According to the Los Angeles Times, "several states are poised to institute new taxes on Internet access the moment the current moratorium lapses."
That's the Los Angeles Times, not some right-wing, anti-tax, nutjob group (of which we at IPI, of course, count ourselves members).
So why doesn't the Democratically controlled Congress pass an extension of the Internet Tax Moratorium, which expires in 23 days on November 1? Do the Democrats want to be known as the party that allowed the Internet to be taxed, after Republicans kept it relatively tax free for all these years?
Part of the answer may lie with the power of the state and local government lobbies, which has never seen a source of revenue that they don't like.
Their tact this time is to argue that telecom and broadband companies are going to bundle voice, video and data services into a single package and then try to claim that the entire bundle should be free of tax because of the Internet Tax Moratorium. In other words, they say Internet providers are going to try to use their bundle to avoid taxes they currently pay, thus reducing state and local revenue.
Well, it's true that all of those services are going to be eventually bundled, because they're all basically just bits travelling over the Internet. Besides, consumers benefit from lower prices when they purchase a bundle of services from a single provider.
But there's no reason why video and voice services can't be broken out separately for tax purposes (just as many jurisdictions break out various "foods" for different tax treatment, all bought at the same grocery store), so the argument being used by the state and local governments is really just as empty as all the other arguments they've used in past years to try to assess taxes onto Internet access and on e-commerce transactions that take place in other states.
But if, in the process of discussing and eventually passing a permanent Internet Tax Moratorium, we begin talking about the insane way that governments have piled tax upon tax onto communications services, well, that will be a good thing too.
Today, communications has become one of the highest taxed industries in our economy, subject to taxes almost approaching the "sin" taxes on tobacco and alcohol.
Why do we tax communications, a critical service and a source of innovation and economic growth, as if it were a sin industry that we wanted to discourage?
Perhaps we should ask the state and local governments THAT question. Have you looked at your phone bill lately?
That's what they want to do to the Internet.