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The Almighty Buck Government The Courts The Internet United States Politics News

Internet Connection Tax Held Off for A Few More Years 100

Christopher Blanc writes "The ban on taxing Internet connections was set to expire at the end of October, but thankfully the US Congress has acted. Last night, a Senate bill was passed that extends the 1998 Internet Tax Freedom Act for seven more years. There are still some details to work out (the House's bill only extends it for four years), but it's clear both houses of Congress are looking to keep taxes out of the picture for the near future. 'Sen. Ted Stevens (R-AK) is excited at the prospect that Americans will be able to continue filing the tubes of the Internet tax-free. "The Internet has provided a powerful economic boost to our nation, and has become an important everyday tool for millions of Americans," said the senator. "By keeping Internet access tax-free and affordable, Congress can encourage Internet use for distance learning, telemedicine, commerce and other important services."'"
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Internet Connection Tax Held Off for A Few More Years

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  • Now if they could just get the ISPs to charge reasonable prices for those connections...

    • I would be ok with the price if we at least got the same connection speed countries like South Korea get.
      • Re: (Score:3, Informative)

        by Seakip18 ( 1106315 )
        This is actually about the senate passing of the bill. The House only wanted 4 years, the senate is going for 7. As the summary says, the problem now is reconciling those versions to one they can send to the prez. All in all, the gov't is getting the income taxes of those who profit off the interenet. Is that not enough?
        • by N3WBI3 ( 595976 )
          If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

          No percent of your money is enough..
          • How about a tariff on foreign ISP's? They seem to be "taxing" the infrastructure with their spam bots. We should charge China for that.
      • That was the House. This, however, is the Senate. Two different beasts entirely.
    • by darjen ( 879890 )
      Now if they would just extend it to all commerce and income...
      • Well, they've got to tax *something* to pay for our roads and such, and I don't really care what they tax as long as it's done in a sensible manner.

        But we'd need far fewer taxes if we weren't pissing away money in Iraq, which comes back to your sig: I don't support the troops because every dollar spent in Iraq is a dollar taken (by threat of force) from some ordinary American. I don't mind giving money to the government as long as I get something for it, but -- if Uncle Sam is going to waste it -- can I hav
        • Re:Great news! (Score:4, Interesting)

          by tjstork ( 137384 ) <todd...bandrowsky@@@gmail...com> on Friday October 26, 2007 @02:15PM (#21131973) Homepage Journal
          I don't mind giving money to the government as long as I get something for it, but -- if Uncle Sam is going to waste it -- can I have it back?

          No, you can't have it back. Your tax dollars go to support the nation as a whole. The government is a not a personal service. It is an organization to foster economic growth by making investments that will benefit the entire country. Sometimes those investments are good, and sometimes they go awry. Sure, Iraq looks bad, but in case you haven't noticed, the US Army is sitting on top of about half of the proved oil assetts on the planet earth, and that's not exactly a bad place to put it.
          • the US Army is sitting on top of about half of the proved oil assetts on the planet earth, and that's not exactly a bad place to put it.

            So you're proposing we insure a supply of cheap fuel by conquest? Does this really benefit the entire country in the long run?

            How many (non-greenhouse-gas-emitting) nuclear plants can you build for $2 trillion? Hint: a lot.
            • by tjstork ( 137384 )
              How many (non-greenhouse-gas-emitting) nuclear plants can you build for $2 trillion? Hint: a lot.

              On that point, I agree, but name me enough votes on both sides of the aisle, regardless of party, willing to say, hey, we should have a national nuclear power grid. The Democrats won't do it because their environmentalist base would oppose it, and the Republicans won't do it because their corporate base would oppose it. All in all, if there was any one case where a centrist party needed to be form to realize t
              • Agreed. I'm an environmentalist, and wish more people who claim that label would learn a little physics and realize that nuclear power is safe and clean. Nuclear power is only unsafe if you're like the Soviets and don't give a shit about safety.

                I mean, come on. Inexpensive, clean energy whose only fault is that it has the same word in its name as those bombs that we dropped on Japan? You could probably make these people cut off their balls by telling them that meiosis is a nuclear process.
      • Re: (Score:3, Insightful)

        by sm62704 ( 957197 )
        Commerce and income? WTF? Income is the ONLY thing that is fair to tax! And I'm OK with B2B taxes as well.

