Categorized | General Interest

The Internet Doesn’t Need Tax Breaks

Every company and every industry runs around yelling, like a little child, “I’m special” and, so, don’t tax me. And Congress just falls all over itself to pass one dumb tax break after another. Here’s the dumb one regarding the Internet.

It’s nothing new: in 1998, Congress passed the “Internet Tax Freedom Act” which basically said the Internet was a new thing so let’s exempt it from sales tax. It was dumb, then, and it’s even dumber now–the dopes in Congress want to extend this tax break again.

As Citizens for Tax Justice points out, bad idea:

If the “infant industry” argument was highly questionable in 1998, it’s utterly absurd now. From books to airline tickets, virtually everything consumers purchased in “brick and mortar” stores in 1998 is now available online. Internet access, while not yet omnipresent is widely accessible. Many traditional retailers are going under due to competition from companies such as Amazon.com. Sixteen years later, the infant of 1998 now has the car keys to the American economy.

Nonetheless, Sens. John Thune and Ron Wyden have cosponsored the “Internet Tax Freedom Forever” act, which would turn the moratorium into a permanent ban on Internet access taxes. A glowing Wyden press release claims the bill will “giv[e] online innovators and entrepreneurs the stability they need to grow their businesses.”

While other tax bills have deadlocked Congress, the Internet Tax Freedom Forever act has garnered 50 co-sponsors in the U.S. Senate. The most likely reason is Congress is playing with other people’s money. The fiscal impact of ITFA in 2014, as in 1998, falls entirely on state and local governments. So Wyden and Thune can breezily pre-empt an entire economic sector from tax without hurting the federal budget’s bottom line. But for state and local governments, the bill would represent a real hit on their ability to balance budgets in the long term.

No kidding. A hit on budgets, money in the pockets of the king’s of the economy.

 

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