Unless the Senate acts unexpectedly today to extend the moratorium on Internet taxation, states and other local taxing jurisdictions will almost certainly begin strangling and regulating cyber-commerce.
If you thought the Internet experienced a bust in 2000, you ain’t seen nothin’ yet.
It may have been the moratorium that allowed the Internet to become the pervasive medium it has become in the last three years. There are many special interests – and governments – that would like to see that mini-boom come to a rapid end.
The midnight hour for Internet tax protection passed a few weeks ago when the U.S. Senate allowed the Internet moratorium to expire, leaving the Internet open to looting by aggressive tax collectors.
States don’t usually characterize what they do as “Internet taxes.” Typically, they call them business activity taxes, or BATs. You’ve got to have bats in your belfry to contemplate such measures, but politicians are always on the prowl for more money and more power over our lives.
Some states are claiming that viewing a company’s website, the presence of a computer server, or the use of an Internet service provider provide sufficient reason for taxing that company, even though the company may have no or little physical presence within the actual state.
Until the inconsistency is resolved, double taxation, costly litigation to companies, fewer jobs and increased consumer prices will be the result.
As the Institute for Policy Innovation reports, Tennessee has wanted to tax J.C. Penney, not because there were department stores within state boundaries (there weren’t) but because a handful of state residents had the retailer’s credit cards. South Carolina sought to tax Toys R Us because the image of the company’s mascot, Geoffrey Giraffe (essentially a trademark and an intangible property) appeared within state lines.
A popular refrain has begun among states in response to federal interest in this issue. States claim that any federal action in this area is unwarranted as an intrusion into federalism principles. Unfortunately, the states are arguing for a sort of federalism that was never intended.
In truth, any proposal to tax the Internet is a direct affront to the U.S. Constitution.
Article 1, Section 9, Clause 5 of the Constitution says simply: “No tax or duty shall be laid on articles exported from any state.”
Now, I’m sure some clever wags will counter that the constitutional clause does not apply to the states, only to the federal government. These will no doubt be the same people who insist that dozens of other constitutional clauses – including many amendments – do indeed apply to the states.
These people rely on circular reasoning. It’s all they’ve got. But you can’t have your cake and eat it, too. Or maybe you can in the United States today, which no longer seems to live by any immutable standards of law and logic.
But, it seems to me, it would take an amendment to the Constitution before there can be a lawful tax on the Internet.
Keep in mind, Article 1, Section 8, Clause 3 of the Constitution also clearly states that the federal government has a legitimate role in regulating interstate commerce. The sales-tax systems being considered in many state capitals today would allow state governments to collect taxes beyond their geographic boundaries via third-party collection agents.
This would be a direct violation of the founding fathers’ thinking. If anyone cares anymore, it was the poor condition of American commerce and trade rivalries among the states that led to the Constitutional Convention.
The Internet tax plans are also reminiscent of the kind of taxation without representation that led to the War of Independence.
Allowing states to tax corporations in other states – businesses without any physical presence within the taxing state and, thus, no voice in the political process – is just the sort of thing that led to the Boston Tea Party. Of course, we’re a nation living under the tyranny of the 16th Amendment – never legally ratified, nor hardly debated. Yet, the income tax that it initiated remains the engine that drives the federal government today. Only radicals like me suggest it should be eliminated. Most of the sheeple accept it as a permanent fact of life.
I guess a people who would accept the proposition that the federal government has a right to confiscate a percentage of your income before you ever even see it would accept anything – including another tax in total violation of the Constitution.
Nevertheless, I have made and will continue to make a principled stand on this issue. If I’m a lonely voice crying out in the cyber-wilderness, so be it. I’ve got to do what my conscience dictates. I’m saying no to Internet taxation.
Yes, the Internal Revenue Service is a great evil. The income tax is an abomination. I will fight to abolish it with my dying breath. But its existence will never be successfully challenged while people are willing to accept even more illegal tax schemes.
I’ve said it before and I’ll say it again: The best way to begin an anti-tax revolution in this country is to start by denying governments any more – by beating back the grab for more power and more of your money. If we win this battle – and I think we can and will – all government tax schemes, including the income tax, will be threatened.
I’m proud of the leading role WorldNetDaily took in fighting for the Internet taxation moratorium. Now the threat is back.
It’s never too late to make your voice heard.