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The Internet The Almighty Buck

Internet Tax Imminent? 505

Posted by CmdrTaco
from the everybody-freak-out-like-the-last-fifty-times dept.
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.""
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Internet Tax Imminent?

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  • by gEvil (beta) (945888) on Monday June 04, 2007 @10:07AM (#19381375)
    Now where have I seen this before? Oh yeah, here! [slashdot.org] And it's even a link to the exact same article...
  • 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.
  • Say what? (Score:5, Interesting)

    by tomstdenis (446163) <tomstdenisNO@SPAMgmail.com> on Monday June 04, 2007 @10:10AM (#19381399) Homepage
    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
    • Tom, why are you so concerned about this? I mean, you live in Canada, after all. Seeing as how none of these people will ever be able to represent you as a constituent, it seems you should save your outrage for when your own government starts talking about taxing you.
      • Canada usually follows the yanks in most policies. I wouldn't be surprised to see an uprising of this idea within a year in Canada.

        But frankly on both sides of the borders I think our politicians were bought and sold long ago. In the states, they bow out to SIGs, whereas in Canada they fight each other for scraps from the public coffers. Both really pathetic.

        And sadly, at least in Canada it doesn't seem to matter who you vote for. As soon as they hit the house it's just non-stop pointless partisan bicke
    • by joe 155 (937621) on Monday June 04, 2007 @10:18AM (#19381527) Journal
      "[G]overnment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

      Reagan, Remarks to the White House Conference on Small Business, August 15, 1986


    • by Himring (646324)
      Along those same lines, please explain to me the justification behind ATM transaction fees.
      • Explain me double fees (I get charged twice the fee, once by the ATM owner, and once by my bank). I'd love to see the explanation for that one. I just use my Visa or stick to my banks ATMs now. Hell, just explain to me any banking fee. That'd be nice. Canadian banks have posted record profits and yet the fees only go up and up. At some point it has to stop or people will just be broke all the time. You can't get fees out of people with no money.

        It isn't like they pay their staff anything. Most tell
        • by Himring (646324)
          My little daughter had some money from birthdays, etc. I take her to my bank, sit her down with the lady and we create her a savings account. I wanted the whole thing to be a learning lesson. I check it later and they've taken $10 of the $50 out for fees.... I didn't think they would since they don't take that money out on my main savings since I have other accounts with them. I've been planning on giving a piece of my mind soon. If they don't put the money back I'm going to withdraw and open at anoth
        • That is why I use a credit union. Far, far fewer fees.
        • I get charged twice the fee, once by the ATM owner, and once by my bank

          For the ATM owner; profit.

          For your bank: profit.

          Canadian banks have posted record profits and yet the fees only go up and up.

          Evidence that the banks ATM fee structure works.

          At some point it has to stop or people will just be broke all the time. You can't get fees out of people with no money.

          Then they loan the broke people money. And since people are broke, they can charge higher interest rates on loans or credit. That goes along wi

        • >Explain me double fees

          I never understand people who complain about banking fees. What is everyone doing using the ATMs so much anyway? Take out a couple of hundred bucks (or whatever) and hide that at home. Tap into it when you need it and there's your spending money. Make purchases with your credit card, and pay it off each month. If people had spending pattern like that they'd pay virtually no banking fees at all. This is how people banked before ATMs - Just do it again. I'll go out with friend

      • Along those same lines, please explain to me the justification behind ATM transaction fees.

        Profit

  • by RichMan (8097) on Monday June 04, 2007 @10:11AM (#19381421)
    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?
    • Taxes are already everywhere. Why more?
      That would be because you're not squealing loudly enough yet.

       
    • You've enumerated nothing but income taxes. All participants in any transaction, internet-related or otherwise, pay income taxes on what they earn. But on top of that, whenever you buy something, it's usually subject to sales tax. ISP service currently has a special exemption from sales tax. Why should that be?

      Maybe it made sense to give internet access special status back in the days when the idea of connecting computers was novel and fragile, and people dialed in to ISPs run by mom-and-pop businesses. N

      • So hit the giant corporations like AT&T with windfall taxes, and 'technology sector' taxes and leave it to AT&T to decide how much they'll take as a profit hit and how much they'll pass on. You don't have to directly tax the customers simply for buying (and let AT&T get themselves an extra $0.50 per customer when they put the prices up for taxes anyway).
    • Re: (Score:3, Interesting)

      by AeroIllini (726211)
      I go to the store, and I purchase a television. I pay 8% sales tax. Is this enough?
      The store pays 35% taxes anually on their operating income (not revenue). Is this enough?
      The store bought their televisions at a wholesale price from a distributor, and paid a sales tax. Is this enough?
      The distributor pays 35% tax anually on their operating income. Is this enough?
      The distributor bought the televisions from the manufacturer, and paid a sales tax. Is this enough?
      The manufacturer bought components from various s
  • Good! (Score:4, Funny)

    by Vengeance (46019) on Monday June 04, 2007 @10:11AM (#19381423)
    Let's get businesses off of the Internet, and take it back to what it's supposed to be:

    A global pornography repository.
  • I don't see the problem with the sales tax part. If brick and mortar stores are required to collect sales tax, then so should online shops. Online shops shouldn't get exempt from collection taxes just because they don't have a physical presence in the state. A web site is just as good as a physical presence, and if you want to sell to people in a certain country or state, you should be prepared to collect taxes for that state. I live in Canada, and have to pay sales tax on every online purchase I make,
    • Online shops shouldn't get exempt from collection taxes just because they don't have a physical presence in the state.

