SPAMearthlink.net> on Thursday April 15, 2004 @10:08PM (#8877428) Homepage
    Because taxing something legitimizes it...

    At least, that's what the pot-legalization crowd says.
  • by G-funk ( 22712 ) <josh@gfunk007.com> on Thursday April 15, 2004 @10:52PM (#8877676) Homepage Journal
    Duh :) But to do more enforcing you need more staff, more managers to manage those staff, and thus a bigger budget for your department. And we all know that in the public service your worth is measured by how much money you're responsible for managing.
  • by Anonymous Coward on Thursday April 15, 2004 @10:59PM (#8877709)
    Should you pay for fire "protection" then?

    Well, they will put out the fire as fast as they can. They might save most of the house. The fire department will also be there in large fires that can clear your firebreak (I live in SoCal. Brush clearance only goes so far.) They will rescue you in a flood, or if you fall down a ravine hiking. They will send paramedics if you call. The fire department is one agency I would never criticize too much.

    Police arrive after you've been victimized.

    You want them to wait around for something to happen? (They will if you show evidence that it might, and want them to.) If you make an real emergency call, they will try to get there as fast as possible. Yes they are more likely to be in your neighborhood serving a warrent than just checking up, because they are underfunded and overworked.

    I had a very minor traffic collision a little while back. I gave the guy my licence number, insurance, all that stuff. He threatened me and left without so much as telling me his name. I called the sherriff, the deputy they sent out (quickly, I might add), was very polite and professional, and went to to guy's house and had him cough up the appropriate information. No hassle, no citations, no problems. Serving the public exactly like you would want.

    I quit high school and I have no children. I don't use the educational system (and I'm a lot better of for it, frankly - it's designed as lowest common denominator until about Master's level.)

    Ahh, spoken like a true high school dropout. How do you know what it's like if you haven't been there? I'll admit that it could be a heck of a lot better, but then, I could have gone to a much better college, too. The fact that you didn't use it doesn't mean that it's not there for you, or for your children. It also benefits you by raising the standards all around you. Society benefits from public education. Government is there to help society benefit.

    If I go to a hospital, I have to pay.

    You have to pay, if you can. You cannot be denied emergency services in this country. Sometimes that involves expensive things like helicopters to get you to the hospital. They don't run a credit check before they call the helicopter. I agree that it isn't quite fair to have those with the means to pay for the care of those without, but it's a much nicer place than if we just let the sick and injured die in the streets, or had to provide a credit card to the 911 operator.

    You sound like a hard working person who has earned your spot in life. I applaud you for that. You also sound anti-social, and you don't appreciate that a stroke of bad luck could put you in a position to need these services like so many other people.
  • Re:Security (Score:3, Insightful)

    by Gojira Shipi-Taro ( 465802 ) on Friday April 16, 2004 @01:15AM (#8878410) Homepage
    Based on the quality of "educated kids" in Florida, I want a fucking refund.

    The way to reduce the number of dumb/desperate kids is to encourage poor/uneducated people NOT TO HAVE MORE FUCKING CHILDREN THAN THEY CAN AFFORD. Quality of education aside, I DO object to paying for some moron's inability to keep it in his pants.
  • by RTMFD ( 69819 ) <ibaird@NOSPAM.gmail.com> on Friday April 16, 2004 @01:37AM (#8878504) Homepage
    Ahem... Let me say this again:
    They are taxing private networks built by private companies with their own money.


    How is this different than the income tax? I can sit on my arse in a shack year round, using no govt. services and still have to pay the income tax. I make money from the fruit of my labors, "built" with my valuable time, and I still have to give Uncle Sam his cut.

    Taxes suck. Full Stop.
  • Highway Robbery (Score:4, Insightful)

    by leereyno ( 32197 ) on Friday April 16, 2004 @04:13AM (#8878973) Homepage Journal
    I don't give a damn what the government buys with the money they steal, the point is that they don't have any right to it in the first place.

