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.
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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.
ObamaNet Assaulting the Free Market
Statement of American's for Tax Reform President, Grover Norquist, on the Federal Communications' Title II utility regulation for the Internet:
While it will take long enough to read the 84 pages of dissent, let alone the more than 300 page rule making from the Federal Communications Commission, it is clear that as Commissioner O'Rielly says, this prophylactic approach is definitely "guilt by imagination."
As we pour over this document we are sure to find a number of things where the public did not have the opportunity to provide comments. This is not the so called "net neutrality" of 2006 or even of 2014. This is not Title II as passed by Congress for rotary phones. We do not support either of these approaches, and have voiced our opposition in the FCC's open comment period. However, we have never had the opportunity to comment on the FCC's new definition of either of these concepts. That in itself is against the law.
Like its handmaidens Obamacare and Dodd-Frank, the true ugliness of this assault on the free-market will only become known as we plunge deeper and deeper into its stormy depths.
The FCC Opens the Door for Taxing the Internet
Federal Communications Commission Chairman Tom Wheeler’s claim that Title II reclassification will not raise the cost of Internet access for Americans is false.
Wheeler and his staff consistently dodge questions on whether Universal Service Fund and similar fees assessed at the state, local, and federal level will now be assessed on Internet access.
According to Grover Norquist, President, Americans for Tax Reform:
The FCC's proposal to classify broadband as a Title II service would make broadband subject to New Deal-era regulation, and U.S. taxpayers could see a 16.1 percent increase on their bills because the Universal Service "Fee" of 16.1 percent on phone lines could automatically apply to broadband.
Brian Fung of the Washington Post reported that, contrary to expectations, the draft rules will actually include parts of Title II that would allow the FCC to extract funds from Internet providers to be used as subsidies.
Gigi Sohn, the FCC Chairman’s special counsel for external affairs, acknowledged that questions remain as to where Universal Service fees will be applied.
These new levies, according to the Progressive Policy Institute (PPI), would (total $15 billion) correction: $11 billion annually. On average, consumers would pay an additional $67 for landline broadband, and $72 for mobile broadband each year, according to PPI’s calculations, with charges varying from state to state.
Chairman Wheeler’s version of Title II for broadband leaves the door open for taxes or fees related to Americans’ access to broadband infrastructure, it could also mean taxes and regulations on data usage, video chats, emails, and video streaming.
ATR Urges Congress to Reject Restoration of American's Wire Act
Today, Wednesday February 4th, Americans for Tax Reform sent a letter to Congressmen urging them to reject the Restoration of American’s Wire Act (RAWA) based on 10th Amendment concerns.
A summary of the letter is below, and a link to the full letter can be found here.
Strong differences of opinion exist about the appropriate level of regulation of online gambling, both among and between civil libertarians and law-and-order conservatives. Some believe a legal regulatory regime is the best way to protect consumers and children, while some believe that a ban is ideal.
Even though strong opinions and business interests exist on both sides of the appropriate level of regulation of online gambling, fundamentally this is a question of the defense of the 10th Amendment of the U.S. Constitution.
As you consider RAWA we hope you will reject federal intrusion into this issue, and instead allow the states to continue making their own decisions about the regulation of intrastate online gambling, just as they have done with brick-and-mortar gambling for hundreds of years.
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State and National Coalitions Support the Internet Tax Moratorium
Dozens of State and National organizations have come together asking the Senate to pass a clean and permanent extension of the Internet Tax Moratorium. For the sake of continued growth and innovation through the internet, we request that the Senate pass S. 1432, the Internet Tax Freedom Forever Act. This legislation will protect Americans from being financially barred from the opportunities and benefits offered by having reliable internet access.
The FCC continues attack on the ISP Freemarket
The increasing desire of the Federal Communications Commission to expand its authority through Net Neutrality rules could have catastrophic consequences for both the growth of American Internet Infrastructure and the average consumer. The FCC is considering enacting Net Neutrality policies that would significantly limit Internet Service Providers, ISPs, from being able to dynamically control allotted bandwidth for high traffic websites such as Netflix and Facebook.