      I don't know about Canada, but in the United States only the Federal Government has the power to regulate and tax interstate commerce. Ohio can't suddenly decide to tax something someone in Idaho buys from an online store in New York because their Internet traffic passes through a router in Cleveland, so why should they be able to force that same store in New York to collect sales tax for

    • The problem is that the US is different.

      Counties and cities apply sales taxes, so you have thousands of different rates. In New York City, the rate is 8.5%; in other New York City counties, it's 4% for some goods (clothes) up to $110 and 8% or 8.25% or 9% for everything else. There's one county with 5 different tax rates!

      Some school districts have excise taxes on things like cell phones, cable TV and other services as well -- and that's just New York!
      • I forgot to mention that some states and local governments are inconsistent with how they apply the law. Massachusetts says that for income taxes, I owe taxes when I set foot in the state. Baseball players have to file when they play against the Red Sox at Fenway.

        The problem is how to you assess the tax rate? If I ship a computer to somebody's vacation house where there's an 8% tax rate, but his principal residence is in a place with a 9% tax, which rate is correct? The customer's home city might say that y
    • "I live in Canada, and have to pay sales tax on every online purchase I make, I don't see why Americans think it should be any different."

      No, you don't. [russnelson.com] That's why we think you're cute and adorable and keep you in cold storage to keep you out of trouble.
    • Re: (Score:3, Interesting)

      by Hoi Polloi (522990)
      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.
  • Scary (Score:5, Insightful)

    by tygerstripes (832644) on Monday June 04, 2007 @10:15AM (#19381479)
    Sorry, but this makes Big Government sound more like a massively privileged private-sector business than any other article I've read in ages.

    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.

  • But that won't be popular in many states, especially the red states, where there is not as much online business. The tax should be collected by the company that sells the goods and services for the state they reside in because that is how it would be done if you went to their store and bought it in person.
    • by zarthrag (650912)
      Exactly! But I thought that states aren't allowed to tax inter-state commerce? I've seen sites that apply sales tax only if shipping within their own state. No way I'm going to calculate/track sales tax for every state/county/city in America - not to mention international sales. If the IRS has a problem with that, I'll gladly let *them* calculate what I owe (good luck w/that!)
      • When I bought Half Life 2 off Steam they charged me VAT on it. So that's a US company collecting taxes for the UK government. Just FYI.

        What would stop you setting up a computer in your shop right now with a barcode scanner attached to it. You bring what you want to buy up to the computer hit it with the barcode scanner and it automatically enters the details into the shops website. You complete the transaction by filling in your credit card details. Internet purchase, delivery choice: collected. No sales

  • YES! (Score:5, Insightful)

    by svendsen (1029716) on Monday June 04, 2007 @10:18AM (#19381525)
    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.
  • by antifoidulus (807088) on Monday June 04, 2007 @10:27AM (#19381633) Homepage Journal
    the most regressive tax there is!
  • Get your phone and blow their ears off. It worked with net neutrality. It will work with this nonsense.
  • by Colin Smith (2679) on Monday June 04, 2007 @10:34AM (#19381737)

    "It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expence, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expence, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will." - Adam Smith
  • by blcamp (211756) on Monday June 04, 2007 @10:34AM (#19381751) Homepage

    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!"...?!

    • by Peeteriz (821290)
      In your China-webshop situation, shipments can be easily taxed at the customs office when arriving in the USA. They are taxed this way when I (in Europe) order stuff from USA.
  • ...ok, if they decide to start charging sales tax on US purchases, what precisely is going to stop people from simply buying overseas? If they tax business imports, what will stop those stores from going to global commerce sites like e-bay?
  • by palladiate (1018086) <`moc.liamg' `ta' `etaidallap'> on Monday June 04, 2007 @10:38AM (#19381805)

    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.

  • Why don't we ever tax government? I mean, you tax something to get less of it, right? To discourage people from doing it. So let's put a tax on government, because if ever there was a drug on the market, it's government.
  • Wait, they don't ALREADY collect enough in taxes? They need MORE? Too many pet projects that need coerced dollars, I guess.

    Surely, you must be joking. Alas, no.
  • by ThosLives (686517) on Monday June 04, 2007 @10:45AM (#19381899) Journal

    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....

  • by paltemalte (767772) on Monday June 04, 2007 @10:52AM (#19381993)
    Ron Paul [ronpaul2008.com] 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.
  • 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?
  • I'm so angry about this, I'm going back to semaphore [wikipedia.org].
  • by Random BedHead Ed (602081) on Monday June 04, 2007 @11:00AM (#19382117) Homepage Journal

    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.

  • by unconfused1 (173222) on Monday June 04, 2007 @11:08AM (#19382235) Homepage
    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).
  • by gelfling (6534) on Monday June 04, 2007 @12:32PM (#19383391) Homepage Journal
    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.
  • by gelfling (6534) on Monday June 04, 2007 @12:35PM (#19383431) Homepage Journal
    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.
  • by Jerry Rivers (881171) on Monday June 04, 2007 @01:34PM (#19384193)
    "...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.
  • by jarrettwold2002 (601633) on Monday June 04, 2007 @01:47PM (#19384395)
    Have you? The only thing that gets these crap laws off of the books, is calling, writing and otherwise being so annoying that they drop the bill.

    My Senator co-sponsored the legislation so he get an email along with the rest of my delegation. You should start firing away emails at yours.

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