        But property tax is the most evil of all taxes. A freind I had about 20 years ago's parents lost their house. These folks were retired, had spent 30 years paying it off, and owned the house free and clear. When they bought it, they probably paid something like $20k for it, with payments maybe $50 per month.

        So these poor folks are retired, on a fixed income (social security and maybe a small pension). Fo
        • Re: (Score:3, Informative)

          by operagost ( 62405 )

          Meanwhile Richey Rich spends 5% of his income and banks the rest. Only 5% of his income is taxes on sales. And he's probably getting his income on capital gains, interest, and other investments, sitting back watching football and eating caviar while his income isn't taxed as income like the poor working man's is, but at a far lower rate.

          Suggesting that "the rich" are just a bunch of lazy slobs who got it all handed to them is not a valid argument for socialism. Besides that, you seem to think that unear

          • Re: (Score:2, Insightful)

            by sm62704 ( 957197 )
            I'm not arguing for socialism. Where did you come up with that?

            Nor am I saying all rich are idle rich; although the rich seem to have the opinion that the poor are all the idle poor.

            Nor am I saying unearned income isn't taxed; it is. But it is taxed at a lower rate than the average workers' income, at least by the US Federal government.

            I agree that charging a set amount is unfair. The vehicle registration taxes you mention are an excellent example.

            A flat tax would be fair IF, and it's a big if, there were n
          • "They're not really regressive because most states (strangely enough, not the most liberal such as NY and CA) do not charge for most clothing and food purchases."

            Dunno where all you've lived...but, I've only lived in one city that didn't charge sales tax on food. That was Tucson, AZ. Everywhere else I've lived charged sales tax on everything....food, clothes, booze....the necessities.

            :-)

        • But property tax is the most evil of all taxes. A freind I had about 20 years ago's parents lost their house. These folks were retired, had spent 30 years paying it off, and owned the house free and clear. When they bought it, they probably paid something like $20k for it, with payments maybe $50 per month.

          So these poor folks are retired, on a fixed income (social security and maybe a small pension). Forty years after buying it, real estate prices have skyrocketed, as have valuations. Suddenly the annu

          • by sm62704 ( 957197 )
            I don't know, but it troubles me anyway. Were they stupid? Maybe, but you shouldn't be able to lose your home from stupidity either.
    • Now if they could just get the ISPs to charge reasonable prices for those connections...

      $20/mo for DSL isn't reasonable?

    • Great news! Now if they could just get the ISPs to charge reasonable prices for those connections...

      Lucky you, no tax for a first post. ;-)

      • I was hoping for a subsidy, but it's not forthcoming.

        • by ackthpt ( 218170 ) *

          I was hoping for a subsidy, but it's not forthcoming.

          Perhaps if you included an 'imagine a beowulf cluster', 'In Societ Russia' or 'I for one welcome our ...', but competition for subsidies is considerable and with so little money to go around. Have you tried the Kellogg Foundation?

  • If nothing else (Score:3, Interesting)

    by ackthpt ( 218170 ) * on Friday October 26, 2007 @01:43PM (#21131479) Homepage Journal

    The internet has made lots of money for shipping companies and employed a lot of delivery/logistics people. UPS, FedEx, USPS, etc. All those online shops have to get the product to the buyer somehow.

    • Delivery of products by big truck is far more efficient than the traditional retail method of buying things. Retail is grossly inefficient: you've got all the floor workers, the physical maintenance of the building itself, and then the huge amount of cash and effort that goes into marketing that gets spent on retail stores. Amazon.com or wherever has none of that: they've got some web-lackeys making a website and a bunch of stuff sitting in warehouses, and if you pay them money they dump some of it on a big
      • by ackthpt ( 218170 ) *

        Delivery of products by big truck is far more efficient than the traditional retail method of buying things. Retail is grossly inefficient: you've got all the floor workers, the physical maintenance of the building itself, and then the huge amount of cash and effort that goes into marketing that gets spent on retail stores. Amazon.com or wherever has none of that: they've got some web-lackeys making a website and a bunch of stuff sitting in warehouses, and if you pay them money they dump some of it on a big truck and take it to you

        I'm waiting for the day they install a pipe in my house connected to the great, world wide web o' commerce and anything I buy is put in at one end and pops out in my house a while later. :)

        • sounds like the Diamond Age, pipes of common elements to molecular assemblers in each house. You know the current batch of patent and other IP laws will have to be scrapped before any of that is allowed
          • "You know the current batch of patent and other IP laws will have to be scrapped before any of that is allowed"

            It would seem more necessary than less, unless the profit is made in the delivery of raw common elements how else would someone make a living?

