Shift In Power To Dems Could Give Republican Chance To Levy Net Tax

from the .tax dept

Since last Tuesday's election, which saw the Democrats return to power on Capitol Hill, we've been trying to read the tea leaves to figure out what, if anything, the change means for technology. Turns out, it may be a change on the Republican side that has the most impact. In the inevitable post-election reshuffling, Tennessee Senator Lamar Alexander is likely to be elevated to Minority Whip; this is important because Alexander is a strong proponent of eliminating the internet tax moratorium. And while generally, politicians have been reluctant to regulate or tax the internet, the partisan nature of the recent net neutrality debates may have brought related subjects to the table. There's no saying how hard he'll push for this, or even what difference it will make, but it would certainly be ironic that given the two parties' stereotypical views on taxation, it could be a Republican in a position to push a new tax.


Reader Comments (rss)

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  1.  
    identicon
    Dizzle, Nov 13th, 2006 @ 10:34am

    Mkay?

    Taxes are bad...mkay?

     

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  2.  
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    James, Nov 13th, 2006 @ 10:35am

    Idiots

    There's a reason you don't tax internet sales, besides the complexity, its called SHIPPING... no different from mail order (in my eyes).

     

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  3.  
    identicon
    cheapseats, Nov 13th, 2006 @ 10:48am

    taxed already

    Hey..last time i looked there was a tax on my phone and one on my isp bill..as well any purchases i've made had the applicable tax added to the total i was charged....am i missing the point,..seems the '' net'' is taxed already

     

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  4.  
    identicon
    Justin, Nov 13th, 2006 @ 10:54am

    Say it isn't so

    Democrats in office and taxes might go up? Who saw that coming?

    oh yeah..

     

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  5.  
    identicon
    Jo Mamma, Nov 13th, 2006 @ 10:56am

    Yep, this will likely happen soon...

    The government wants their piece, and odds are that they're going to get it (unless the Internet businesses have a good lobby, of course).

    I don't like taxes either, but I think this probably should happen. They were given a moritorium to encourage growth, but with the deficits and debt we're running as a nation, the gov't needs money. This tax should happen.

    Shipping is a cost the Internet companies face, but should be more than offset by the absense of maintaining a pretty physical storefront for us. If it's not offsetting enough by now (about ten years after the Internet started being used for commerce), perhaps they shouldn't be in business.

     

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  6.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:02am

    Re: Yep, this will likely happen soon...

    don't you mean shipping is a cost the internet consumer faces? Amazon sure as hell isn't paying my $10 shipping cost (which, shamefully, only gets my package here a week later).

     

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  7.  
    identicon
    Economist, Nov 13th, 2006 @ 11:07am

    Re: Yep, this will likely happen soon...

    Raising taxes will not fix the deficit. When you cannot pay the bills you cut your spending, and then go looking for a better paying job (if you can). Republicans like Lamar Alexander is the reason Dems got elected: republicans who took over in 1994 were in DC for far too long and stopped behaving like republicans. Nothing else changed. Economist.

     

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  8.  
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    UniBoy, Nov 13th, 2006 @ 11:08am

    There is a simple solution to high taxes...

    SPEND LESS!


    Oh, wait, I forgot that all democracies are *supposed* to spend themselves into bankruptcy. So sad for all those bond holders (not to mention the rest of us :() when the day of reckoning does finally come.

     

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  9.  
    identicon
    The Swiss Cheese Monster, Nov 13th, 2006 @ 11:09am

    Re: Mkay?

    Taxes are indeed bad.

    Well most of them

    When you consider that more than 50% of the Federal budget goes to welfare, that doesn't help the "we need more money to fund the government" argument at all.

     

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  10.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:12am

    Now is it me or aren't you SUPPOSE to already tax yourself for items you buy out of state and ship to you?

    How is this really different? Instead of taxing yourself at your local rates (which people never really do) you get a tax based on an internet rate. Personally I think it makes a good bit of sense.

     

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  11.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:21am

    This will happen...

    When they can figure out "how".

    They have to figure out how to tax more than just physical goods.

    They also have to figure out how to tax google and the likes. They are providing a valued service, and one that makes significant money. Once they figure out how to tax that (without killing anything useful in mounds of paperwork) then the gloves will be off.

     

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  12.  
    identicon
    raulr, Nov 13th, 2006 @ 11:24am

    Re: Say it isn't so

    @Justin #3.