The FCC has been under consistent pressure to regulate broadband internet by activists with outlandish ideas that the same companies that provide internet service are also destroying the industry. While the FCC has historically supported a free-market approach of governance for ISPs, recent changes in policy led to the failed attempt to impose Net Neutrality in 2010 and continued failures thereafter. The most recent attempt by the FCC uses provisions from the 1996 Communications Act to justify Net Neutrality, even though congress never intended the wording in the bill for that purpose.
Worst of all the FCC has been entertaining the, “Nuclear option,” of classifying ISPs as a Title II Utility, treating the Internet as a government-owned utility monopoly. If this policy were to be enacted, Internet development would come to a halt, and the effects on consumer internet services would be disastrous.
With this in mind, “We therefore respectfully call on Congress to assert its authority concerning the FCC’s role, and ask the FCC to await further action from Congress.”
Unfortunately, during the FCC's Thursday May 15th meeting, the decision to move forward with Net Neutrality rules passed along party lines by a 3-2 vote. This will create unneeded uncertainty in the market, restrict investment and innovation, and ultimately harm consumers.
Read more: http://www.atr.org/fcc-continues-attack-isp-freemarket#ixzz31p8anGas
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ICANN Senior Advisor Responsible for Egyptian Internet Shutdown
This week Giuseppe Macri from the Daily Caller reported that back in 2012, the Internet Corporation for Assigned Names and Numbers (ICANN) hired on Tarek Kamel as senior advisor the CEO. He is touted as an expert on global Internet governance but there is just one problem; his questionable past. Kamel was the Egyptian Minister of Communications and Information Technology until February 2011. He is probably best known for being held accountable, along with other top Egyptian officials, for shutting down the Internet during the Arab Spring Revolution of 2011.
In an open letter to Kamel during the Internet shutdown, former White House Deputy Chief Technology Officer Andrew McLaughlin said:
“Unless you act now, in your final hours as Minister, to reverse the Internet cutoff, your name will forever be associated with an unprecedented human rights violation on a national scale, and an economic catastrophe triggered by a shortsighted regime's drive for self-preservation.”
In response to Kamel and the Egyptian Government shutting down the Internet, President Obama said that the Egyptian people had “the right to peaceful assembly and association, the right to free speech and the ability to determine their own destiny”. These are all rights that we hold true in the US and remain available on the Internet today. As a senior advisor to Fadi Chehadé President and CEO of ICANN, Kamel could greatly alter the landscape of Internet freedom should the US relinquish ICANN oversight.
On Wednesday April 3 the House Communications and Technology Subcommittee held a hearing about the much discussed recent Commerce Department announcement. By relinquishing power over the Internet, the U.S. will be allowing a significant asset to potentially fall into the hands of a bad actor that could ruin freedom on the Internet as it is known today. Democrats believe that this is a step towards a truly free Internet but this belief was met with much criticism from Republicans, and for good reason. Republicans contend that our current system actually promotes a free Internet and this decision allows for the potential of a new country to take the place of the U.S. and start censoring the Internet.
Chehadé, President and CEO of ICANN, testified in Washington in front of the subcommittee in an attempt to quell fears and answer questions regarding possible abuse of the organization's capabilities beyond assigning names and numbers. Chehadé said in regards to the announcement from the Commerce Department that "At the heart of this proposal is the commitment to security, stability, and resiliency.” While this comment may sound good in theory, the problem remains that once the United States removes its authority there will be a great potential for catastrophe.
Committee Chairman Greg Walden (R-Ore.) warned that removing our powers will remove an important “backstop” that our country plays in such an event like an authoritarian regime attempting to interfere with free Internet. This problem has to be dealt with in a proactive plan rather than reactive. Once enacted, this cannot be reversed. As Rep. Walden said at the hearing “there’s no putting the genie back in the bottle.”
