President Obama Agrees to Stop Internet Taxes
The Internet Tax ban has always been widely supported, but because of its popularity for 18 years it could not escape other ball and chain initiatives. Now it is Free!
Four major bipartisan trade bills have been signed into law this Congress under the leadership of Senator Hatch (R-Utah). These bills help American job creators and workers compete in the global market.
There are more reasons than efficient trade enforcement and facilitation in this Act to celebrate.
Senator Hatch, along with allies Senator Ron Wyden, Chairman Kevin Brady, and Chairman Bob Goodlatee, included a permanent ban on Internet access taxes in the Trade legislation.
The Internet Access Tax was a threat that Congress held over the heads of the American people for 18 years. The ban on these taxes was periodically extended, but without permanency it was always a bargaining chip that tax & spenders wouldn’t take off the table. That threat is gone.
On Wednesday February 24th, President Obama signed the fourth of this suit of bills into law, the Trade Facilitation and Trade Enforcement Act, with Senator Hatch at his side.
Americans can thank a bipartisan effort in both the Senate and the House to pass trade legislation and the Permanent Internet Tax Freedom Act.
Americans, can also thank President Obama for signing this legislation into law.
Like the permanent extension of the Bush tax cuts, the Permanent Internet Access Tax Ban is a win to celebrate.
In a time when it seems as though the partisan gridlock seems impossible to break, and American taxpayers see there taxes rising, we need to remember these victories.
These victories are not small. These are battles we never have to fight again.
New Jersey State Senator Proposes Bill to Infringe on Ability to Buy Pets
Senator Lesniak of the New Jersey State Senate recently introduced NJ SB. 63, which infringes on the right to conduct business via the Internet. This bill specifically attempts to regulate an already regulated industry, animal breeding. It is now a common practice to purchase a puppy of a specific breed or cross breeds online from a private breeder.
The senator uses the rallying cry of animal abuse to shield the true nature of the bill, more intrusion and regulation of the internet on the part of the government. Animal abuse should be taken seriously. Americans level of awareness of “puppy mills” or other unsavory breeding methods for any pet has raised dramatically over the decades. It is my belief that no one in search of that special pet wants their best friend or its relatives to have been abused in any way.
This problem of abuse and added regulation has already been addressed by Animal Plant Health Inspection Service through USDA in 2013. The rule established that these “unseen sellers” must be federally licensed, thus allowing inspection by federal authorities. The rule also encourages buyers to report inhumane conditions and sickness stemming from breeding mismanagement. To put it simply, the New Jersey bill is there only to force regulation down the throats of small business owners while increasing government control.
The bill, read to the letter, seems to completely ignore the need for service and emotional support dogs, which are often done via the Internet sometimes through unseen sellers. Many people with mental and physical disorders, ranging from a child with autism to a veteran to PTSD, use service dogs to better their quality of life. This bill has the potential to hurt those in need by limiting their access to available animals.
ATR Letter: Keep ITFFA in Customs Bill
ATR this week released the following letter supporting the inclusion of the Internet Tax Freedom Forever Act (ITFFA) in the Trade Facilitation and Trade Enforcement Act of 2015. The letter can be found here, and is pasted below:
January 12, 2016
Making the ban on Internet Access Taxes Permanent is a tremendous victory for all taxpayers. Thank you for including the Internet Tax Freedom Forever Act (ITFFA) in the Trade Facilitation and Trade Enforcement Act of 2015.
To stop Harry Reid’s war on taxpayers, I urge you to vote for cloture, against point of order, and for the “customs” bill as a whole with ITFFA included.
It does not follow that online sales tax must be tied to ITFA wherever it goes. The argument that all states need a new revenue offset, does not apply. Only seven states currently have access taxes. Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wisconsin are exempt from the current ban.
The Center on Budget and Policy Priorities estimates eliminating these taxes would amount to $561 million in aggregate savings to those taxpayers, Texas makes up $358 million for the $561 total. From the grandfathered states Senate Commerce Committee Chairman John Thune (R-S.D.), Sens. Ted Cruz (R-Texas), Rob Portman (R-Ohio) and Ron Johnson (R-Wis.) are sponsors of the legislation.
In terms of original intent, the Act was not necessarily based on the nascence of the Internet industry. It was based on the fact that the Internet is intrinsically multijurisdictional, thereby uniquely situated for multiple and discriminatory taxation.
