7 More Years No Internet Tax

Senate approves a seven year extension

[Import Export]

Senate Passes Internet Tax Moratorium
3 hours ago

WASHINGTON (AP) — The Senate on Thursday night approved a seven-year extension of a moratorium on state and local taxes on Internet access.

The Senate voice vote came a little over a week after the House passed a bill calling for a four-year moratorium. The tax ban, first approved in 1998, is set to expire Nov. 1.

Attempts in both the House and Senate to make the ban permanent in recent weeks were unsuccessful despite strong support for the idea.

Sens. Tom Carper, D-Del., and Lamar Alexander, R-Tenn., in a joint statement called the agreement "a commonsense victory both for Internet users and for state and local governments."

The two chambers will have to reach a compromise on the length of the ban and other differences before the bill can be sent to the White House for President Bush's signature.

[ap.google.com ]

[Fortune Hunter]

Standard Congressional action on this one. They will never permanently remove this tax. Congress never ever takes a tax off the table forever. They are simply doing this to fatten up the industry so when they do decide to tax everyone it will be a nice fat target to clean up on.

Interestingly, the first phone tax wasn't added until the Spanish American War. A tax was added to help pay for this war. It was just removed a few years ago and a tax credit was given to people last year who had paid it since the court had ruled the tax illegal...over a hundred years after the war was over!

I wonder what pre-text Congress will use to tax the Internet when they finally do?

[LifeinAsia]

I wonder what pre-text Congress will use to tax the Internet when they finally do?

"We're taxing everything else- it's the only thing left."

[TheGuyAboveYou]

Were not taxing capital gains on real estate investments :)
The last REAL tax shelter. 1031 exchange!

[LifeinAsia]

That's not a tax shelter- it's a tax postponement.

[TheGuyAboveYou]

Not the way we do it. Factor in the time value of money
into development and interest it is a tax shelter.

But your right. Technically it is a postponment but you never
pay it if you do it right.

[edited by: TheGuyAboveYou at 5:03 pm (utc) on Oct. 26, 2007]

[martinibuster]

I'm happy they've extended this, although it would have been better to make it permanent rather than merely an extension. Buying over the Internet is largely similar to mail order, and imo should be taxed the same way. Additionally, although debatable, it's not unreasonable to compare download purchases to buying something out of a catalog, at least to the extent the purchase is not being made within a physical store. So why the wait in classifying Internet sales along the same rules as catalog sales?

[Tapolyai]

I venture to say that if this does not become permanent, and companies get fattened up, as Fortune Hunter said, the Congress is in for a huge surprise.

Just as sin sites can, and did move overseas with a few clicks, so can fattened up web-only businesses.

[buckworks]

I'm confused ... is this about taxes on internet shopping or just about taxes on internet access?

[thecoalman]

Excellent decision and should be made permanent. It would be a mess for online retailers to try and calculate the taxes involved for people in different localities. State taxes would be easy but when you throw local taxes into the mix you have literally hundreds of thousands possibilities.

[Bewenched]

Why in the world should US citizens pay tax to access the internet. OUR TAXES BUILT IT.

[martinibuster]

I'm confused... is this about taxes on internet shopping or just about taxes on internet access?

Both. Here's the wikipedia entry for the original Internet Tax Freedom Act [en.wikipedia.org] tax ban that is being extended:

This law bars federal, state and local governments from taxing Internet access and from imposing discriminatory Internet-only taxes such as bit taxes, bandwidth taxes, and email taxes. The law also bars multiple taxes on electronic commerce.

Contrary to popular belief, it does not exempt sales made on the internet as they will be taxed at the same rate as non-Internet sales just like mail order sales. The Act did not repeal any state sales or use tax.

[edited by: martinibuster at 8:47 pm (utc) on Oct. 26, 2007]

[boomtown123]

Buckworks- It's a tax on internet service. It's not related to sales tax paid on goods and services bought over the internet.

If internet access was taxed we'd all see increase in our monthly internet bills.

[creeking]

it would be interesting if they passed an internet tax,........ and made it retroactive. :)

[BananaFish]

The baby boomers are getting old, I read in the NY Times that the first one took her Social Security this year. The Congressional pork barrelers will have to pay for this impending boon somehow. At least in the next decade of tax-happiness, Internet business will get a mild reprieve.

[mjwalshe]

i' ve neaver under stood taxing phone and internet services you pay VAT/Sales tax so what is the rationalisation for this extra tax.

USP sould be funded by the industry - as they have a licence from the state

[LifeinAsia]

i' ve neaver under stood taxing phone and internet services you pay VAT/Sales tax so what is the rationalisation for this extra tax.

The "rationale" is that other agencies want to dip their hands into the till. Sales tax goes to the state and local governments, not Federal.

[Fortune Hunter]

i' ve neaver under stood taxing phone and internet services you pay VAT/Sales tax so what is the rationalisation for this extra tax.

Huge bloated government that spends way beyond its means and provides services far beyond its original charter doesn't need "rationale" it just needs whiny voters who think that it is the job of government to provide everything and will continue to vote for the idiot politician that promises to give them the most. That combination of elements produces the recipe to tax everything possible without any type of "rationale"