Internet Connection Tax Held Off for A Few More Years

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."'"

If nothing else

[ackthpt (218170)]

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.

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[Entropius (188861)]

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

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[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. :)

Great the internet is not taxed !

[Arthur B. (806360)]

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.

Re:Great the internet is not taxed !

[JK_the_Slacker (1175625)]

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

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[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?

Watch what they do, not what they say

[JonTurner (178845)]

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]

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[gregoryb (306233)]

The government removing a tax? You must be new here.

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[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

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[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

Rural internet access?

[Vellmont (569020)]

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".

Only ISP Account is Tax-free

[Metaphorically (841874)]

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].

blah blah blah it's all talk anyways

[hurfy (735314)]

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 ;)

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[Entropius (188861)]

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?

Somebody wake me up

[zappepcs (820751)]

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.

Taking away money doesn't help pay for anything

[SuperKendall (25149)]

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.

Re:Somebody wake me up

[thebdj (768618)]

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.

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[Mr. Underbridge (666784)]

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

$20/mo for DSL isn't reasonable?

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[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?

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[Kadin2048 (468275)]

More like two heads on the same beast -- or maybe two lobes of the brain inside one head of the three-headed beast [wikipedia.org].

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[Entropius (188861)]

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!

[tjstork (137384)]

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.

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[Entropius (188861)]

Well, I *don't* get something in return (and neither does anyone else) for a lot of the money I give the government. That's why I'm pissed off.

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[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

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[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