Internet Taxes In Our Future?
State governments always seem to find creative ways to tax Americans, so why haven't they taxed us for using the Internet yet?
It's because we are protected by the Internet Tax Freedom Act. But if the Senate doesn't pass a permanent extension of the act by November 1, we might see $15 to $20 additions to our phone bills for Internet usage, reports The Daily Caller.
On July 15, the House passed the Permanent Internet Tax Freedom Act (PITFA) via voice vote in bipartisan fashion, which would allow permanent freedom from Internet taxes and eliminate the need for extensions.
The Senate still has yet to pass the bill. On July 31, right before the August recess, Republican Texas Senator Ted Cruz tried to bring the bill to the floor, but it was shut down by Senate Majority Leader Harry Reid.
Reid is trying to get the Senate to pass a different bill called the Marketplace and Internet Fairness Act, which lumps PITFA together with the Marketplace Fairness Act (MFA). MFA calls for a sales tax on Internet transactions, to make the marketplace fairer for retail stores. Since a sales tax is imposed on traditional brick-and-mortar retail transactions, why shouldn't all transactions be taxed?
The House and most Democrats are in agreement that an Internet sales tax is necessary. But it's because of that addition to PITFA that the Republican-led Senate isn't voting it through.
If the two bills aren't lumped together, MFA won't pass, because Republicans won't vote to impose an Internet sales tax. Because of Reid's agenda to authorize an Internet sales tax, PITFA is stalled, and the Senate is running out of time.
"I think what's going to happen is some states are going to keep it relatively low, but some states like Illinois will have much higher Internet taxes," president of the Taxpayers Protection Alliance David Williams told The Daily Caller. "I think it's going to be a mixed bag. It has the potential to bring millions of dollars into state coffers, but they aren't going to put the money towards better Internet access, they're going to put it toward wasteful spending. This is bad news all around."
For poorer states like Illinois, this a golden opportunity. "Illinois is broke, needs money," said Williams. If MFA passes and PITFA does not, then the state of Illinois will have more opportunities to tax consumers and producers.
But for Democratic Senator Durbin, the Internet sales tax is more than just a way to revive a bankrupt state. It's also a way to prevent unfair business practices and crony capitalism. The question is whether or not MFA will actually solve these problems.
"Small businesses in Illinois and across the country don't want special treatment," said Durbin. "They don't want a handout; all they want is a level playing field. The Marketplace Fairness Act gives them that while helping states avoid raising taxes or making painful cuts that will slow our economic recovery."