The grandfathered states were intended to phase out their access taxes. However the grandfathering continued through subsequent reauthorizations giving the seven taxing states more time to phase out their taxes. States have not phased out the taxes on their own. There was never an intention to grandfather states in.
ITFFA does not exempt sales made on the Internet from taxation. Taxes for e-commerce must simply be taxed at the same state and local sales tax rate as non-Internet sales.
If online sales tax were to be considered as part of a package, it is more naturally aligned with Digital Goods Fairness, Mobile Workforce and Business Activity Tax Simplification. These are all tax nexus bills.
If you should have any questions or thoughts, please contact me, or Katie McAuliffe, Federal Affairs Manager, by phone, 202-785-0266, or by email, firstname.lastname@example.org.
Americans for Tax Reform
Excessive Regulation Costs US Economy $2 Trillion Dollars
Agencies continually enact new regulations without eliminating unneeded, obsolete and conflicting regulations. These regulations weigh down the US economy with a $2 Trillion price tag.
On Wednesday the House will consider the SCRUB Act, (H.R. 1155, “Searching for and Cutting Regulations that are Unnecessarily Burdensome Act of 2015). Americans for Tax Reform supports this legislation, which creates a BRAC-style commission tasked with ferreting-out obsolete or excessive rules for amendment or elimination.
Many regulations are too difficult to interpret, requiring businesses and individuals to enlist professional help. On Friday the House will consider the Providing Accountability Through Transparency Act of 2015, H.R. 690. Americans for Tax Reform supports this legislation as well. It requires agencies post an easily accessible 100-word plain language summary of any new regulation online.
Together The SCRUB Act and the Providing Accountability Through Transparency Act will help streamline and modernize our federal regulatory system.
Taxation Without Representation; The Collateral Damage of Crony Capitalism
For several years now, big box retailers have been pushing Congress to implement sales taxes on the interstate transactions that the Supreme Court has ruled off-limits baring legislation.. While these big box stores claim to be after “parity”, the end result would be punitive to small mom-and-pop retailers that are less well equipped to navigate the considerable red tape and audit threats from thousands of taxing jurisdictions around the country.
The irony is that the big box stores have wrapped themselves in the mantle of “main street” and neglect to mention that the real impetus for the federal institution of online sales taxes comes almost exclusively from the biggest retailers in the country. Ten of the biggest ten retailers in the country are pressing for interstate sales tax legislation, and even eight of the top ten internet retailers are pushing for taxation.
The two main bills being pushed by the big box retailers this year are the Remote Transactions Parity Act (RPTA) and the Marketplace Fairness Act (MFA). In addition to the tax increases on consumers they both layer more regulatory burdens on small businesses and set a dangerous precedent for taxation without representation by extending collection duties and audit targets outside a state’s own borders.
Many state governors and their allies in the legislatures have made allies of the big box stores in their attempts to pass online sales tax. In working to feed the monster of big government, the alliance of the retailers and government officials is making exactly the point Carly Fiorina was trying to get across on Wednesday night: Big government benefits the powerful and well-connected.
Don’t believe the claims of the tax-and-spend crowd at the state level when they claim citizens already owe the tax and they can’t collect it. The truth is that as a practical matter almost no attempt is made to collect “use” taxes because they are deeply unpopular and most taxpayers don’t believe they owe them. The taxing authorities want someone else to collect their taxes for them; hence the idea of forcing online retailers in other states to do their dirty work for them.
Then when the businesses in other states run afoul of one or more of the thousands of taxing jurisdictions they can look forward to countless audits and lawsuits, with no recourse to any elected official that needs their votes. The online sales tax isn’t about “leveling the playing field” or giving states taxes they need and deserve; it’s about vastly expanding the powers of states beyond their borders.
Should either online sales tax bill become law, online retailers will be faced with over 10,000 complicated tax codes, including 45 state sales taxes and local tax jurisdictions.
The costs of imposing these online sales tax proposals represent another big hit to small businesses. While the bills provide for “free” software and installation, the cost of maintenance and upgrades would range in the hundreds of thousands of dollars. These costs will have little effect on larger corporations, but it will certainly stifle smaller businesses.
These bills are vastly unpopular with voters across the spectrum. According to polling conducted by the National Taxpayers Union and the RStreet Institute, 57 percent of respondents were opposed to an online sales tax. Broken down by party affiliation 65 percent of Republicans, 56 percent of Independents, and 48 percent (to 43 percent) of Democrats were opposed.