            If we all respected IP laws (or had no choice not to) then it would make sense (to me) that what you would be buying is the blueprint the assembler uses to build $whatever it is you want...

        • The internet is not something that you just dump something on. It's not a big truck. It's a series of tubes.

          How dare you try to clog my internets with your purchases!

        • by Amouth ( 879122 )
          so what you want is a national or even international Pneumatic tubes for mail delivery.. kidna like what they use at banks and walmarts...

          while i think international system would be very hard and expensive.. there have been ones developed for localised area's.. several blocks at walstreet - even runs of several miles..

          who knows it might jsut work

          http://en.wikipedia.org/wiki/Pneumatic_tube#Pneumatic_Post [wikipedia.org]

          if you want to read up on it
  • by Arthur B. ( 806360 ) on Friday October 26, 2007 @01:43PM (#21131485)
    Meanwhile, food is taxed, energy is taxed, clothing is taxed, health is taxed, labor is taxed, trade is taxed, wealth is taxed, inflation hedging is taxed, mail is taxed, building is taxed, savings are taxed.

    Fortunately sex and the internet are still untaxed. Cool.
    • by JK_the_Slacker ( 1175625 ) on Friday October 26, 2007 @01:46PM (#21131527) Homepage

      Even my patience with reading your post is taxed. How about that.

    • <obvious>
      For most slashdotters, taxing either one would have the same effect.
      </obvious>
    • That all depends on how you go about obtaining said sex...
    • The Internet is taxed, though perhaps not directly. The government already derives tax dollars from the Internet. Or did Google, Sourceforge, Inc., etc. all stop paying income tax since the Internet became 'tax free'? Also, everyone getting their Internet from DSL or dialup pays the Universal Service Fee, which is also a tax.

      Oh, and BTW -- since you can't deduct some of the taxes you pay from your taxable income, like the USF or sales tax, even taxes are taxed. Howya like dem beans?
    • Re: (Score:2, Interesting)

      by LuxMaker ( 996734 )
      The power to tax is the power to destroy. ~Daniel Webster (1782-1852)
    • According to the government, sex *is* taxed. This madam [wikipedia.org] was busted for prostitution *AND* tax evasion...

    • Fortunately sex and the internet are still untaxed

      What difference would that make to the average /.'er? Who around here would notice if sex was taxed?

      • by Myopic ( 18616 )
        Who around here would notice if sex was taxed?

        Not me, although I would certainly notice if sex were taxed.
        • Who around here would notice if sex was taxed?
          Not me, although I would certainly notice if sex were taxed.

          No offense dude, but membership in the grammar patrol isn't going to improve your prospects for getting laid...

    • Re: (Score:3, Interesting)

      by Some_Llama ( 763766 )
      what pisses me off is that the money i earn is taxed, then when i spend it i get taxed again, how did we ever accept that "sales" tax should be paid by the buyer and not the seller?
      • how did we ever accept that "sales" tax should be paid by the buyer and not the seller?

        Sellers would just end up factoring that into the cost anyway.

        • "Sellers would just end up factoring that into the cost anyway."

          Good, then i would see the real price advertised instead of seeing something 8% cheaper than it really will be...
          • Good, then i would see the real price advertised instead of seeing something 8% cheaper than it really will be...

