New.Economy@Old.Constitution
by Lawrence A. Hunter, George Pieler on 03/20/2000
28 Pages
Press Release (04/21/2000)
As the 21st Century dawns, few people doubt that something fundamental has changed in the American economy. The new economy is being fueled by a revolution in information technology and networking—the Internet. Today, more than 100 million American adults are using the Internet, and email already outnumbers regular mail by a ratio of 10 to 1.
Ronald Reagan characterized politicians’ natural predisposition as, “if it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it.” The Reagan dictum still holds, it seems, even if “it” moves in data packets at the speed of light. Today politicians at virtually every level of government are looking for ways to tax the Internet.
Clearly, the reality is much more complex than a choice between making the Internet a “level playing field” and making it a “tax-free zone.” For one thing, we must draw a distinction between constitutional and unconstitutional methods of taxing the Internet. Of course, everyone assents to the proposition that there should be no unconstitutional taxes on the Internet. But there is considerable disagreement about what is or is not constitutional.
The Madisonian model of government, as laid out in The Federalist Papers, is a model of competition, not collusion; friction, not harmony; a calculated division of power, not unification across all levels of government. The Internet is the most dramatic example yet of the power of markets, unencumbered by heavy-handed government intervention, to make the world a better place. How policy makers respond to the challenge of electronic commerce will help determine not only the future of the Internet, but also the continued relevance of constitutional governance.
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