In an attempt to force the tax through, legislators have actually held hostage a vote on The Internet Tax Freedom Forever Act. This legislation would make the current Internet Tax Moratorium permanent, ending any possibility of states taxing Internet access, and ensure that there are no discriminatory taxes on e-commerce. But the powerful interests have blocked the bill unless and until some kind of online sales tax is attached to it.
In the Republican debate, when Carly Fiorina reminded us that big government benefits the rich, powerful and well connected she made critical points. When she said, “Government trying to level the playing field between Internet and brick and mortar causes a problem,” she was right on target.
Internet sales taxes are about the most powerful retailers in the country raising taxes on their competitors. It’s that simple.
Chicago’s “Amusement” Tax is No Laughing Matter
Convenience has a new price for Chicago residents. Thanks to a fiat administrative declaration by Chicago’s Department of Finance, residents are now burdened with a new online “amusement services” tax. That means if your billing address is within city limits, you will be forced to pay a 9% tax for services like Netflix, Spotify, and Xbox Live.
The new policy is predicted to generate an extra $12 million in annual revenue for the city, and is seen by many as a feeble attempt to quench the city’s $430 million budget deficit, and the $530 million in increased payments to police and fire fighter pension funds for 2016.
Government bureaucracies operate under a “see what sticks” mindset, and have no qualms about throwing all types of new taxes on the Internet regardless of legal precedent and future effects. Chicago already has one of the highest sales tax rates in the country at 9.25%. Now, the tax collector can literally infiltrate the living room.
The meager money grab by the struggling city is not only bad for Chicago’s economy in both the short and long term, but could also set a dangerous precedent for tax discrimination. Consumers of online amusement services will pay taxes that would not be levied if they had chosen the physical marketplace equivalent. Using the Internet to rent a movie will get you the 9% tax, but buying the movie digitally will be taxed at 9.25%.
This leaves open a number of questions. For example, Chicagoans pay a cable television tax. Now if they rent or buy a digital movie from their cable provider, will they be hit with a 9% or 9.25% tax on the movie and then the cable tax on their total bill? That equals double and discriminatory taxation. Definitely a no-no under the Internet Tax Freedom Act.
In addition to the discrimination, the new amusement tax faces heavy criticism for violating other federal law, state law, and Supreme Court precedent. On the Federal level, the new tax is likely, not only a violation of the Internet Tax Freedom Act, but also the Commerce Clause, and of the first and second prongs of the Supreme Court’s Complete Auto test. On the State level, the Dept. of Finance rulings clash with Illinois’ home rule and uniformity requirements.
Congress could bring more clarity to state tax boundaries by passing the Digital Goods and Services Act. This legislation would ensure consumers are not punished by multiple taxes when purchasing a digital good or service, modernize Congress’s role in tax policy for interstate and international commerce to better suit the digital age, and clearly establish jurisdiction for the taxation of digital transactions.
Chicago’s “amusement services” tax is emblematic of the wider government agenda seeking to expand tax revenue by taking advantage of the Internet. The Internet holds the potential for a streamline of new revenue for all levels of government, and the fiasco in Chicago emphasizes the need to establish a federal framework through the Digital Goods and Services Act to combat the trend of government overreach.
Lindsey Graham Introduces Restoration of America’s Wire Act in Senate
WASHINGTON, D.C. – June 24, Sen. Lindsey Graham (R-S.C.) introduced the Restoration of America’s Wire Act (RAWA), S. 1668. The bill’s purpose is not to “restore” any legislation to its original intent, but for the fed to further encroach into state’s jurisdiction.
The following can be attributed to Grover Norquist, President of Americans for Tax Reform:
“State legislatures are more than capable of making their own decisions about gambling online in their states just like they have done with live casinos. They don’t need the federal government babysitting them. The Internet should be a freedom zone, and this is a piece of that pie.”
Precedent since the birth of the Republic has been to leave decisions about gambling in the hands of the states. The states should continue to make their own decisions about the regulation of intrastate online gambling, just as they have done with brick-and-mortar gambling for hundreds of years. It has served the country well for these matters to be settled at the state level.
There are strong opinions and business interests surrounding gambling in general, but, fundamentally, this is a question of the defense of the 10th Amendment of the U.S. Constitution.