            In Australia the GST (10%, more or less a sales tax) must, by law, be included in the price as advertised/quoted/etc. Either way, the buyer will end up paying it. Me, I'm not a big fan of having a price on the ticket and then having a sales tax slapped on at the counter.
  • by JonTurner ( 178845 ) on Friday October 26, 2007 @01:46PM (#21131523) Journal
    If Congress really wanted to assure affordable internet access, they'd set about removing the "Universal Access Fee" (a/k/a "e-Rate" or the "Gore Tax") which has long since fulfilled it's stated purpose of subsidizing internet access to rural schools. (According to the FCC, 99% of public schools are connected to the Internet). And while they're at it, they can shut down the Universal Service Administrative Company, which is a bureaucracy set up to administer these funds.
    It should be easy, right? A school asks for funds to help establish internet access, an application is reviewed and funds transferred... well, here's a little link to a flowchart showing how out-of-control a government agency can become in only a few years:
    http://www.usac.org/_res/documents/sl/pdf/application-process-flow-chart.pdf [usac.org]
    • If they *really* wanted to assure affordable internet access, they'd actively encourage municipal wifi.
    • Re: (Score:3, Funny)

      by gregoryb ( 306233 )
      The government removing a tax? You must be new here.
    • Re: (Score:3, Insightful)

      by RingDev ( 879105 )
      That really isn't that bad of an application process. You submit the request, negotiate a deal, the deal gets reviewed for appropriateness (ie, the school board isn't getting a company they have investments in the lucrative contract or grossly over paying), the deal gets reviewed for technical appropriateness (you're not trying to buy 500 phone lines to shot gun 56k modems over are you?), the paperwork goes through, and the applicant gets then money.

      It's really quite efficient and stream lined, especially f
    • Re: (Score:3, Insightful)

      by CodeBuster ( 516420 )
      If you want another example of how pernicious these taxes can be and how difficult it is to eradicate them, even when the taxes have long outlived their original stated purpose, then look no further than the Federal Telephone Excise Tax [wikipedia.org]. It was originally enacted to help fund the Spanish American War [wikipedia.org], but it persisted for over one hundred (100) years after hostilities were ended. That is why citizens groups form to argue so vehemently against new taxes, even ones which might have some merit, because of the
      • Darn, you beat me to it [slashdot.org]!
      • It is technically illegal. I don't know if the judge ruled on it officially yet, but the court is expected to kill the tax. It a shame that we have to wait for that. In the mean time, we still have it.

        The local tax was attached to the federal tax, it should have been done away with at the same time. Instead, we are now being illegally taxed. Furthermore, the Mayor of Los Angeles is proposing a 9% tax measure on all telephones, next election. It is being sold as a 1% tax decrease instead of a 9% increa
    • If Congress really wanted to assure affordable internet access, they'd set about removing the "Universal Access Fee" (a/k/a "e-Rate" or the "Gore Tax") which has long since fulfilled it's stated purpose of subsidizing internet access to rural schools.

      Remember, this is the "same" government that took ~100 years to remove the "Spanish American War" tax from our phone bill.

  • by Vellmont ( 569020 ) on Friday October 26, 2007 @01:46PM (#21131529) Homepage
    Nobody likes paying more money for anything, so the first instinct is to say HOORAY! I'm not going to be taxed!

    But I have to wonder. What kind of inequities are being created that aren't solved by the "free market" because of what economists call externalities [wikipedia.org], or put simply benefits/costs not given to the party who produces the service?

    Access to high speed internet at reasonable prices in rural, or outlying areas is certainly a concern. I don't really know if that's still a problem or not. But if it is, one solution is a.. yes, that dirty word, a... tax on internet service to support paying for "rural internetification" (to bastardize the program in the 30s, "rural electrification".
    • by RingDev ( 879105 )
      I think we already tried that... a few people got internet access and a couple of really rich CEO's retired.

      -Rick
    • But the private sector has already fulfilled that need, satellite.

    • by modecx ( 130548 )
      Hell, even if you want to pay the cost to have the cable/fiber/whatever laid--and then give the corporation plenty of profit on the deal--to get high speed internet in rural areas, you're going to be shot down by the major internet suppliers. They will not do it at any price, unless it's of their own motivation. You'd have to form your own freaking regional ISP to get rights to land lines laid in some areas, ala that Canadian volunteer run ISP. What a pain. Not that it couldn't be without benefit...

