October 16, 2007

Democrats Blocking Permanent Ban On Internet-Access Tax

The Democratic leadership in Congress has started to work overtime in blocking a Republican attempt to permanently ban taxes on Internet access. According to Congressional Quarterly, they will instead offer a four-year extension in its place, and refusing to consider a more permanent solution:

House leaders are using a looming deadline and procedural heavy-handedness to thwart the will of nearly 240 House members who support a permanent ban on Internet-access taxes, some supporters of the ban say.

Democratic leaders have scheduled a vote Tuesday on a bill (HR 3678) that would extend for four years the existing ban on taxing Internet access, which is scheduled to expire Nov. 1.

Although supporters of making the tax ban permanent almost certainly would have enough votes to amend the bill more to their liking, it is scheduled for consideration under suspension of the rules, a procedure that bars amendments and is usually reserved for less controversial legislation.

“Basically, what the Democratic leadership has said is, ‘Here’s four years, take it or leave it,’ ” said Republican Robert W. Goodlatte of Virginia, cosponsor of a bill that would permanently ban Internet-access taxes. “Congress will probably take it, but I don’t know. We’ll have to wait and see what the vote is.”

The four-year approach will probably pass. No one will want to vote against it and risk failure of the broader ban. A failure to pass either bill will almost certainly result in an imposition of state taxes on Internet access, driving up costs for both businesses and individuals and disincentivizing commerce.

The issue continues in the Senate, however. Trent Lott and Ted Stevens plan on holding a press conference with John Sununu, whose S.2128 bill proposes the permanent ban. If the Senate passes 2128, then the conference committee may have the opportunity to favor the Senate version rather than the House edition. If Harry Reid pushes a four-year moratorium instead, he may not get enough votes for the weaker version. Silicon Valley has pushed hard for the permanent ban, and although Barbara Boxer would likely follow Reid's lead, Dianne Feinstein may decide to listen to her constituency rather than lose them to the GOP.

A permanent ban makes more sense. There is no better model of interstate commerce on an individual level than the Internet. The federal government has a Constitutional interest in controlling the taxation on access to the Internet, and that should be addressed in a more stable manner than punting the ball every four years. With a majority of House members favoring a permanent solution, House leadership should follow both the will of its members and the Constitution in settling the matter permanently.


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It appears that the Democratic leaders have decided to block the permanent ban on taxing internet-access according to Captains Quarters and Congressional Quarterly. The permanent ban appears to have the support of the of the majority of congressmen fr... [Read More]

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Comments (13)

Posted by Yompkee | October 16, 2007 10:07 AM

Democrats are against permanently exempting anything from taxes.

When you think taxing death is a great idea, you really can't take anything else off the table.

Posted by Jazz | October 16, 2007 10:10 AM

It's amazing to me how the Democrats wound up on the wrong side of this one. (Except possibly as part of an addiction to taxing everything under the sun.) E-commerce has been around for a while now, but it still has a long way to go. Hindering access by imposing additional costs is insane.

I don't know exactly how it would play out in terms of constitutionality. (Regulating interstate commerce is probably the broadest and most abused phrase in the constitution) But this does sound like it fits the bill to me.

Posted by patrick neid | October 16, 2007 10:41 AM

Can you imagine how hard it must be for a democrat to place a permanent ban on a tax resource.

I think we are asking to much!

Posted by RBMN | October 16, 2007 10:43 AM

I'm afraid that if the private internet companies (with new protocols and software) can't get a handle on all the email spam, and all the phishing schemes (beyond just segregating them at the end of the line,) they create a great hook for all the tax-loving-types in government to collect some type of spam-killer tax, that people might fall for. "For this small extra fee, we’ll finally fix this spam problem." And when they don't fix it, it'll be because they didn't collect enough money...or take enough control of the system. As they say, the power to tax is the power to destroy.

Posted by SouthernRoots | October 16, 2007 11:01 AM

Democrats love to tax. They will not allow a ban on any tax, and even if they did, all it takes is a new law a couple of years later to undo the "permanent" ban.