One of the arguments in favor of the Department of Commerce relinquishing oversight is that, in essence, ICANN is merely the white pages of the Internet. In its current form, ICANN is merely the white pages, but without the Department of Commerce's commitment to maintaining that role there is nothing preventing a future ICANN from expanding its areas of influence and control.
The ability to assign and create names and numbers is in itself a power to wield. Without proper oversight, domain names such as ".sucks" could be used to extort companies and besmirch individuals. Currently companies are able to turn to Congress and the Administration to hold hearings that encourage and increase ICANN's accountability and transparency. Furthermore, as a non-profit with headquarters in the United States it is subject to the American judicial system and legal proceedings. At the termination of its contract there is no telling where ICANN would choose to incorporate, but one cannot imagine that it would be beneficial for the world's Internet population as a whole if ICANN incorporated in North Korea.
Of course North Korea is an unlikely headquarters location, but it is one of the most vivid examples of government censorship and control that is incredibly damaging to its citizens. With the "Internet of things" quickly entering our day-to-day lives, censorship and control does not only mean the words you speak or send, but the energy you use, the food you eat, and the times you sleep.
It is widely known that countries like Russia, China, and Turkey are proponents of Internet censorship. If the U.S. goes through with this proposal scheduled for October 2015, a scenario where a country or consortium of countries attempts to changed stifle or control the free flow of information internationally is not out of the realm of possibility.
While Chehadé says he is committed to stability and resiliency, it is quite the opposite message to have Kamel as a senior advisor, or in any position at ICANN for that matter, considering his involvement with shutting down the Internet in Egypt during the revolution in 2011.
Conservative Coalition Support for Patent Litigation Reform
The health of the American patent system is vitally important to American competitiveness in both national and international arenas, especially in an economy that is increasingly supported by knowledge-based products. Americans for Tax Reform supports the patent reform efforts undertaken being undertaken in the Senate. As such, ATR has joined in a coalition letter to show our support for our elected officials understand the importance of creativity to the future of our Nation.
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Appeals Court Strikes Down FCC's Misguided Net Neutrality Attempt
Americans for Tax Reform supports the decision of the United States Court of Appeals for the District of Columbia in Verizon v. FCC, which vacated the FCC "Net Neutrality" rules. The following can be attributed to Katie McAuliffe, Executive Director of Digital Liberty and Federal Affairs Manager at Americans for Tax Reform:
"Federal agencies are consistently trying to overstep their boundaries and create rules and regulations without any mandate from Congress. The FCC has attempted, again, to regulate in a way that it has no authority to do so.
While the Court noted that the FCC does have authority to encourage the deployment of broadband infrastructure, the Court ruled against the FCC's order to impose anti-blocking and anti-discrimination rules because those regulations are authorized under Title II "common carrier" regulations, which regulates basic carriers like landline phone service, on information service providers and therefore outside the authority of broadband's classification of an "information service".
We know common carrier regulations are more restrictive,hinder growth and innovation. Title II regulations are the reason Google Fiber has refused to offer any kind of voice service as part of its Gigabit and Video packages- because they do not want to open up their innovative services to that kind of restrictive regulation. Investment flows to the areas with the least hurdles and restrictions and we can see by the explosive growth in the Internet ecosystem that it is not broken.
The Internet is already open and competitive and will remain so. We can all see that it is one of the greatest growing sectors of our economy. Internet service providers benefit from users wanting to use their networks. The more applications, video services, and other options available to consumers, the more consumers will use those networks and find ways to innovate.
These companies do not have an incentive to degrade or block popular content on networks. Additionally, not all content uses the same amount of data to transmit - Facebook and Email interactions require far less data to connect quickly and efficiently than Netflix or FaceTime. Providing additional data transmission availability to high consumption apps does not mean that email or other low data consumption uses will be degraded. In other words, a fast lane does not necessarily mean a slow lane.
What it means is that companies need to manage their networks so that consumers get the best user experience."