    Did you actually read through the post.

    "Turns out, it may be a change on the Republican side that has the most impact...Alexander (Republican) is a strong proponent of eliminating the internet tax moratorium."

     

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  13.  
    identicon
    UniBoy, Nov 13th, 2006 @ 11:27am

    Hey AC...

    Sounds like you have been effectively brainwashed into the belief that you were put here on earth mainly to generate revenue for the State.

     

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  14.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:34am

    "50% of the Federal budget goes to welfare"

    If this is true then I am shocked. Can somebody send me a link to more information about how much of the budget really goes to welfare.

     

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  15.  
    identicon
    Vincent Clement, Nov 13th, 2006 @ 11:34am

    Re: Yep, this will likely happen soon...

    How about cutting back on that spending that is causing the deficits in the first place? How much did your politicians 'earmark' in the past budget year? How much pork was approved?

     

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  16.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:44am

    Welfare takes up 50%?

    Welfare takes up 50% of the Federal Budget? Um... Are you stupid?

    The two largest welfare programs for the poor, AFDC and food stamps, each take up only 1 percent of the combined government budgets.

    2% is not 50% in my book.

     

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  17.  
    identicon
    Xiera, Nov 13th, 2006 @ 11:45am

    Heh

    Well, I haven't learned much from the comments (like I usually do). Republicans hate (fear?) taxes because they like small government. Democrats like taxes because they like social programs.

    There's a limit to how far you can cut expenditures. (Not to mention that government expenditures can greatly boost the economy.) There's also a limit to how high you can raise taxes before (more) people are willing to risk jailtime to find ways around taxes.

    To voice my opinion on the matter of discussion, however, I also believe that internet-based companies should be taxed. The problem is differentiating (or not?) between intra-state transactions, inter-state transactions, and international transactions. Do we tax based on where the consumer lives or where the company is based, or do we just implement a flat internet product tax? What about internet companies that are located in other countries -- importation tax? Tax e-bay?

    This is just one of those issues where politicians will have to realise that they cannot possibly satisfy everyone.

    As for the tangent of shipping costs. I agree with post #4: internet companies should swallow the shipping costs to make up for the lack of overhead of any other interface (it does not cost as much to maintain a working webserver as it does to maintain a shop).

    And, Economist -- this time it -wasn't- the economy. The democrats (at least in my area of the country) were running on policy issues (specifically Iraq). To overcome a deficit, spending must be reduced, yes, but taxes must also be raised. Nobody likes taxes (I hate them), but they are a necessary evil.

     

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  18.  
    identicon
    CSGATOR, Nov 13th, 2006 @ 11:53am

    Eliminate all the freaking taxes - Impose a Flat T

    Sales Tax is just another form of double taxation. We already pay income tax then with the money left over we have to pay sales tax, real estate tax, etc.... Why not just eliminate them all and implement a flat tax where everyone pays their fair share!!!!!!!!!

     

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  19.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:55am

    Re: Eliminate all the freaking taxes - Impose a Fl

    Not all states have income tax, 9 states don't. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming

     

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  20.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:56am

    Re: Heh

    In my part of the country the democrats ran on the "We aren't republican" platforms and it turned out pretty good for them.

     

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  21.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 11:58am

    Re: Re: Eliminate all the freaking taxes - Impose

    It's not just state income tax. Alaska, Delaware, Oregon, New Hampshire, and Montana don't have sales tax.

     

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  22.  
    identicon
    :(, Nov 13th, 2006 @ 11:58am

    "I don't like taxes either, but I think this probably should happen. They were given a moritorium to encourage growth, but with the deficits and debt we're running as a nation, the gov't needs money. This tax should happen."

    No, it shouldn't. We wouldn't have a massive debt to reduce if we hadn't rushed somewhere we don't belong.
    A consumption tax would better suit the nature, not everyone uses the internet - some even avoid it like the plague, so why should they have to pay for it? Taxing internet use would cripple the spread of information and severely reduce enjoyment from online gaming. The internet itself should be left alone, and the government shouldn't really be taxing us in the first place - the states should. The fed already takes way more from the people in taxes than it ought to, considering a lot of the public programs it runs could be done on a local level. The government grows madly out of control and then turns around and looks for ways to cut the earnings of the people to steady it's growth. It's no different from Sony shelling out millions on R&D for the PS3 and then expecting the masses to be complacent buying $80 games. Baby steps.

