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February 4, 2016

Tax Succor or Sucker Punch


The Permanent Internet Tax Freedom Act (PITFA), widely approved by the House of Representatives earlier this year, is scheduled to be taken up in the Senate this week or next. The provision has been added into the conference report (the final version of a bill to be considered by both chambers of Congress) of the Trade Facilitation and Trade Enforcement Act of 2015.

PITFA would make permanent the Internet Tax Freedom Act (ITFA) which has been extended multiple times over the last seventeen years. ITFA was first signed into law in 1998. Originally intended to be permanent but compromised to be temporary, the Act bans federal, state and local governments from imposing discriminatory taxes on online sales and Internet access, and protects consumers by limiting taxes on transactions to a single state.

If ITFA were allowed to expire as scheduled then Internet using consumers will be burdened with at least $16.4 billion a year in new taxes. Knowing that, and acknowledging a still sluggish economy, one may be tempted to think that passage was a fait accompli. After all, what politician wants to go on the campaign trail in a few months bragging that they have imposed a massive new tax specifically targeting Internet users? What politician wants to explain that, while the federal government spends millions on making broadband available to citizens, they voted to fleece those very same citizens, driving up costs and ironically discouraging broadband usage in the U.S.?

To date, only one thing has prevented passage of a permanent moratorium and the elimination of disparate, discriminatory tax treatment of the Internet—politics. That threat remains for the upcoming vote but the tactics have gotten even more desperate.

For years, big-government pro-taxers (particularly in the Senate) have put off a permanent fix in an effort to force Congress, and the nation, to accept a massive tax increase and the expansion of government tax authority with a legislative vehicle once named the Mainstreet Fairness Act. They have often deployed the kinds of parliamentary tricks that drive voters up the wall to thwart the vote. This time, however, there may be nowhere to hide.

Rumor has it that Senators Enzi of Wyoming, Alexander of Tennessee, and Durbin of Illinois will raise a point of order to strip the PITFA language from the conference report. For the language to be eliminated—for the Senators to have their way and raise taxes—the point of order will have to receive 60 votes. Put bluntly, Senators who side with Senators Enzi and Alexander are supporting a massive tax increase. Those who oppose this parliamentary trick are voting against a tax increase, standing to protect the Internet and its users from a discriminatory tax.

The choice should be an easy one for those who oppose massive government and huge tax increases.  Finally called out of the shadows to vote in the light of day, the people will see where their Senators line up on the issue allowing citizens to decide for themselves whether their Senators should be ordered out of the U.S. Senate.



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