Clinton, governors push Net tax

After spending the night at the White House chatting with President
Clinton about golf and writing letters on White House stationery,
Utah's Republican Gov. Mike Leavitt toasted the president during a meeting
with the National Governors Association in
which Clinton voiced his agreement with taxing the Internet.

"I stayed across from the Lincoln Bedroom in the Queen's Bedroom,"
Leavitt said, according to the Deseret News. "I stayed up way too late
wandering around looking at political memorabilia on the walls and
visiting with other people who were there."

Those others included Clinton and saxophonist Kenny G, who performed
Monday evening at a black-tie dinner Clinton hosted for the National
Governors Association. Leavitt, North Carolina Gov. James B. Hunt and
Kenny G also were invited to stay the night with their spouses before
Monday's meetings.

Gov. Mike Leavitt, R-Utah

Leavitt said Clinton and Kenny G. swapped some stories about playing
the saxophone, and he and Clinton talked golf.

"He showed me his collection of putters. We compared golf stories,"
Leavitt said. "I can't match his golf stories, nor can anyone else.
After all, he is the president."

After the late-into-the-night chats, Leavitt said, "I found myself
sitting in the room using up all the stationery (and writing), 'I don't
want to waste this stationery, so I'm writing you a letter.'"

Leavitt added, "It was a very nice experience and one that I don't
ever expect to have again."

Earlier in the evening, Leavitt also offered a toast at the dinner to
Clinton on behalf of the governors.

"I raise my glass in this, the first meeting of the National
Governors Association of the 21st Century with the hope, with the
desire," Leavitt said, "that the prosperity of the last century will be
with us for the next; with an expression of gratitude for your constant
memory of your days as a governor; your kindness to us; and your
willingness to always listen."

Leavitt and the National Governors Association believe prosperity
will be continued only if states are allowed to tax e-commerce. The
group discussed Internet taxation with Clinton at its annual meeting.

Clinton said Monday the federal government should not stop states
from taxing sales on the Internet -- a position Leavitt advocates as
chair of the Governors Association. The group sponsors a tax collection
scheme known as "trusted third parties,"
enabling states to bring in sales tax revenue from e-commerce.

After Clinton made supportive statements in a closed-door meeting
with the association, Leavitt was quick to announce it to the press.

"The president made very good points today. Number one, the national
government should not be in the business of pre-empting the states'
capacity to solve this (Internet sales tax) problem," Leavitt said.

"Second, a level playing field is ultimately the goal of good tax
policy. And third, if the sales tax is not to be viable, the states need
to begin to look at how they will deal with this dilemma," Leavitt said
in the Deseret News account.

Gov. Jim Gilmore, R-Va.

Leavitt claims "about four out of five governors" support his
position of "fairness," requiring Internet merchants to charge a sales
tax on all sales made across state lines -- a policy the U.S. Supreme
Court has deemed unconstitutional.

Leavitt's claim is far from accurate. Stateline.org asked each of the
nation's 50 governors their position on Internet sales taxes. Only 15
agreed with the NGA's position. Eleven governors are dead set against
e-commerce taxes, and 20 are undecided. Only four did not give a "yes,"
"no" or "undecided" answer.

Anti-tax governors, led by Virginia Gov. James S. Gilmore, want to avoid additional Internet sales
taxes, saying that will slow what has been a rapidly growing industry
creating many new jobs in their states.

California Gov. Gray Davis, who
sides with Gilmore, acknowledged the fact that the Internet has made
spectacular contributions to America's economic boom.

"I certainly don't want to kill the goose that laid the golden egg,"
Davis said Monday.

Gilmore and Leavitt are both members of the congressionally-appointed
Advisory Commission on Electronic Commerce, scheduled to have a final
meeting on March 21 in Dallas before issuing its report to Congress on
April 21.

"I think there is a chance it will be non-conclusive," Leavitt said.

The National Governors Association's leader expects the nation will
experience a repeat of last year's record-setting increase in holiday
shopping over the Internet. That increase, according to Leavitt, will
create political pressure for an e-commerce tax since states will "lose"
tax money that otherwise would have been collected by brick-and-mortar
merchants.

"We will see the retail and business community storm Capitol Hill
with one phrase on their lips: Level playing field. They'll say we just
want a level playing field," Leavitt said.

He added that in the next two to five years, debate will show whether
a sales tax will continue to be viable in the new economy, or if it will
be replaced by higher property and income taxes.

Leavitt believes if Internet companies do not have to collect sales
taxes, all companies will find loopholes to escape tax -- possibly by
forming subsidiaries that would not have to collect Internet sales tax
except in one or two states.

Leavitt claims slow progress on resolving the Internet taxation
debate is hampering resolution of problems coming from rapid technology
changes that are globalizing the economy and making old systems of tax
and regulation obsolete.

An example, he said, "is telemedicine, where you have a physician
doing business across state lines" via the Internet "but is not licensed
in one. So do we make licensing of medical personnel a federal
responsibility?"

Another example, he said, is that many people with college educations
find they still lack skills needed amid today's rapidly changing
technology, so how should state colleges respond to those needs?

"If I had time, I could tell you 25 to 50 similar items that are
emerging," he said.

"The United States is on the cusp of a third industrial revolution,
Leavitt added. "The changes are revolutionary and will affect every
business, every government and every individual in our country."

Groups such as the E-freedom Coalition
and the congressional Internet Caucus say the government should not
involve itself in an industry that has flourished without taxation and
regulation. The groups say such involvement will only serve to slow
technology's progress as government attempts to tap into the industry's
enormous revenue generation.

But Leavitt and others in the pro-tax crowd maintain states have the
right to regulate the worldwide industry. And now the governor has
begun to use fear-tactics in an attempt to gain support for his
position.

He said if states don't come up with a way to make national
collection simple on their own, he fears the Internal Revenue Service
could take it over -- and states would lose power to collect and
appropriate their own sales taxes.

Sign WorldNetDaily's "Don't Tax the Net!" petition.

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Libertarian Party endorses WND petition

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Net tax in limbo

See Joseph Farah's columns:

New Internet taxes and old hoaxes

Don't tax the net!