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(Fwd) FC: Sen. Ron Wyden on no-new-net-taxes legislation

in den USA wird offensichtlich die Internet-Benutzung je nach Staat 
unterschiedlich besteuert. Dagegen will der Senator Ron Wyden etwas 
unternehmen. Dies wird als der THE INTERNET TAX FREEDOM ACT 
Gruss Arne Haeckel

------- Forwarded Message Follows -------
Date:          Tue, 26 Aug 1997 07:03:34 -0700 (PDT)
From:          Declan McCullagh <declan@well.com>
To:            fight-censorship-announce@vorlon.mit.edu
Subject:       FC: Sen. Ron Wyden on no-new-net-taxes legislation
Reply-to:      declan@well.com

---------- Forwarded message ----------
Date: Tue, 26 Aug 1997 09:45:07 -0400
From: James Lucier <jlucier@atr.org>
To: declan@well.com
Subject: For FC: Great and lucid statement by Senator Ron Wyden on  cybertax 

Committee on the Judiciary
Subcommittee on Commercial & Administrative Law
Senator Ron Wyden

July 17, 1997

Imagine this scenario: You and a friend run a small home-based business
from Rapid City, South Dakota.  You decide to send a token of appreciation
to a favorite customer in Ames, Iowa.  You log on to the Internet using an
Internet service provider in Alexandria, Virginia.  You find the home page
for Harry and David^Rs Fruit in Medford, Oregon, order a gift basket for
your customer and pay for the purchase with your online banking service in
Charlotte, North Carolina.  Given the extraordinary growth of the Internet
and hunger by some politicians to get a "byte" of tax revenue wherever
possible, all ten of those cities and states may choose to tax part of your

There are more than 30,000 taxing jurisdictions in the United States, and
already more than a dozen states have exacted tolls on electronic commerce
over the Internet. The Internet will be the business infrastructure of the
21st Century, and if the pro-tax forces have their way, you better start
budgeting for some lawyers and accountants to advise you how to collect,
account for and remit  Internet taxes.

Here are some examples of Internet tax mischief.  If you subscribe to the
Wall Street Journal online in Connecticut, you pay a tax, but you don^Rt pay
the tax if you subscribe through regular, or "snail" mail.  Tennessee
retroactively imposed five years of back-taxes on a home-based Internet
service provider, driving the small business into bankruptcy. Minnesota has
notified vendors who have no physical presence in that state they must pay
sales tax in Minnesota because they advertise through a catalogue on the
Web.   Texas levies a tax on home pages, and taxes Internet service
providers twice: once for leasing the phone lines and again for access to
the same phone lines.  

Congressman Chris Cox and I are concerned that the growth of Internet taxes
could kill the goose that is starting to lay golden eggs.  That^Rs why we
have introduced the Internet Tax Freedom Act.  Our bill would prohibit
Internet-specific taxes (such as Connecticut^Rs), double-taxation (such as
Texas^R) and new Internet taxes (such as Minnesota^Rs).  The bill calls for a
moratorium on such taxes.  During the moratorium, the administration is
directed to bring together state and local governments, business and
consumer groups to develop policy recommendations for Congress on Internet
taxation.  Under the bill, there will be no more tax the Internet first,
ask questions later.

One can never underestimate the desire of some politicians to invent new
ways to tax, and the Internet Tax Freedom Act has run up against powerful
opposition.  Although the bill specifically allows states and localities to
continue to levy all technologically neutral taxes -- such as sales,
income, gross receipts, property and business license taxes -- some
politicians just can^Rt keep their hands off the Internet.  In fact, the
Texas Director of Tax policy recently proclaimed with pride "Texas is a
leader in taxing services surrounding the Internet!"    

Here are the four major arguments of the pro-tax forces.  First, they claim
there are so few states and localities actually imposing taxes on
electronic commerce, there is no need for Congress to rush in with a
moratorium.  But then they claim the bill will deprive them of so much
revenue that it would impose on them an unfunded Federal mandate.  It^Rs
hard to have it both ways.   The Congressional Budget Office estimates the
legislation will not surpass the $50 million annual Unfunded Mandates Act
threshold, and without a moratorium, there is little incentive for these
tax-hungry authorities to come to the table to hammer out policy

 Their second argument is that the Internet is just like mail order and
should be treated as such.  We don^Rt disagree.  Online businesses should
pay their way like any other business, and if a vendor has nexus with the
taxing jurisdiction under current law, then the vendor has tax nexus with
the jurisdiction whether the transaction is by phone, mail order or online.
The problem arises where states have chosen to ignore Supreme Court
rulings.  The Supreme Court, in the Bellas Hess and Quill decisions, said
that to force companies to collect a tax on mail order there must be
physical presence in that jurisdiction; merely sending a catalogue into a
town does not constitute physical presence.  Our legislation is consistent
with the Supreme Court^Rs view: where a business has no physical presence in
a state or local jurisdiction -- whether it advertises by mailing a
catalogue or posting a web page --  a state or city should not be allowed
to levy taxes.

Their third argument is that the Internet should be taxed like telephone
service.  Because telephone service is already taxed, this amounts to
double taxation.  When someone places a call, that phone line is dedicated
to the conversation between two specific points.  If a speaker pauses
during a phone conversation, no other activity happens on that line.  But
online, there are no pauses: information, such as data and images, is
constantly flowing electronically to many different destinations
simultaneously.  Geographic location is almost meaningless:  a company may
not know the actual geographic location of someone who both buys and
downloads the company^Rs software online.  

Their fourth argument is that competition from online business will hurt
main street stores.  Most businesses I know welcome competition.  This
argument goes back to nexus, where a taxing jurisdiction knows its attempt
to levy a tax on an out-of-state web page is beyond the clear legal
boundaries set down by the Supreme Court on nexus.  Moreover, online
business is not in space... yet.  Every online business has a physical
presence somewhere and is subject to income, property and other taxes in
that jurisdiction.  A main street or Mom-and-Pop shop that goes online and
increases its sales will generate even more taxable income.  Taking a
longer view, if the American people and Congress had bought such an
argument, we^Rd still be writing laws by candle light with quill pens.  Do
we really want a 19th Century economy for a 21st Century world?

High-tech savvy Governors Pataki, Weld and Wilson have given a strong
endorsement to the legislation.  Dozens of state legislators from around
the country have also written in to express support for the measure.  More
than two dozen major national groups, from the American Home Business
Association and Direct Marketing Association to the U.S. Chamber, National
Association of Manufacturers, the American Electronics Association and the
leading information technology associations, have gone on record supporting
the bill.   
The Internet is a new technology. It is changing the way that we
communicate, the way that we obtain information, the way that we do
business.   Electronic commerce holds tremendous potential for small
business, people living in rural America, the elderly and the disabled.  It
simply does not fit into the existing geographical mold of state and local
taxation.  Instead of trying to fit a brand-new square peg into a
decades-old round hole, government should take the time to figure out the
right way to regulate commerce on the Internet before allowing a taxation
feeding frenzy that could doom this still-developing technology.

U.S. Senator Ron Wyden (D-Ore.)  is the Senate sponsor of the Internet Tax
Freedom Act.  He serves on the Senate Committee on Commerce, Science, and
Transportation, and its Subcommittee on Communications. 

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