Congress Plays Politics With the Internet | Commentary

Posted October 1, 2014 at 4:01pm

In a town where Democrats and Republicans can hardly agree on anything, Congress has the unique opportunity to pass legislation that is both bipartisan and popular: extending the ban on Internet access taxes. The Internet Tax Freedom Act, which prohibits politicians from slapping new taxes on Internet access, is currently scheduled to expire at the end of October. Despite its wide support, Congress is dragging its feet on renewal, meaning consumers could find themselves paying even more in taxes. Legislators need to get off the sidelines and protect unfettered online access for all Americans and by passing a permanent extension of the Internet Tax Freedom Act.

Introduced by then-California Republican Rep. Chris Cox and Oregon Democratic Sen. Ron Wyden and signed into law in 1998 by then-President Bill Clinton, the Internet Tax Freedom Act has preserved the low barriers to accessing the Internet. Now more than ever, the Internet has become the epicenter for everyday life whether it’s business, consumption, education, communication or interaction. Without ITFA, the barriers to accessing the Internet become greater and costlier. Since it was first passed in 1998, the law has been extended on three separate occasions and there is no reason as to why it shouldn’t be extended one more time, permanently. Unfortunately, however, some in Washington seem more interested in brinkmanship and political games than sound policy.

Part of the problem, it seems, in passing a permanent extension of the Internet Tax Freedom Act is that some lawmakers on Capitol Hill want to use it as a vehicle to pass flawed Internet sales-tax legislation, the misnomered Marketplace Fairness Act. In typical Washington fashion, backers of the MFA seem intent on making lawmakers swallow their unworkable and deeply unpopular legislation by attaching it to the bipartisan Internet Tax Freedom Act. The broad coalition of supporters of ITFA shouldn’t be bullied into accepting unprecedented new online sales taxes as a price for extending the Internet tax moratorium.

The problems with the MFA are myriad. It expands tax authority while explicitly contradicting the Quill decision, in which the Supreme Court ruled that a state cannot impose a tax on a business that doesn’t have a physical presence in that state. It also poses a threat to small businesses and economic growth at a time when our flat-lined economy can least afford it by seeking to impose a massive new burden on businesses, which would be forced to comply with the ever-changing rules of nearly 10,000 tax jurisdictions. Furthermore it puts small businesses, which are located in only one state, at disadvantage to big-box retail stores located throughout the country (which are also much more likely to have the armies of accountants and attorneys required to comply with the MFA’s far reaching provisions than the average mom-and-pop shop). Yet instead of allowing an up-or-down vote on the bill, some politicians think it will be easier to pair this misguided measure with other pieces of legislation such as the ITFA or the continuing resolution.

Congress needs to act on ITFA. It’s too important to be a part of some back-room deal that leaves taxpayers having to accept an outcome that includes harmful internet sales tax legislation like the MFA. The ITFA will preserve the status of keeping the Internet open and accessible to the public without subjecting them to new and damaging taxes.

Americans need certainty and nothing would send a stronger message than making ban on Internet access taxes permanent.

Thomas Fletcher is a policy analyst for Americans for Prosperity.