Skip to main content

Is the Taxman Coming to the Internet?

October 08, 2007

Established in 1998 under the Clinton administration, the Internet Tax Freedom Act banned taxes on Internet use. The moratorium sunsets November 1. (More after the jump.)
The Center on Budget and Policy Priorities, a well-regarded public policy institute that studies the effect of economic policy on low-income households, has published a paper that establishes the position of the two camps: those that want to make the tax ban permanent (via a bill introduced by a Republican and a Democrat), and those that want the act to expire. Proponents of removing the ban argue that the revenue generated from the tax would be used to invest in improving the United States' broadband infrastructure, which lags well behind those of other developed nations. So just like a gas tax is levied to help build and maintain roads, an internet tax would help pay for a larger, faster information superhighway. However, as Bill Moyers reported in his excellent series last year, "The Net @ Risk," telecommunications companies have been receiving tax breaks since the early 90s, with the charge to take that financial windfall and reinvest it in improving broadband infrastructure. However, for the most part, companies like Verizon, Time Warner, and Philadelphia's own Comcast have pocketed that money--or invested it in their own physical infrastructure. This is because Congress and the FCC have had trouble enforcing the rules they created. As a result, some opponents to the tax argue that greater pressure should be placed on the telecom companies to use their corporate tax relief for its expressed purpose. This may alleviate the need for additional taxes. Needless to say, this is just one aspect of the increasingly compelling intersection between public utilities, private ownership, and the people. h/t