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.
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.
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."
MFA Software Integration to Cost up to $290,000 for Small Businesses
Today the eMainstreet Alliance sent a letter to the House of Representatives emphasizing that, while major retailers are still pushing to passage of the Marketplace Fairness Act, the costs to comply with the MFA are overly burdensome, and the MFA, as written, does not comply with ANY of Chairman Goodlatte's seven principles of remote sales tax collection.
The MFA crushes small businesses with tens of thousands of dollars in compliance costs by turning them into tax collectors for 9,600 different tax jurisdictions. An independent, non-commissioned study by TruST found that integration costs for small to mid-sized businesses will range from $57,500 to $290,000. Faced with such a heavy burden, some small businesses have said they will be forced to close their doors. The findings of the TruST study are consistent with eMainstreet business estimates of the costs their businesses will incur should the MFA go into effect.
Additionally, MFA does not meet any of the remote sales tax principles set out by Chairman Goodlatte:
“Chairman Goodlatte spelled out seven reasonable and common sense principles to guide any discussion of remote use tax collection legislation. The MFA fails all seven principles. One principle insists that any solution be “tech neutral”. This is an important safeguard for small businesses. Businesses should not be required to implement any third-party software to collect and/or remit sales taxes. We understand that proponents of the MFA are pressuring lawmakers to ignore both the clear meaning of Chairman Goodlatte’s principles as well as the heavy burdens the MFA imposes on businesses. Please do not be deceived by special interests - the MFA is unwise and destructive legislation.”
To read the full letter, click here.
Patent Trolls Beware: The Innovation Act is Here
Digital Liberty and Americans for Tax Reform welcome the introduction of House Judiciary Chairman Bob Goodlatte's (R-Va.) Innovation Act. The bill, introduced today, addresses the rising number of abusive patent lawsuits that have stifled inovation and cost the American economy $80 billion per year.
The Innovation Act raises standards for initial pleadings from patent holders, who would need to explain what patent is being infringed upon and how that infringement is occurring. Another very important aspect of this legislation is fee shifting, which requires the loser to pay the victor's legal fees.
The following statement can be attributed to Katie McAuliffe, Executive Director of Digital Liberty & Federal Affairs Manager at Americans for Tax Reform:
"We would like to commend Chairman Goodlatte for his excellent work in moving patent reform one step closer to completion. His legislation released today includes aspects vital to curbing the economically detrimental practices of patent trolls. Overall his legislation strikes an appropriate balance that will dramatically curb the troll problem, while still maintaing the value of American intellectual property.
"In a knowledge-based economy it is important to protect Americans' Intellectual Property. Patents are an important tool for encouraging and stimulating innovation, while also ensuring that inventors are compensated for their work. Unfortunately, the system has been abused by non-practicing entities, entities who own patents but do not create anything with the patent. While litigation is a legitimate course to protect patent ownership rights, the abusive nature that has permeated recent patent cases has necessitated balanced action from Congress."
ATR Letter Urges Michigan State Representatives to Oppose Unpopular Internet Tax
The Michigan House of Representatives is considering two bills 4202 and 4203 to expand Michigan’s taxation authority into other states. These bills are unlikely to withstand constitutional scrutiny, without the passage of the so-called Marketplace Fairness Act (MFA). However, the MFA is vastly unpopular with voters nationwide.
Due to the harm House Bills 4202 and 4203 would cause Michiganders and the likely unconstitutionality of the proposed legislation, Americans for Tax Reform sent a letter to members of the Michigan House of Representatives urging them to oppose to House Bills 4202 and 4203.
“The bills would have terrible consequences for the Michigan economy. It forces out-of-state businesses that bring even a small ownership stake into the state to collect taxes. This will provide a powerful incentive for businesses to stay entirely out of state, which means less investment in Michigan,” said Grover Norquist, president of Americans for Tax Reform. “Anything that discourages investment is bad policy for a state that’s had a sluggish economic recovery, still struggling five years after the 2008 crisis.”
The online sales tax bills awaiting a vote in the Michigan House are not just bad policy; they’re probably unconstitutional. In Quill v. North Dakota the Supreme Court ruled that states could not make businesses without a physical presence in their state collect taxes. Interstate tax collection is a responsibility of Congress, not the states.
As stated in ATR’s letter to Michigan legislators, “Poor enforcement of ‘use tax’ law is no justification for constitutionally dubious legislation, especially if its only guarantee is to negatively impact Michiganders.”
Consider if nearby Illinois attempted similar legislation affecting Michigan state businesses. Illinois would try to force Michigan businesses to collect and remit Illinois sales tax, thereby making Michigan businesses subject to the tax laws, court proceedings, audits and liens of Illinois. Michiganders would have no recourse at the ballot box, and there would be nothing that their home state could do to protect them. This cuts at the principles of federalism, competition between the states, and due process.
New polling data released by the R Street Institute and the National Taxpayers Union shows that voters are strongly against Internet sales taxes. The Marketplace Fairness Act (MFA) is a losing bet among likely voters; 62 percent of likely primary voters and 57 percent of likely national voters are opposed to the idea.