It is difficult to overstate how the Internet has permeated American life over the last several years. For starters, it provides a platform for commerce, from Amazon to the thousands of small businesses on eBay.
It also helps connect people, whether it’s a group of friends on Facebook or a community of moms and dads struggling with a child’s serious illness. It serves as a platform for higher education, allowing individuals to obtain degrees and certifications from anywhere. The Internet allows medical professionals to provide lifesaving services to individuals in remote areas who might not otherwise have access to this care.
One main reason the Internet has flourished is because government has been prevented from burdening it with new taxes.
But that ban expires on October 1 of this year. Unless Congress acts, state and local governments will have free rein to levy new taxes on Americans’ Internet access and to discriminate against e-commerce.
In 1998, Senator Wyden co-authored the bipartisan Internet Tax Freedom Act, and Congress passed it into law. We have now extended this bill five times — sometimes retroactively or immediately before its expiration. It’s time to make this moratorium permanent.
Yesterday, we introduced our bill, the Internet Tax Freedom Forever Act, to permanently ban Internet taxation as well as multiple and discriminatory taxes on e-commerce, including online services. Our bill already has strong bipartisan support with over 40 senators co-sponsoring.
Taxing Internet access would have real consequences for families and businesses. For example, states and local governments can tax cell-phone plans, but generally not Internet access. If states and localities were free to levy the kind of charges on Internet access that they levy on cell phone service, often up to 17%, families could end up paying hundreds of dollars more a year. That’s a significant expense for a middle-class family. A tax hike of $200 could cover a couple of months of electricity bills or buy a family more than 90 gallons of gas at current prices.
Internet taxes would also have a harmful effect on commerce, particularly on startups and small businesses, who have to watch their expenses very carefully. New Internet access taxes would discourage innovation.
Since its inception, the Internet has encouraged experimentation and creativity. Think of American innovators who have revolutionized the way the world communicates. One big reason this kind of creativity has flourished is the tax-free status of Internet access. When you’re a college student dreaming up a revolutionary business, it helps if it doesn’t cost too much to bring your idea to life.
Finally, allowing Internet taxation would slow the deployment of broadband to rural areas. Getting broadband to individuals in rural areas is a top priority for us, to ensure that geography doesn’t prevent Americans from accessing the many opportunities the Internet offers. It makes no sense for the government to undermine these efforts by allowing taxes that would discourage companies from expanding their broadband offerings to remote areas.
Given the impact Internet taxes would have on families and businesses, permanently prohibiting these taxes is a no-brainer. A permanent moratorium enjoys widespread bipartisan support in both chambers of Congress, as well as among a variety of civic organizations. When we introduced this bill in the last Congress, more than half of the Senate co-sponsored it. A companion bill overwhelmingly passed in the House.
Congress could keep extending the moratorium every year, but the constant uncertainty does not help families or businesses. Perpetually having to wonder if your business will be hit with Internet taxes next year may not be as bad as actually being taxed, but it still discourages growth. And the last thing families need in these uncertain times is more cause for concern.
The Internet tax moratorium has kept creativity and innovation flourishing on the Internet for the past 16 years. Making this act permanent is nothing more than common sense. We look forward to working with members of both parties to get this done.”
Sen. John Thune is the chairman of the Senate Commerce Committee and a member of the tax-writing Finance Committee. Sen. Ron Wyden is the top Democrat on the Finance Committee.