The Remote Transactions Parity Act Has It Wrong: Removing the Physical Presence Standard Can Only Lead to Taxation Without Representation
Grover Norquist, President of Americans for Tax Reform, recently testified before the House Subcommittee on the Regulatory Reform, Commercial and Law on the Judiciary on tax nexus. Unfortunately Mr. Chaffetz' bill does not maintain the physical nexus standard and sets a precedent of taxation without representation.
The following statements come from Mr. Norquist's testimony that relate to tax nexus issues:
One of the challenges we have in taxation is that politicians love to tax people who cannot vote against them. States can raise taxes on the people who live and work in that state. But to export that tax to other people to reduce the opposition to tax increases is problematic.
Exporting taxes violates the whole concept of taxation without representation, and undermines competition between the states.
The discussion that Chairman Goodlatte has put forward on hybrid origin I think is a very good start. Origin sourcing, which clarifies that physical presence in a state is the law that governs the tax code, is a very good discipline on potential abuses by state and local government.
Cities and states that have taxed their citizens and businesses so badly that they fled to other states are now looking for a way to throw a harpoon into those that have escaped and try to drag back tax dollars. That has to stop.
I've heard some conversations about states' rights. States don't have rights. People have rights. States exercise power. This power is often abused against the people in their own state. That is not a good thing, but we ought to limit that abuse to the people who live in the state.
To view the coalition letter ATR has signed in opposition to this Bill click here.
Norquist Testifies on Tax Nexus, The Marketplace Fairness Act is Still Bad News
President of Americans for Tax Reform, Grover Norquist, testified before the House Committee on the Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law. Mr. Norquist expressed support for the Business Activity Tax Simplification Act, the Digital Goods and Services Tax Fairness Act, and the Mobile Workforce State Income tax Simplification Act. While these bills were the topic of the hearing, the discussion quickly turned to online sales tax. Mr. Norquist expressed that the marketplace Fairness Act or anything similar is still unacceptable. Any legislation regarding sales tax must maintain the origin principle of physical nexus.
The Obama Administration's Internet Take Over
Chairman Wheeler’s recent speech at his alma matter, Ohio State University, did not tell the full story about the Federal Communications new Open Internet Order.
The Open Internet Order will increase costs, decrease investment, and increase regulatory uncertainty. Put simply you are going to see costs rise and choices diminish.
Chairman said that special interests in Washington would not sway his decisions, but Washington DC special interest did contribute a great deal to his transition away from light-touch 706 regulations and heavy-handed Title II regulation.
The Ford Foundation and Open Society Foundations (funded by billionaire George Soros) were huge funders of the pro-Internet- regulation organizations. In its Open Internet Order, the FCC cited Soros and Ford Foundation funded groups 206 times. This is clearly disproportionate to free-market proponents who were cited five times (four citations to TechFreedom and one to the Free State Foundation).
Its hard to say whether the FCC even considered other points of view. When the FCC asked for public comments on its proposal in May 2014, the proposal focused on Section 706 regulation, not Title II. This gives opposing views no ability to submit research and comments about Title II effects, when they believe the question is something completely different. As a result, many experts believe the FCC could have violated the administrative Procedures Act by failing to give adequate notice of the rules it adopted.
When Wheeler says “Open Internet,” that’s code for public utility regulation. The Chairman will try to tell you different, but broadband reclassification as a Title II telecommunications service by definition equals rate regulation. Plus, under the FCC’s general Internet conduct standard, the FCC explicitly invites consumer rate complaints, which upon receiving these complaints, the FCC welcomes the opportunity to engage in rate regulation to determine whether the rates charged are ‘just and reasonable’.
Chairman Wheeler would have you believe that Title II is some kind of Net Neutrality light-touch regulation. Title II is not Net Neutrality, which includes the basic principles of no blocking, non-discrimination of content, and transparency. It is Public Utility regulation established in the 1930s.
Wheeler positions our choices as Title II public utility style regulation, or “we can have the people who operate the networks making the rules for the Internet.” This is a false choice. The FCC had a choice to implement a basic set of rules using light-touch regulation under Section 706, or an onerous set of rules under a Title II framework. It chose the latter. The FCC’s original net neutrality rules were based on Section 706 authority – not Title II.
He says, “we can have an Open Internet and light-touch regulation that encourages innovation and consumer choice.” We can have that, but we won’t because the regulations the FCC has passed will discourage innovation. With its 1934 monopoly era rules and micromanagement practices, with many regulations yet to be determined, nothing about Title II is ‘light-touch’. It is heavy-handed and onerous regulation of one of the most dynamic and innovative inventions in history.