The idea of taxing email is no more popular today than when President Bill Clinton signed the Internet Tax Freedom Act into law. But a dedicated congressional minority now wants to allow states and localities to tax email—unless these governments are given new powers to collect sales taxes on e-commerce.
On Nov. 1—three days before Election Day—the Internet Tax Freedom Act is due to expire. In place since 1998 and renewed three times, it wisely prohibits taxes that discriminate against the Internet. State and local governments can't impose burdens online that don't exist offline. And multiple jurisdictions can't tax the same online transaction—a critical consumer protection in a country with more than 9,600 taxing authorities. The law also bans email taxes and new taxes on Internet access services.
Originally authored by former GOP Rep. Chris Cox and Sen. Ron Wyden (D., Ore.), the law has attracted large bipartisan majorities every time it's been up for a vote in either house. That's because the law has allowed the Internet to grow into an engine of interstate and international commerce.
But in a few months customers may begin receiving notices from their Internet providers that new taxes are on the way. Even though nearly everyone in Congress opposes slapping all of America's heavy traditional telephone taxes on Internet access, a renewal of this successful policy is being held hostage by lobbyists for giant retailers.
They've persuaded Democrats like Sen. Dick Durbin (D., Ill.) and even self-styled limited-government advocate Rep. Jason Chaffetz (R., Utah) that an extension of the Internet Tax Freedom Act should be paired with more authority for those 9,600 governments over e-commerce. Unless states and localities are granted new powers to reach outside their borders to force collection of sales taxes on goods purchased online, the plan is to punish all American consumers with new taxes on communication.
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