Internet Tax Imminent? 505
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.""
Say what? (Score:5, Interesting)
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
Re:Once again...not new taxes (Score:4, Interesting)
Well, that will help... almost nobody. (Score:4, Interesting)
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!"...?!
Will we get revenuers? (Score:5, Interesting)
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.
So, for what will it be used? (Score:3, Interesting)
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....
VERY Good (Score:4, Interesting)
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!
Ron Paul is against this tax (Score:3, Interesting)
Re:I don't see the problem. (Score:3, Interesting)
Once again your bluff is being called. (Score:4, Interesting)
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?
Tax on e-mail is unenforceable (Score:5, Interesting)
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.
Re:VERY Good (Score:2, Interesting)
Taxing the internet can be good but has a peril (Score:4, Interesting)
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.
Is this driven by the phone companies? (Score:3, Interesting)
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.
Re:Taxes are already everywhere. Why more? (Score:3, Interesting)
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 suppliers, and paid a sales tax. Is this enough?
The manufacturer pays 35% annually on their operating income. Is this enough?
The suppliers buy raw material to manufacture their products, and pay a sales tax. Is this enough?
The suppliers pay 35% annually on their operating income. Is this enough?
The producers of the raw materials pay 35% anually on their operating income. Is this enough?
This is not including all the sales tax paid on the purchase of refining/manufacturing/administrative equipment, the property taxes paid by the various companies for their facilities, the taxes paid on utilities, the levies on various products for various political reasons, or the income tax paid by the employees of each of the companies. I'd say the system is fully covered, from every angle, sometimes doubly so.
But the difference is that all of these taxes are enacted by people *we* elected. The tea party was about taxes enacted by people who we didn't elect; in fact we had no say in the election proceedings at all. Puerto Rico might have a beef with taxation without representation, but those of us who live in a bona-fide state do not.
Taxation is high, but that's an orthogonal issue to the need for a tea party.
Apparently I lack your faith. (Score:3, Interesting)
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.)