      But
  • by Metaphorically ( 841874 ) on Friday October 26, 2007 @01:47PM (#21131539) Homepage
    This is a little misleading - the part that we often think of as "Internet access" is not taxable, several important services which are not provided by your ISP will now be explicitly taxable. This includes VoIP, Internet radio and Internet-delivered television services that don't come over email and aren't provided by your ISP as part of your account. See this thread [slashdot.org].
    • by hurfy ( 735314 ) on Friday October 26, 2007 @02:00PM (#21131751)
      hehe only halfway there....

      My DSL LINE is currently taxed and will remain so (unless there is big dif between house and senate version)

      The ISP part only is not taxed.

      That would be $66.00 taxed (office, home is like 38.00)
      The 9.99 ISP charge is taxfree...woohoo ?

      $10 a year more to spend, I am going to save the economy ;)
      • Good point. The part of the bill that the title is named after really delivers a trivial return whereas the things it makes explicitly taxable are much more lucrative. Typical political double-talk.
    • How can they tax VoIP and net-radio?

      How can they even tell the difference between a netradio stream over SSL and, say, a sftp transfer?
      • How can they even tell the difference between a netradio stream over SSL and, say, a sftp transfer?

        The fact that you can disguise it doesn't change the fact that it is (hypothetically) taxable. All it means is that you are avoiding tax which is also illegal. I think geeks need to stop thinking about how we can easily avoid stupid laws and realize that we must work in the world created by stupid laws.

        How can they tax VoIP and net-radio?

        As for how they can tax it, it's really pretty easy. To get the service you need an account. The organization providing the account must abide by the law. If the law says they must charge a tax and r

        • But how is the ISP going to even determine whether I'm using netradio or not? All they see is a bunch of bits.
    • When this was brought up weeks ago. [slashdot.org] Not that I'm trying to say I'm that smart, but I have my moments.

      Basically they're operating on a sort of "sell you the printer/razor for cheap, then nickle & dime you for the cartridges/blades" model.

      Here is my question, I thought there were rules or guidelines, if not actual laws, that required the government to tax businesses entities equally (with rates, not dollar values). For example, let's say you have small biz owners A and B who are competitors. Now, and this
      • Ah, wait, my last statement. The tax would be on the consumer, not the business providing it, right? Hm. But still my earlier part is unanswered. Taxing certain services would drive people away from those business ventures. Ah, so you could suppose it's to keep people from them and they remain well entrenched in the status quo. Streaming audio too pricey now? Here, the RIAA will sell you a CD! VoIP bill got you feeling the pinch in the pocket book? How about a good ol' fashioned landline?

        So I guess I still
  • by zappepcs ( 820751 ) on Friday October 26, 2007 @01:58PM (#21131707) Journal
    When reality sets in. Sure, great that internet tax is held off for a few more years, god knows the cable companies and telcos don't need any help. This is an election year-ish, so taxes will be a big issue soon. The trouble is that the wars of choice for Bush are going to have to be paid for some how. I'm reasonably certain that the Bill Gates of the world are not going to donate their personal fortunes to pay for it, so that means that you and I (if you live in the US) will end up having to pay for it. Any guesses as to how? yes, that's right, in the form of taxes.

    We could legalize/regulate/tax the sale of pot... no, that won't happen.
    We could tax the monetization of religions... no, that won't happen, Xenu won't let it.
    We could tax gasoline... that will happen
    We could tax food stuffs... that will happen
    The list continues with all the stuff that you cannot live without

    So be wary of any politician that promises to reduce taxes, even if they manage to not tax internet access.

    Truthfully, the only reason that this has worked is that they are still trying to figure out who will give the best backhanders ... Telcos or cable companies. If it gets taxed, one of them will make out terribly well as it will open the gates to applying taxes to VoIP and other such services. We'll have monthly bills that even Enron accountants couldn't figure out.

    If that sounds cynical, think about it for awhile, the truthiness of it will settle in.
    • by afabbro ( 33948 )
      The trouble is that the wars of choice for Bush are going to have to be paid for some how

      You must have meant "middle class entitlements" such as Social Security, medicare, prescription drugs, etc. Those are far more expensive than anything spent on the defense budget. If you're unhappy with the state of the budget, then look no further than the massive benefits middle class Americans have voted themselves.

