Internet taxation is on the way!

[Fred A. Miller]

The Washington Times
Internet taxation is on the way!
Just the latest Obama administration power grab
By Timothy H. Lee

The Obama Era has become a protracted, nightmarish Whack-A-Mole game of tax
increases and bureaucratic self-enlargement. In sector after sector of
American life, another scheme to expand government and wrench more earnings
from Americans' pockets pops up.

Its next targeted sector? The Internet.

Take a look at the following introduction of a nationwide tax upon Internet
goods and services, inserted within page 58 of the Federal Communications
Commission's (FCC) National Broadband Plan released this week:

Digital Goods and Services Taxation

RECOMMENDATION 4.20: The federal government should investigate establishing
a national framework for digital goods and services taxation.

The National Broadband Plan is focused on increasing beneficial use of the
Internet, including e-commerce and new innovative business models. The
current patchwork of state and local laws and regulations relating to
taxation of digital goods and services (such as ringtones, digital music,
etc.) may hinder new investment and business models. Entrepreneurs and
small businesses in particular may lack the resources to understand and
comply with the various tax regimes.

Recognizing that state and local governments pursue varying approaches to
raising tax revenues, a national framework for digital goods and services
taxation would reduce uncertainty and remove one barrier to online
entrepreneurship and investment.

Ponder that curious logic for a moment.

Americans already suffering from a recession prolonged by Mr. Obama's
policies are being asked to concur that raising - yes, raising - taxes on a
nationwide basis will somehow "reduce uncertainty and remove one barrier to
online entrepreneurship and investment."

Consider also that section's observation that "entrepreneurs and small
businesses in particular may lack the resources to understand and comply
with the various tax regimes."As if federal tax laws are straightforward?
Anyone who has asked two separate tax attorneys to ascertain a provision
from the Internal Revenue Code and received seven different indecipherable
answers can immediately recognize the absurdity of suggesting that
federalizing Internet taxes would somehow "reduce uncertainty" and
facilitate understanding and compliance.

In just fourteen months, political discourse during Mr. Obama's tenure has
pioneered new depths in Orwellian Newspeak - think of "jobs saved or
created," for instance - but this is remarkable even by those standards.

The FCC's National Broadband Plan contains other tax-increase proposals,
unfortunately. It states that we "should broaden the universal service
contribution base," which refers to the tax upon telecommunications service
providers created by the FCC in 1997.

Just what the Internet sector needs - a new tax upon Internet-service
providers whose yearly investments in network expansion are necessary to
keep pace with exploding Internet data traffic.

These tax proposals in the National Broadband Plan come just as the FCC
continues to push so-called "Net Neutrality" regulations for the Internet.

"Net Neutrality," which in fact constitutes Net regulation, would prohibit
service providers from differentiating distinct forms of Internet data. And
why is this important? Because with booming Internet use consuming
ever-greater amounts of scarce network capacity, service providers must be
free to test innovative methods to prioritize data to prevent gridlock.For
instance, emergency medical data could be prioritized over routine
recreational video downloads.But Net Neutrality would stifle that sort of
experimentation and innovation.

The result of "Net Neutrality" would be fewer incentives for
Internet-service providers to continue investing in infrastructure
expansion, which would in turn degrade Internet quality as ever-increasing
traffic overwhelms existing capacity. The Internet has flourished like few
technologies in human history precisely because its innovators and service
pro-viders have remained free of regulatory suffocation."Net Neutrality,"
however, and now proposed taxation of Internet goods and services would
jeopardize that.

The nation's attention understandably remains focused upon the yearlong
fiasco that is ObamaCare. Nevertheless, the FCC's agenda recalls Ronald
Reagan's portrayal of government logic: "If it moves, tax it. If it keeps
moving, regulate it. If it stops moving, subsidize it."

As concerns the Internet, the Obama administration is at the tax and
regulation stage. Should it succeed in imposing Internet taxes and "Net
Neutrality," however, it's only a matter of time until we would reach the
failure and subsidy stage for yet another sector of our economy.

Timothy H. Lee is vice president of legal and public affairs for the Center
for Individual Freedom.

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A REVOLUTIONARY IDEA! 'Time to put Nana Pelosi in a home!'