In Washington, King County, last year they increased property taxes to pay for road maintenance. Why they didn't have available funds from the gas tax, I don't know. The new budget is calling for three new taxes, two property and an increase in the sales tax. This is at a time where they are trying to force light rail with taxes that could hit upwards of $150 billion over 50 years. Even these taxes won't fund some highway projects fully, so they will need to raise more taxes and add tolls and fees to fund all they want.

Democrats love to tax.

Posted by Darren | October 16, 2007 11:02 AM

"And when they don't fix it, it'll be because they didn't collect enough money...or take enough control of the system."

You've hit the nail on the head, RBMN. That's the government's MO (even some Republicans). Neither the federal nor state governments should have the power to tax internet access. However, I'm not sure the federal ban fits within the framework of limited government. In fact, the Constitution's interstate commerce clause itself is a gross error on the part of the framers (just like the 'general welfare' clause). It's unleashed the full force of totalitarian government over the past 150 years. Of course, the federal ban currently acts to enhance the liberty of individuals by protecting them from the states. But on the other hand, it could go the other way with an actual federal tax on internet access (all in the name of regulating interstate commerce). Very thorny issue.

Posted by Orion | October 16, 2007 11:03 AM

As the Internet is an interstate commodity Congress could pass a tax on it on any day of the week ending in a "y", including bank holidays. However they don't have the nerve to do that and they certainly don't want a mish-mash of state regulartory agencies jumping in and taking those revenues for themselves (they'd get blamed, too).

However the big-state Democrats want to keep that option open in case public opinion ever changes so they won't support a permanent ban. We'll just have to take what we can get and hope for a shift in partisan balance by 2011.

Posted by daytrader | October 16, 2007 11:05 AM

The dot com types are mainly in the camp of the progressive/liberal side of the political spectrum so they are shooting part of their own base in the foot with this.

It is all simply another political power play to make life as miserable as they can like a school yard bully.

It goes right along with the idea of taxing tobacco products even more to finance SCHIP. They get a revenue stream and hammer something they hate and are trying to kill by a death of a thousand cuts.

Posted by swabjockey05 | October 16, 2007 1:10 PM

CE, did you really say: "Dianne Feinstein may decide to listen to her constituency rather than lose them to the GOP." ??

Been "sipping" the grog again...have we?

Posted by unclesmrgol | October 16, 2007 2:09 PM


No, the Captain isn't drinking the grog -- only his sailors. If you look at Microsoft's contribution pattern, you find that whichever party owns the pit-bull trying to regulate Microsoft's behavior, the other party gets the contributions. Right now, the needle is on the Democrats (because the Administration is dogging Microsoft), but the needle was to the Republicans (during the Clinton administration).

So imagine Google's contribution pattern should the Democrats try to tax their bread and butter. Their needle is fully on the Dems right now (even though they park their private non-Gore-compliant jetliner at Moffet Field) but I suspect that if the Google Regulation Act attempts to pass, that would change suddenly and dramatically.

Posted by swabjockey05 | October 16, 2007 2:33 PM

OK Uncle. You got me.

When he said "constituency" I was thinking of the Haight-Ashbury types still living the “summer of love”…not the few "deep pockets" sloshing the swill in DiFi’s trough.

But don’t the Dhimmis represent "the people"?

Maybe this swabbie should take a smaller sampling of the grog.

Posted by BB | October 16, 2007 5:43 PM

Tax, folks, is not just a source of money; it's a powerful weapon/social engineering tool.

Personally, I suspect this is the genuine concern against a permanent ban.

Come on! Everyone knows that Cap'n Ed hits above his bandwidth! Someone has to address that! (not with ideas and more speech, of course)

Big tax club comes in handy for a progressive thinker you know.

Posted by Rose | October 17, 2007 12:32 AM

Posted by Jazz | October 16, 2007 10:10 AM



PLEASE!!! Just show me ONE Socialist Dictatorship that LOVES OPEN communication!


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