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Internet Service Tax Moritorium Set To Expire

Posted by kdawson on Wed Sep 26, 2007 07:03 AM
from the one-of-two-things-we-have-always-with-us dept.
The Almighty Buck Government The Internet Politics
nelsonjs writes "On November 1, the ban on taxing Internet service is set to expire. The ban was originally implemented in 1998 in order to encourage the proliferation of Net access. The Senate is considering two competing bills to extend the ban: one would extend it for four years and the other would make the ban permanent. Verizon and Google, usually to be found on opposite sides of any question of Net access, are united in lobbying for the permanent tax ban. If neither passes by November 1, prices for Internet service nationwide could jump by as much as 17 percent, according to ISPs."
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Submission: The Ban on Internet Service Taxes May Soon Expire by nelsonjs (1063374)
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  • They can't tax the internet - that's double dipping! Isn't porn ALREADY taxed?

    • Re: (Score:3, Insightful)

      by PlatyPaul (690601)
      Strangely enough, you could argue that it may be [nolo.com] (FYI, this [cornell.edu] is the cited precedent for most anti-tax situations). If you made a purchase for which sales tax would be applicable within your home state, and sales tax isn't included in the cost, then you may be responsible for declaring the purchase to the state and paying the tax accordingly.

      This all assumes that you actually paid for that porn in the first place, though.

  • that's mor-A-torium (Score:4, Informative)

    by Anonymous Coward on Wednesday September 26 2007, @07:08AM (#20753899)
    n/t

  • This comes up periodically... (Score:5, Insightful)

    by Algorithmnast (1105517) on Wednesday September 26 2007, @07:09AM (#20753905)

    The politicians are unlikely to make the ban (on the tax) permanent - each time the ban is about to expire, they get to look good to their constituents without actually doing anything.

    So it'll get extended... again... and then in N years we'll hear another net-centric story propagated by a media wanting our avid attention for politicians who want our unconditional vote.

    Move Along.... nothing to really see here...

    • This comes up periodically. The whiners are unlikely to do anything about the political environment. Each time a politician doesn't do exactly what they want to do, no matter the effort or cost, the whiners get to look good to their peers without actually doing anything. So social problems get extended... again... and then in N minutes, another whiny comment propagated by an irrational hatred for authority and media sites who want our unconditional patronage.

      Move along... nothing to really see here...
      • And of course, the people cheering this on are going to be the same ones who want to put health-care decisions for the entire US in the hands of the same government that brought us the TSA.

        So you're saying that Mitt Romney will be the next president? You remember Mitt, don't you? The Republican who forced the entire population of Massachusetts to buy health insurance or pay a fine, starting with confiscating any tax refund you may get.

        You do mean the Republicans, don't you?

        • Re: (Score:2, Insightful)

          by Anonymous Coward
          "So you're saying that Mitt Romney will be the next president? You remember Mitt, don't you? The Republican who forced the entire population of Massachusetts to buy health insurance or pay a fine, starting with confiscating any tax refund you may get."

          Not sure why this is flame bait, he just pointing out that both sides of the political spectrum have had quacks with horrible ideas (even if they were well meaning). Imho, the only difference in Reps and Dems are the tie colors - both sides have smart peop

          • Re:Don't be so sure... (Score:5, Informative)

            by bkr1_2k (237627) on Wednesday September 26 2007, @08:10AM (#20754361)
            "the only difference in Reps and Dems are the tie colors "

            Are you sure? http://www.c-span.org/images/2004vote/bushkerry3_200.jpg [c-span.org]
          • Of course it's flamebait. 'Fair and Balanced' means pointing out only the wacky, socialist ideas that Democrats have, never the same socialist ideas that Republicans have and have implemented.

            And let's not get into the whole "smaller government" thing that Republicans continually tout. That would be heresy to point out the HUGE government expansion the Republicans have done, not to mention the Big Brother-esque, all-knowing-all-seeing spying programs.