     

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  23.  
    identicon
    Xiera, Nov 13th, 2006 @ 12:07pm

    Not taxing internet use...

    Taxing internet transactions, not internet use.

    You pay income tax to the federal government that goes to social programs and other government expenditures. You may not always agree with what the government spends your taxes on, but it's a republic and we (as a collective whole) elected the officials. You pay your sales tax to the state so they can actually afford to make the state a better place to live -- fix roads, fund schools, create parks, etc. You pay property tax to your city/town/whatever for the local school system, local police and fire, etc.

    As I mentioned before, taxes are a necessary evil.

     

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  24.  
    identicon
    Justin, Nov 13th, 2006 @ 12:09pm

    Re: Re: Say it isn't so

    @raulr #11

    Yes, I can read, mostly.

    I just know when Dems take over my taxes go higher. I don't care if it is the morons on the right that are raising them. My taxes will still be higher

    Though somehow we went from Cut-Tax and Spend leadership to what I'm *guessing* will be a Tax and Spend leadership.

    And in both cases... the problem is the word *spend*

    My money... your money... just not *their* money.

     

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  25.  
    identicon
    :(, Nov 13th, 2006 @ 12:19pm

    Re: Not taxing internet use...

    Internet transactions are internet usage in my book. If I'm on the internet and it costs more than what I pay the ISP, it's bad. You mention a ton of good things the taxes are used for but there's a shitload of things people don't like yet taxes still get poured into anyway. Taxes spread and grow like a virus, if we let them start taxing the internet, the price will only rise. The internet has worked just fine all these years without a tax, I don't see a reason why it should start now. As a collective whole, we all get railroaded when it's not as hard as it seems to support things locally. Look at double taxation - that's a great example of getting lubed up for the system.

     

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  26.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 12:35pm

    Re: Re: Mkay?

    I find it hard to believe that 50% of the Federal budget goes into welfare.

    So either I am uninformed or you sir, are a fear-mongering idiot.

     

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  27.  
    identicon
    DownWithTaxes, Nov 13th, 2006 @ 12:36pm

    Re: Heh

    A necessary evil?? That's brainwashing. We didn't even have an income tax for quite a bit of our history and there is an argument out there that the one we do have was passed illegally. Government should provide a service and be compensated for it just like everything/everyone/anyone else. What it should not be doing is bascially demanding and collecting money at gun point from it's citizens... and when you break it down that's what laws/force/enforcement all come down to.

    Imagine how things would be different if they (the government) actually had to justify and beg for every penny they spent rather than just blow through trillions like it was monoploy money....

     

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  28.  
    identicon
    Xiera, Nov 13th, 2006 @ 12:38pm

    Taxing issues

    Right. The key is determining what is worth taxing for and what is not. That comes from good research, good planning, good investment, and mostly good luck. Unfortunately, politicians often fail at properly analysing good research; they often fail at planning within a budget and sticking to that plan; they often fail at choosing the proper things to invest in. But they are human and the fact that luck has a lot to do with how things actually play out doesn't bode well for any politician.

    But, yes, I agree that taxes need to have some kind of reigns so they do get to become too out-of-control. Just to clarify what I meant by "not taxing internet use" -- from my understanding, I would be able to use the Internet to play games or obtain information without being taxed. But if I want to go on amazon.com to purchase something, it should be taxed as though I went to the local bookstore or some Barnes and Noble in a nearby shopping center.

    Taxes are always going to be a controversial topic, and that IS a good thing.

     

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  29.  
    identicon
    Xiera, Nov 13th, 2006 @ 12:45pm

    Re: Re: Heh

    It is not brainwashing. It is the product of logical social thought. Regardless of whether we've always had an income tax and whether it was passed illegally, it exists now for a reason.

    The problem you are struggling with is that government CANNOT provide a service and be compensated like everything else. Government needs money in advance. Government needs to know that when a recession hits (thereby causing unemployment rates to rise) there will be money to provide to people while they're looking for new jobs (this welfare money ends up back in the economy when the recipients spend it). Government needs to know that when terrorists fly planes into buildings or a massive hurricane destroys a city there will be money to help in the relief and recovery in the disaster area. Government needs money to pay for things that no individual person is going to pay for. (Why am I going to pave the road? Then others get to benefit from my hard-earned money.) There are certain things like these that are considered social benefits. THESE are what taxes are necessary for. THERE ARE VERY VERY MANY excess taxes out there as well -- and these are bad and should be fixed -- but they should not overshadow the good uses.