    Misapplication of the law for the purpose of generating revenue is nothing short of extortion. This law was not passed for the purpose they are trying to use it for. It is therefore an abuse of power which it is the duty of every citizen of the state of Florida to resist.

    Lee
  • Re:tax on what? (Score:3, Insightful)

    by aziraphale ( 96251 ) on Friday April 16, 2004 @04:18AM (#8878981)
    Just how do you think taxation actually works?

    Taxes aren't about paying for the things on which they are levied. When I buy something from the store and pay sales tax, that sales tax isn't paying for the item I purchased - it's paying for the existence of the government. When I pay tax on my income, that's not paying for the provision of my services - it's paying for the government again. So, just because I paid a copmpany for some LAN equipment, and the electricity company some money for the electricity to power it, makes NO DIFFERENCE to whether or not the government can tax it. the government can tax what it likes, when it likes, up to whatever level the people can stand, or demand, according to its political and fiscal inclinations. Hell, way back when, in my country, they used to tax people for having windows (not Windows, although that's not such a bad idea...) on their houses - not at the point of sale, but annually - just because it was as good an indication as any of the wealth of a house owner.

    Taxation is just a way for governments to pull a little bit of money out of the economy as it moves round. Remember, money isn't created or destroyed (At least not by taxation), simply handed from one person to another. When I hand some money to a shopkeeper, he has to give a bit of it to the government. When I own assets, like houses, which have a certain value, the government takes that to mean I have a bit of cash available, and asks to take a bit of it each year. When I do work for someone and they pay me, I have to give a bit of that to the government. But all that money comes back out of the government once again (albeit unevenly distributed so that a lot of it ends up in the private bank accounts of large investors in big public suppliers, but a large proportion ends up as wages of teachers, payments to suppliers of tarmac, welfare payments, and so on - point is, it flows round the economy in much the same way as the bit of the money you spend that doesn't go to the government did).

    All taxation is is friction. It slows the rush of money round the economy and diverts some of it according to overarching social need, rather than individual preferences.
  • by fr0dicus ( 641320 ) on Friday April 16, 2004 @07:49AM (#8879618) Journal
    Lets hope the portion of your tax that goes towards policing helps prevent your shack from getting broken in to, or that which goes towards the fire service that will be available should your shack catch fire. Or the army that provides the country your shack is in with the security against invasion from neighbouring countries. Or the public roads that you travel on from your shack to your office or grocery store to work or get food. Do you have a toilet and running water in your shack? etc.

    I could go on if I could be bothered to think of any more of the umpteen examples that ungrateful whelps take for granted when it comes to moaning about taxes. Welcome to society, you can opt out and live like a gypsy if you want and I hope you enjoy your rootless life of poverty, but if you want to opt in then I'm afraid you're going to have to pay for the things that you take advantage of every day without even realising.

  • Just a thought... (Score:2, Insightful)

    by flynns ( 639641 ) <seanNO@SPAMtopdoggps.com> on Friday April 16, 2004 @11:00AM (#8881046) Homepage Journal
    Being from Florida, this slightly unnerves me. But realistically, you have to consider a few things:

    1) Although taxes suck, where in the Constitution does it say that US citizens are immune from stupid, absurd, overbearing, or even intolerable taxation? All we are guaranteed is representation. Am I missing something in this, or did we give the Government permission back in 1787 (Constitution ratified) to tax us in whichever way seemed best to our representation?

    2) While this doesn't affect businesses, Florida has no personal state income tax (go us!). So at least folk in NW Florida, life is wild, rich and largely tax-free.

    3) If the FL legislature decided to find a way to do this, the most logical way to do it would be to place an additional tax on all network hardware sold or shipped to FL, and grant an amnesty to all existing, in-place hardware.

    --flynn
  • by Anonymous Coward on Friday April 16, 2004 @10:58PM (#8888927)
    But the key definition is that a communications service is explicitly NOT:

    (h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line computer services.

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