              • Re: (Score:3, Insightful)

                by Firethorn (177587)
                I think that a large part of this problem with ever expanding government is the fact that people who run for office generally think in terms of solving problems through government, which leads to more government. For that matter, while in office your tool is government and thus every problem starts looking like a good candidate for a government solution. The government solution generally creates more problems, which leads to more government intervention, leading to massive inefficiency.

                Just imagine if we

      • Re: (Score:3, Insightful)

        by Anonymous Coward
        [OT]

        That is true. Whereas the Republicans just want to spend it, without taxing it in the first place.

        The cost just gets passed on to the next (current) generation. Thanks a bunch, not. Hey, I know, we'll just liquidate and cancel Social Security and cut off Medic[aid/are] to anyone over 65. Carry on.

      • Re: (Score:3, Insightful)

        by Dunbal (464142)
        We're about to see Dem's true colors shine through: TAX IT!

              Yes, especially since the original bill was passed under Bill Clinton's presidency. Oh, good old Bill such a republican, wasn't he?

              Sigh. Yes I am being sarcastic.
        • Yes, especially since the original bill was passed under Bill Clinton's presidency. Oh, good old Bill such a republican, wasn't he?
          Sigh. Yes I am being sarcastic.

          Fiscally, the only thing that Bush has done that could be considered Republican was to lower the capital gains tax. However, Clinton himself lowered the capital gains tax, but also kept spending in check, balanced the budget, promoted a sound dollar. If Hillary would actually be as good fiscally as her hu

  • Misnomer (Score:3, Informative)

    by MyLongNickName (822545) on Wednesday September 26 2007, @07:09AM (#20753907) Journal
    They can pass a bill to make the non-tax "Permanent", but it only takes another bill to tax it again. The only upside to passing the bill would be to create a bit of legislative inertia.

  • Extend it...DUH! (Score:3, Insightful)

    by DarkNemesis618 (908703) on Wednesday September 26 2007, @07:10AM (#20753909) Homepage
    I hope the ban is extended. I'd prefer permanently, but I'd be content with a 4 year extension...for 4 years anyway. If it's not the internet is gonna become just like cell phones. Sign up for a $40/month plan and end up paying $55 after all the taxes. C'mon congress!
    • Stop complaining, you voted for it. 99% of Americans voted for high tax parties.
       

      • Re: (Score:3, Insightful)

        by bentcd (690786)

        Stop complaining, you voted for it. 99% of Americans voted for high tax parties.
        Does this include the ~45% of Americans that didn't actually bother to vote?

        • Re: (Score:3, Insightful)

          by Colin Smith (2679)
          Well they clearly don't care so why would anyone else care what they think?
           

          • Well they clearly don't care so why would anyone else care what they think?

            True, true. Why should anyone care about a demographic that in 1996 was only a majority of US voters. Democracy is just sooo 20th century :-)

            What I am trying to get at is that whenever I see assertions of the kind "80% of Americans voted for . . ." it just screams out at me because the /truth/ is "80% of the Americans /that voted/ voted for . . ." and the difference is really very important.

            As an example, the current president is probably lucky if he can /actually/ boast more than 20% public support back o

            • The number of people who don't vote outnumber the number of people who vote for either party. If they united behind a candidate and got up off their asses, they could have it all their own way.

        • Does this include the ~45% of Americans that didn't actually bother to vote?

          Yes, because many people consider voting to not be a right but a responsibility, and the "right to vote" is tied to the "right to complain". If you didn't vote, shut up and swallow the pill.

          • I moved to a new county fewer than 30 days before the 2006 elections and promptly registered to vote in my new county. Thus, by law, I was not able to vote anywhere. Does that mean I am not allowed to complain?
    • I hope the ban is extended. I'd prefer permanently, but I'd be content with a 4 year extension...for 4 years anyway. If it's not the internet is gonna become just like cell phones. Sign up for a $40/month plan and end up paying $55 after all the taxes. C'mon congress!

      In EU we pay VAT on services and products, so we do sign up for $40/month plan and pay $55 after the taxes. But somehow our Internet is still faster and cheaper than the US one.