    • by SuperKendall ( 25149 ) on Friday October 26, 2007 @02:41PM (#21132359)
      The trouble is that the wars of choice for Bush are going to have to be paid for some how.

      Yes they are, so reducing government income by raising taxes seems like a particularly poor idea.

      The measured effect is very simple and has repeated itself enough by now that people should know better - lower taxes increase government revenue. Raising taxes freezes up money going into the government.

      The government isn't the group that creates wealth so giveing them more money only lowers what the rest of us can do with the amount we have remaining.
      • by 2short ( 466733 )
        "The measured effect is very simple and has repeated itself enough by now that people should know better - lower taxes increase government revenue"

        Measured? Simple? Please. Reagan and George W both put forth this plan to get more revenue by lowering taxes thus stimulating the economy, etc. So then they lowered taxes a bit, increased spending super-enormously, and viola! more revenue! Please ignore the exploding debt behind the curtain. Heck, you could have gotten similar or better revenue increases ju
      • The measured effect is very simple and has repeated itself enough by now that people should know better - lower taxes sometimes increase government revenue. Raising taxes sometimes freezes up money going into the government.

        Fixed that for you. Really now, if economic policy was even remotely that simple, would we need so many economical theories? Let's not sour a discussion with imaginary absolutes.

    • by thebdj ( 768618 ) on Friday October 26, 2007 @02:54PM (#21132555) Journal

      We could legalize/regulate/tax the sale of pot... no, that won't happen.
      Probably not and a pity really. Legalize all drugs, watch crime go down. Watch number of police needed drop. Watch the cost of policing go down. Watch taxes drop. Vicious cycle and we didn't even have to tax the pot.

      We could tax gasoline... that will happen
      It already does happen. Where do you live? States and municipalities tax Gas. Guess what, so does the US Government [wikipedia.org]. So it isn't a "will happen" but "is happening".

      We could tax food stuffs... that will happen
      Depending on your locale this currently happens. Usually it is at a lower rate then regular items, but it does happen. This said, I doubt you will ever see the fed impose taxes on food stuffs short of imposing tariffs on imports.

      Seriously, a lot of stuff is already taxed. It is an ever growing list and this is some minor little thing for them to use when the debate comes up during the next presidential election.
    • No, they just monetize the debt. Of course, the dollar will get weaker and weaker.
  • Congress could just let the tax issue drop. But by putting the it off for seven years, they keep the cash flowing. Same as "Medicare Reform" and "Farm Bill Reform"; give the biggest donors what they want, then reset the timer so it goes off again in a few years.
  • So if there is a federal law prohibiting Internet access taxing, why do so many states actually have the tax? I know for a fact that at least Texas has a tax on it. It is only supposed to be collected on monthly amounts over $25, but the ISPs generally collect it on the whole thing (or at least Time Warner Cable does). This would probably be grounds for a class action suit against any ISP that does the same.

    Here is the link to the tax code for Texas. [state.tx.us]

    When I talked to a tax representative there a few yea

    • by sdnoob ( 917382 )

      So if there is a federal law prohibiting Internet access taxing, why do so many states actually have the tax? I know for a fact that at least Texas has a tax on it.

      They're grandfathered in.. i.e. they were all specifically charging tax in internet access before the first federal prohibition on such taxes. It was a compromise added to the original internet access tax prohibition legislation in order to get the support and votes from lawmakers in those affected states.

      http://en.wikipedia.org/wiki/Internet_tax [wikipedia.org]

  • Sunset Clause (Score:2, Insightful)

    by debianlinux ( 548082 )
    Funny how Congress attaches expirations to the things that protect us from taxation but you don't see these things on the ugly stuff like the DMCA or PATRIOT Act.
  • > said the senator. "By keeping Internet access tax-free and affordable, Congress can
    > encourage Internet use for distance learning, telemedicine, commerce and other important services."

    Gosh! He sounds like he's doing us a favor, not heaving the bon-bon eating lardass that is government on yet another thing.

    I think what he meant to say was, "By keeping Internet access tax-free and affordable, Congress can avoid getting our asses handed to ourselves at the next election."
  • And misleading. This isn't a law until the President signs it. And he's been vetoing a lot lately, with the Democrats unable to get votes for an override.

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