     

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  30.  
    identicon
    drkkgt, Nov 13th, 2006 @ 12:47pm

    expenditures

    but it is about some expenditures
    How much did the FBI blow on a computer system because they didn't know what they were doing? How about the boucning check of the congressman from a while back? How about the screw ups in the Homeland security budgets or the payouts for Katrina? How about the large salaries for already farily wealthy people who are supposed to be working for the people? How about the screwup in Social Security?
    I agree taxes are a necessity for any government to survive but it isn't a blank check for them to spend and us to repay.

     

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  31.  
    identicon
    Medbob, Nov 13th, 2006 @ 12:51pm

    Re: Yep, this will likely happen soon...

    Of course. It must be simple arithmetic.
    Increased taxes = higher revenues.

    I've seen nothing in life (including this) that is a simple mononomial. The response to this is a curve.
    You might be able to argue that a raise in a particular tax is revenue positive, but there are a whole bunch of inputs that you will need to prove it.
    Yes, we see activity, so tax that activity! That's the way to buy our way out of trouble!

    Wait a minute, why are Income Tax revenues going down..... Oh, must be the decrease in internet sales activity sparked by the new tax.

    Want to increase revenues? Increase economic activity. You'll never accomplish that by increasing taxes. Especially with the price pressure being brought by China and other lower-overhead countries.

     

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  32.  
    identicon
    Xiera, Nov 13th, 2006 @ 1:07pm

    Re: Re: Yep, this will likely happen soon...

    The government does not directly profit through increased economic activity. The best way to increase economic activity is through the FED (not through the government). The FED can stimulate the economy, which will lead to increased consumption, which leads to high prices, which leads to higher profits, which leads to increased wages, which then feeds back into consumption. (This is called inflation.) Nowhere in this feedback mechanism without taxes does the government profit. The government needs taxes to have revenue.

    Is the answer raising taxes? No. Keep income taxes where they are.

    What if we keep internet transactions untaxed? More people will move to the internet economy. Not a problem for us, the consumers. Not a huge problem for the federal government: they will still earn money through the income tax, as they currently do. However, it IS a HUGE tax for state governments, which base their revenues primarily on sales tax. If more people move to cheaper internet prices, the states are losing all of that money. Though I guess the states could start double-taxing, but we've already established that that would be bad. Increasing the movement of the economy to the internet also hurts the economy. It will not happen any time soon, but in the long run, it will be more efficient for corporations to sell via the internet, shops will close, and people will lose jobs. I'm not incriminating the internet economy, but this could potentially be a reality in the future. It will happen and people will have to adjust accordingly. But until the adjustment is made, it will severely cripple the economy.

     

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  33.  
    identicon
    Ryan, Nov 13th, 2006 @ 1:32pm

    fair tax

    30 posts and yet no mention of the fair tax? Unbelievable. That's gotta be some sort of record.

     

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  34.  
    identicon
    chuck, Nov 13th, 2006 @ 1:42pm

    Good! Collect the sales tax.

    I'm all for it since I am already liable for use tax in Michigan if I buy from out of state. The "use" tax replaces the sales tax the internet company should have collected. I am still liable but I have to pay with my yearly income tax.
    When I was a contractor, if I bought something for one of my clients on my VISA, *I* was responsible to collect the tax and pay it to the state when I filed. This was a stupid burden so Michigan could get their 6%.

    It is much better for the vendor to collect it and pass it on to the state.

    Unless you had planned on cheating....

     

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  35.  
    identicon
    Wyndle, Nov 13th, 2006 @ 2:12pm

    Taxation without Representation

    Now that the pesky paper trail has been done away with at the e-Voting machines its possible for those in power to use plausible deniability about false representation. Therefore, I submit that begining on this past election day we have been taxed without proper representation.

    That only leaves me to wonder what a modern day Boston Tea Party would be. DDoS on all .gov websites at the same time?

     

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  36.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 5:19pm

    Re: Welfare takes up 50%?

    um.. are you stupid?

    Welfare can broadly refers to all public welfare programs; any hand out.

    Social security eats around 23%, Medicare 12%, Medicaid 7%, and other odds-and-ends entintlement programs eat 6%, off the top of my head, in 1999. (Just happened to look at a chart earlier today)

    Thats about 48%.