      Internet tax definitely won't ruin teh Internet. The question is ra

      • Internet tax definitely won't ruin teh Internet. The question is rather: why on Earth tax it in the first place.

        Well why tax anything? Why tax income, or sales, or gasoline, or any of the other million categories of items that are taxed? The bottom line is, the government needs money, and it's probably a lot easier to get it by nickel-and-diming people with taxes on everything they pay for than by raising income taxes or some other high-profile tax. Of course this simplistically assumes that all tax revenue just goes into a big pile to be used for anything, but...

        Also, in response to the other part of your post,

  • Unfair taxing (Score:3, Insightful)

    by packetmon (977047) on Wednesday September 26 2007, @07:19AM (#20753961) Homepage
    You know, this is insanely stupid bill. Let's take two people, Farmer Joe in Oregon and City Jake in New York City. Farmer Joe has Internet access for mundane tasks and will usually go online maybe 3 times a month to check weather stats, maybe check out the prices on Cattle feed. For his access he pays say 20.00 a month. City Jake in New York City - to make a long story short - lives online spending in excess of 12 hours daily. He pays 20.00 a month. Why should Farmer Joe now have to pay an Internet tax if he should, why should it be more than City Jakes taxes. What I can see happening is less usage over time as consumers will be less likely inclined to pay high fees for what is almost always in the home segment iffy service at best (how many times has your cable provider went down... DSL had issues). If this should happen it would mean less consumer spending throughout the country and world (why should I spend a 17% tax when I can walk to the mall). Politicians are just plain e-stupid
    • Might as well ask why he has to pay the same $20 in the first place. We -used- to have usage-based fees on our internet access, but the overwhelming majority of the market demanded unlimited access for a set cost. Now you'd like to go back to usage-based cost.

      Your example is poor, anyhow, since City Jake doesn't have $20/month access, he has $50/month because he prefers the speed. His livelihood is based on the net (or he couldn't afford to spend 12 hours a day on it) and if he used a slower line, he'd s
    • Jake is actually easier to provide access to than Joe, living in a very dense urban area where millions of customers can offset the cost of laying fiber. I don't know whether this offsets the cost of his increased access, but it is something to consider in your example.

    • Why should Farmer Joe now have to pay an Internet tax if he should, why should it be more than City Jakes taxes

      Perhaps because it's more expensive to provide that internet service to Joe?

      Perhaps because the net benefit to society of cheaper access for urban consumers is greater than the benefit of cheaper access for rural consumers?

      Many 'economic development zones' have a reduced tax burden to encourage businesses to move there. Why should it be any different for residential zones where development is wa

  • Could be a boost to the 'failed' attempts at establishing 'free' wifi in urban & other areas, many of which originally intended to help the poor who - as often - were missing out on an important part of modern society.

    Also for sites that encourage listing 'free' hotspots and help you with establishing your own. Too many to list here - Google is your friend, (uh, if you're logged out and using Noscript etc.)

    Finally, if you're near a border, or have a rich friend that's just a little too far away, you ca
    • How do you think they pay for those "free" services? Through taxes. There is no such thing as a "free" government service. Your Wi-Fi may be "free" but you'll end up paying more at the store, or on your property taxes, etc. Government is supposed to be a zero sum game. If you add something you have to taking something from somewhere else. And honestly, having done contract IT work for State and Federal agencies for almost seven years, I'm not sure I'd want to use a municipal WiFi service (not a knock
    • "many of which originally intended to help the poor who - as often - were missing out on an important part of modern society."

      Because we all know the most important thing that poor folks need is internet access. You do realize that they already have this access if they chose to go to a library.
  • Appears this might just be a United States thing.
    Wikipedia article regarding the tax-free Internet act: http://en.wikipedia.org/wiki/Internet_Tax_Freedom_Act [wikipedia.org]

  • What is the tax for? (Score:5, Interesting)

    by foniksonik (573572) on Wednesday September 26 2007, @09:13AM (#20754983) Homepage Journal
    Taxes are typically set in order for the government (State or Federal or City) to aggregate some money to DO SOMETHING. What will they DO with this money? If they will build out Municipal networks with the money, extend fibre to neighborhoods that don't currently get it because it's not profitable enough for the private company to invest, then I am FOR the taxes. If it's just going to go into a slush fund that will pay bonuses or something then I am AGAINST the taxes.

