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Destroying Internet Freedom by Taxation

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Destroying Internet Freedom by Taxation

Government taxation is as old as the first brute using force to steal from those intimated by threats. So why should it be any different for the internet? In today’s political environment of choosing winners and losers, the rush to tax online sales is gathering steam. Everyone feels the presence of the Amazon behemoth. Retail outlets like Best Buys are rethinking their business model in order to compete. States are eager to tap the flow of transactions with a sales tax that would cost consumers dearly. The issue of "so called" fairness is the argument that bureaucrats love to hang their hat on. So who makes the valid case for exemption or inclusion?

Senator Jim DeMint made quite a stir in his article, No Internet Taxation Without Representation.

"The Marketplace Fairness Act recently introduced in the Senate would require online retailers to collect and pay sales taxes to states where they have no physical presence or democratic recourse. Overstock.com, eBay and the like could have to pay sales taxes to any state from which an Internet user placed an order, even if the company's headquarters, warehouses and sales staff are located entirely in other states.

Such online sales tax proposals are taxation without representation. The proposed federal law tells businesses that there is no escape from the clutches of tax-hungry politicians. That concept is antithetical to our federalist system, which promotes competition among our states for the best economic policies."

The push back from the bricks and mortar lobby comes from Michael P. Kercheval’s op-ed in the Wall Street Journal, Internet Taxation Will Help States and Local Retailers.

"Sen. Jim DeMint's "No Internet Taxation Without Representation" (op-ed, Aug.1) is surprising and disappointing in that it is replete with outdated and inaccurate information. What Sen. DeMint fails to mention is that in states with a sales tax—five don't have one—tax is already owed by consumers when a purchase is made online. This isn't a new tax. It's erroneous to state that the Marketplace Fairness Act would create "taxation without representation," as retailers don't pay sales tax, they collect it. The in-state customer who makes the purchase and pays the appropriate sales tax has an opportunity every election to render judgment on his state's fiscal direction. Furthermore, because of technology advancements, it is patently disingenuous to suggest that collecting sales tax is a crushing burden for online merchants."

In a perfect society, a consumption tax would have merit, if the byzantine bureaucratic tax codes were used for a proper bond fire. In an age of deficit spending and revenue shortfalls, this prospect is zero. So why give special treatment to the Internet, when hungry government tax collectors want to apply their trade to cyber space? Maybe the better question is why are we so willing to comply with state sale tax regulations, that only increase the retail price?

What other forms of internet taxation should the consumer expect in the future? Laura Reynolds explains the history of the Internet Tax Freedom Act, which seems to be destined for oblivion.

"The Internet Tax Freedom Act (ITFA) of 1998 is an act of Congress regulating what kind of taxes may and may not be placed on Internet use in the United States. It was extended as the Internet Tax Nondiscrimination Act of 2004 and was extended as The Internet Tax Freedom Act Amendment Act of 2007. President Bush signed the current law, extending provisions to 2014. The act forbids taxation of Internet service based on amount (bit tax), type (bandwidth) or use (email) in order to make the medium affordable and accessible for commercial and personal use."

No "Bit or Bandwidth Tax" and certainly no "Email Revenue Enhancement" sounds like a sound policy. However, the wheel of creative extortion never sleeps. The respected publication, The Hill reports in the FCC eyes tax on Internet service.

"The Federal Communications Commission is eyeing a proposal to tax broadband Internet service.

The move would funnel money to the Connect America Fund, a subsidy the agency created last year to expand Internet access.

The FCC issued a request for comments on the proposal in April. Dozens of companies and trade associations have weighed in, but the issue has largely flown under the public's radar."

Our colleague Kurt Nimmo warns about the significance of this new tax.
"The scheme is nothing new. "Consumers already pay a fee on their landline and cellular phone bills to support the FCC’s Universal Service Fund." The "Service Fund" was devised as yet another grand socialist enterprise "to ensure that everyone in the country has access to telephone service, even if they live in remote areas."

Who can be against extending the total Google/Facebook surveillance society at taxpayers’ expense! Wiring the planet with a wireless net of shadowing observation goes well beyond compliance of tracing sales, from your favored online merchant. The only valid duty that ought to be levied should target the snoops that are recording your life in real time.

If there was ever a tool to liberate the minds and spirit of mankind, the internet revivals the printing press. The freedom to connect worldwide is awesome. However, the power of governments and corporatists to strip away your privacy and personality is frightening. Access to the web is desirable for those who choose to make the connection. Even so, they must bear the risk and responsibility of linking into the supercomputers of the snoops and spooks.

Yet, the practical intrusion of internet taxation on any level hits, not only the pocketbooks of consumers, but finances the operations of the total observation state. Debate if you wish the equity of sale tax exemptions if you are so inclined, but accept as existential, the danger of accepting the mark of the beast for buying or selling.

Only an all-inclusive net of cyberspace registration would have the ability to tax everyone without exception. At that point, it will not matter if Amazon has cheaper prices than Best Buy.

James Hall – August 29, 2012

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