Internet tax would only slow progress

Freedom New Mexico

Congress has an opportunity to permanently ban Internet taxes, but it had better act fast. The temporary moratorium instituted in 1998 and extended twice since then expires Nov. 1.

We hope Congress has the courage to take advantage of its opportunity, but if lawmakers are tardy, prepare to see a feeding frenzy begin.

State governments, ever-eager to tax whatever they can, are likely to pounce on the unprotected Internet like wolves on a sheep if the tax ban isn’t extended.

More than one bill to extend the protection is pending in Washington, but the best of the lot is authored by Rep. Anna Eshoo, D-Calif. Only her bill, HR743, would make permanent the temporary ban, and for good reason.

The original Internet Tax Freedom Act of 1998 created a temporary moratorium on Internet access taxes as well as discriminatory or duplicative taxes on e-commerce.

By extending it twice, in 2001 and 2004, Congress sought to encourage access to the Internet and to promote online commerce.

The tax moratorium has been “a resounding success, fostering growth in productivity and innovation and widening public access to information,” according to Rep. Eshoo.

Her bill would extend the tax moratorium to ensure that Internet users maintain unfettered access and e-commerce remains unhindered.

“Should Congress fail to renew this moratorium, the continued growth and progress in Internet access and e-commerce will be endangered,” Eshoo said.

It’s refreshing to hear a Democrat acknowledge the damage taxes do to commerce and freedom, considering that party’s propensity to impose such levies.

“The power to tax is the power to destroy,” U.S. Supreme Court Justice John Marshall wrote in 1819.

We can be fairly certain that 50 states are poised for destructive action should a window of opportunity open Nov. 1.

Beware of duplicitous claims. Some state taxing agencies are sure to claim they need the money. But, as noted in the Wall Street Journal, state and local governments have had 17 consecutive quarters of increasing revenue.

And don’t be snowed by arguments that Internet users won’t mind a little bitty tax that will increase their service providers’ bills just a little bit. From little bitty acorns mighty tax burdens grow.

The top income tax rate originally was 3 percent. Today it’s 35 percent.

Eshoo points to a 2006 Pew Internet and American Life Project report that 73 percent of those polled were Internet users, an increase from 66 percent one year earlier. In 2006 alone, online retail exceeded $100 billion, a 24 percent increase over the previous year. The surest way to retard, or even destroy, such robust trends would be to tax them.

We urge Congress to make the Internet tax ban permanent.