    Does anyone know what these taxes are for?

  • Hey idiots and non-readers (Score:4, Informative)

    by GarfBond (565331) on Wednesday September 26 2007, @09:36AM (#20755207)
    This is a ban on Internet SERVICE taxes, not state sales taxes. This would prevent a collection of sales and other taxes on your monthly ISP bill, such as what occurs with your cell phone and usual cable bill.

    • Re: (Score:3, Informative)

      by faloi (738831)
      If you fight to keep the special treatment of internet companies over brick-and-mortar companies, you are no better than the vested special interests that you often criticize.

      A valid point, perhaps. Except that the article is in regards to additional taxes put on Internet services, and has nothing to do with taxing goods sold across the Internet. This is, essentially, an effort to hold down any additional fees that might be assessed for Internet access. Similar to keeping all the odd state and federal

    • Re: (Score:3, Insightful)

      by TinBromide (921574)
      The websites and the brick and mortar shops both have to pay local state sales tax, provided that the customer is in the same state as the website's product point of origin (For a service, its the main/local office that determines if you pay sales). Thats why newegg customers have to pay tax in NJ and a few other states, they ship products from there. That's to prevent the diner from setting up a web kiosk to order coffee and allowing the waitresses to be merely couriers of the product ordered over the web.
    • If you fight to keep the special treatment of internet companies over brick-and-mortar companies, you are no better than the vested special interests that you often criticize.

            So you suggest that in order to "fight taxes across the board" we should accept a tax on internet services, since everything else is taxed? I have a pastor friend who is looking for help with a new church, and I think we just found the right candidate for the job...

    • it's the same for EVERYONE (Score:5, Insightful)

      by ScentCone (795499) on Wednesday September 26 2007, @07:48AM (#20754175)
      If you fight to keep the special treatment of internet companies over brick-and-mortar companies, you are no better than the vested special interests that you often criticize.

      Yeesh. As has already been pointed out to you, this isn't about sales taxes on the goods that happen to be ordered online. This is about taxing the service you're buying which connects you to the internet. Much like your cable and phone services are already being taxed.

      That being said: A small mom-and-pop retailer that takes an order over the phone, or through the mail, or by fax, or off of an auction site, or from their own web site is - JUST LIKE AMAZON - not obligated to collect and remit sales tax if they happen to ship out of state. Conversely, companies like Amazon DO have to collect and remit sales tax if they're shipping into a state where they have a business presence. So, if Amazon operates a warehouse/distribution center in Maryland, then they're on the hook to remit Maryland sales tax on any orders they ship to Maryland addresses.

      Very large companies, increasingly, DO have offices, operations, or other "nexus" in more than one state, and are increasingly on the hook to collect such taxes for those state governments. Further, you've got places like California, which has been known to lean on out-of-state retailers to remit CA sales tax whether they have a presence there or not. Their leverage? The tell retailers that if they don't, they'll be blacklisted from any purchasing done by any agency of the CA state government. And while that may not matter to Uncle-Jim's-Fly-Rods-dot-com in Idaho, it definitely matters to retailers that sell office supplies, truck fleet parts, computer hardware, etc. It hits big companies, and the mom-and-pops the same way.

