IPI Publication Press Release
IPI Policy Report - # 152
Related Publication Title:
Should We Tax the Internet?
Released by Sonia Hoffman on 06/02/2000
IPI Policy Report - # 152
Related Publication Title:
Should We Tax the Internet?
Released by Sonia Hoffman on 06/02/2000
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Dizzy With Internet Tax Proposals?
For Immediate Release For more information: Sonia Hoffman
Friday, June 2, 2000 (888) 557-4IPI or Shoffman@ipi.org
Dallas, TX: Working through today’s maze of Internet tax proposals leaves most Americans confused and frustrated. They can’t understand why states shouldn’t tax the Internet because they don’t have a clue how politicians want to impose such taxes in the first place.
“Internet tax proponents have suggested a number of ways to raise money from the Internet,“ says Dr. Merrill Matthews, visiting scholar at the IPI Center for Technology Freedom. “But while states may claim the right under current law to levy taxes on Internet sales, access and use, most don’t—and shouldn’t.”
With 49 million households soon to be spending $3,738 online, per household, Americans ought to know what’s wrong with these types of Internet tax proposals.
So, what Internet tax ideas are on the table?
· Sales Taxes. Most proposals that coerce states to adopt a uniform Internet sales tax are unconstitutional. Not only can such collaborations violate the Compact and Confederation Clause of the Constitution, but the Supreme Court has ruled states’ authority to tax commerce ends at their own borders. Plus, with over 7500 taxing jurisdictions within the United States—knowing which tax level to apply to whom would be nearly impossible.
· Use Taxes. Some states want to smother Internet commerce with onerous “use” taxes on purchases that occur outside their borders. Here an out-of-state seller would be required by federal law to report buyers’ names and addresses to the buyers’ state of residence for remittance of taxes. But use taxes are already difficult to implement and monitor.
· Access Taxes. Internet “access” can be taxed when governments tax fees charged by Internet service providers like America Online. But instead of taxing commerce, access taxes end up taxing information, the primary reason Internet users ever go online.
· Miscellaneous Taxes. Cities might tax phone lines, high-speed access lines, or the airplanes and trucks that deliver the goods purchased online. Such actions serve as a mask for indirectly taxing Internet sales.
The growing demand for access to and use of the Internet has spawned a number of schemes meant to increase tax revenues. Considering the harm a tax is likely to do to the growth and development of the Internet, it makes sense for the states—at least for now—to see the Internet as a tax-free zone.
This information was taken from an IPI Center for Technology Freedom Policy Report entitled Should We Tax the Internet? by Merrill Matthews. Copies are available upon request at (972) 874-5139 or from IPI’s website at www.ipi.org. The author is also available for interviews.