    I've got some loose papers in front of me from some texts I copied at the library today, and if I add it up, I get 1,458.37 billion, leaving no hand-out untouched. That would yield, according to the total FY2006 budget, of public welfare spending of at least (I wasn't able to pull out hand-outs to federal and state employees, it was mixed in with other data) 39%.

    Of course, that FY2006 data didn't go entirely to plan; revenues were a little better thanks to a market rally in Q1 & Q2, and medicare expenses ballooned at a higher than expected rate.

    So saying 50% of the budget goes to welfare is an exaggeration, but not far from the truth. Social Security is actually the largest line item in the entire budget, followed by the military, followed by medicare and medicaid, with science and education spending coming in as absolute dead last with beans compared to what we give those who are too lazy to give a damn any way.

     

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  37.  
    identicon
    Anonymous Coward, Nov 13th, 2006 @ 5:21pm

    Re: Re: Welfare takes up 50%?

    Oh, and I looked in to why welfares share of the budget decreased in terms of absolute percentage from 1999, and I should've figured.. It hasn't gone down, its gone up (by a lot), rather, its share went down thanks to massive increases in military expenses and domestic security.

    http://www.budgetsim.org/nbs/

    That's a fun little tool.

     

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  38.  
    identicon
    Austin, Nov 13th, 2006 @ 8:18pm

    Chances

    I, as someone who is a day trader and follows tax/fiscal policy daily, do not think that a tax on the internet will get out of committee, let alone passed by the dems. They want first and foremost for the investor tax cuts, (cap gains, and dividends) and top brackets readjusted before they tax the favorite industry of those left of center. Tech and the internet companies in general are like the "big oil" of the republicans and to alienate them would not be good politically. Also, since Bush is a lame duck now, he will be pressured to block and any every policy that doesnt appeal directly to his ambitions or his base's ambitions. I think he will veto any non-security related regulation or increased taxation of any kind.

     

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  39.  
    identicon
    Pat, Nov 14th, 2006 @ 5:15am

    Democrats and Republicans

    Republicans spend a lot of money if we have to raise taxes its because of the debt they created in America, thanks Bush.

     

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  40.  
    identicon
    David, Nov 14th, 2006 @ 9:26am

    Re: Democrats and Republicans

    Bush Spent money on 9/11 and the Medical Care Program. The Republicans did the Medical Care Program as an Attack first concept. They knew that the Demonrats were going to push this Medical plan threw but they didn't want it to be as big as it was going to be and to give the Demonrats the credit when they had control of the house and senat.

    Now for 9/11 It didnt matter who was in office when this mess hit due to it was building up for 20 years and like an Earth Quake just happen to go off As Clinton was leaving office and Bush was taking over.

    With this event it pushed the Stock market to Depression levels and almost destoryed the USA's economy as we knew it.

    Lucky we didnt have a goverment see a Need for more money when Americans were picking them selfs out of the stock market durt. You have to see that most of the money in the usa is Held by the baby boomers and they had it in the stock market. Now that they had just lost 60% to 80% of all they had Bush needed to Throw a Hell Marry pass to get the market moving up and America moveing up.

    How.. Well he lowered taxes on " The Rich " and opened a free market gate of spending and investing. 2nd Home sales if you didnt notice. This also helped with jobs. More Spending and Jobs lead to more Income Taxes.

    It is very easy to say " Oh if you tax the rich" bala bala bala...

    But think about this .. If were were all 12 years old and the RICH were the kids who got A's in class B's to C's were the middle Class. And D's to F's were all the Fast food workers to welfare...

    Now we didnt like that the D's and F's were getting such low grades due to they didnt Learn well or didnt try or just to dumb to learn... So we Took all the kids with A's and lowered there Grades to C's, Same the the B's and then Raised the D's and F's to C's.

    How long could you do this befor the kids with A's and B's quit trying. Most of the A's could get C's buy just showing up. And soon they might even move away to a School that was not so " Progressive"...

     

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  41.  
    identicon
    Dav, Nov 14th, 2006 @ 8:27pm

    Re: Re: Democrats and Republicans

    The federal pie has two parts, each accounting for about 50 percent of outlays. "Mandatory spending" includes entitlement programs such as Medicare and student loans that are provided by law rather than by annual appropriations. Then there is discretionary spending, comprising most defense spending, homeland security, and programs such as farm subsidies and education. Discretionary spending is what the president and Congress decide to spend each year through appropriations bills.

     

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