      Your example of the diner is a particularly bad one. There is no un-taxed competition shipping competing omlettes and cups of hot coffee in from out of state. If your point is that there are large businesses (in other lines of work) making money by doing business with the residents of a given state, and not collecting sales tax... remember that it's the CONSUMER'S responsibility to pay sales and use taxes on stuff they buy from out of state. Don't like that the sale isn't taxed up front? Don't sweat it... it's the people who live in YOUR state that are then supposed to pay those taxes on the goods they buy from out of state. Otherwise, you've got businesses that aren't even IN your state having to do insane amounts of paperwork with your state government. Some states have sales tax rates that vary by zip code, and which depend on the type of goods being purchased, and which change seasonally. Should every retailer in every state have to keep track of, and remit all of that nonsense to every other state government around the country? Or should your fellow state citizens simply pay up when they buy something big ticket from out of state?

      And lastly: how about simply making your state a more attractive place from which to OPERATE a large retailer? That way you get WAY more cash flow into the state coffers... income taxes on the employees, corporate incomes and real-estate taxes, taxes on all of the services and utilities that the company uses in the state, taxes on all of the services and items that the employees consume in that state, taxes on the incomes of all of the third-party vendors and service providers that support the company in your state. What you SHOULD be doing is asking your legislators to find ways to make your local infrastructure and circumstances very attractive to the next Amazon.

    • Why should the mom-and-pop diner that ekes out a living by selling coffee and donuts be forced to comply with the onerous burden of collecting and remitting taxes on every cup of joe they sell while the multi-billion dollar sale companies like Amazon get a free ride?

      Amazon does not get a free ride: they have to charge and remit taxes in any state in which they have a physical presence. If you live in say, Nebraska and an Amazon vendor has a physical presence in NE and you purchase from them, you will be cha

    • Fight for lower taxes across the board, fight for better spending efficiency by the government. Slashdot readers are tech savvy people who can avoid sales taxes by ordering online. If you fight to keep the special treatment of internet companies over brick-and-mortar companies, you are no better than the vested special interests that you often criticize.

      That doesn't make much sense because most brick and mortars have store fronts these days. In reality, if internet companies want to avoid sales tax, they'll

    • Re:Why? (Score:5, Informative)

      by morgan_greywolf (835522) <morgan_greywolf@ ... m ['rr.' in gap]> on Wednesday September 26 2007, @07:36AM (#20754075) Homepage Journal
      You already pay tax on your Internet connection if:

      • You use a dislup, DSL, ISDN or FiOS connection, you are paying into the Universal Service Fund, plus federal, state and local tax on the phone line
      • Your ISP has a business presence in your state (state sales tax)
      • You use a cable connection, you are you paying federal, state, and local tax on cable.
      • You use a mobile broadband network, you are paying federal, state and local tax on cellular service



      • That's pretty much everybody. I didn't include satellite only because I've never had a satellite connection, and therefore I am unfamiliar with whether there are taxes included on that bill.

        Why on earth would you want to pay more tax?
      • I don't pay tax on my cable internet service.

        Of course, thats because the local cable company is HAPPY to sell you cable internet without requiring you to pay for cable tv.
    • The argument used to be that everyone had dial up back then, so they were paying taxes on their phone line and therefore paying an internet tax on a phone line that was already taxed would amount to a form of "double taxation".

      However the situation today is quite different - many people have broadband through ADSL lines, a lot of these people have even gotten rid of their regular phone lines to use VOIP, and are therefore not paying any tax at all on their voice/data communication services (unless they have
    • If the moratorium ends you will be paying tax on your internet connection to your local township (borough, city), the state and the federal government (that is assuming that the county doesn't dip in for a bite as well). Each of these will be some "reasonable" percentage of the bill, adding up to increase the cost of internet by 1/3 to 1/2 of what you are paying now. Oh btw, when this moratorium was originally passed, there were municipalities and states talking about taxes such as a couple cents on each em
        • but it's not going to happen out of the goodness of the hearts of the ISP

          And why should it? So, out of whose hearts/pockets to you suggest that it SHOULD happen?

          87% of Americans live within a 20 mile radius of a major urban hub

          And it still costs a fortune to run fiber more than a few hundred yards. And the laws of physics mean that DSL doesn't get you anywhere close to that 20-miles-away guy. So there is a MUCH larger layer of infrastructure that has to flow out, mile by mile, all the way through t

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