November 17, 2003

Five Lies about Internet Taxation

Dave McClure, president of the US Internet Industry Association, examines what he says are the five big lies being told by opponents of making permanent the federal ban on Internet access taxes, in this excellent piece at TechCentralStation.com. McClure's association is lobbying for making the ban permanent. Among the five lies McClure debunks are two false themes pushed by U.S. Sen. Lamar Alexander of Tennessee:

#1. This is an issue of state's rights that the federal government should not trample. Internet services are global in nature, and clearly fall within the realm of interstate commerce. According to Article I, Section 8 of the US Constitution, the individual states have no right to regulate, tax or tamper with interstate commerce. Denying the states the right to tax the Internet is a cornerstone of what the Founding Fathers had in mind when they drafted the Constitution.

#3. Banning Internet Taxes is an illegal "Unfunded Mandate." In the Republican "Contract with America," Congressmen and Senators pledged they would not pass laws that required the states to spend money unless they also provided for reimbursement of that money. Nowhere in that pledge did they give the states a right to plunder the pocketbooks of working Americans. Nor does the pledge promise that the federal government won't step in to keep the states from acting in a way that harms national interests, such as taxing Internet access.

Alexander portrays the issue as one of states rights versus federal mandates, but that's a red herring. There's no federal mandate involved, simply a federal ban on a certain kind of taxes. The Commerce Clause of the U.S. Constitution clearly gives Congress the right to make laws governing interstate commerce, and the Internet clearly involves interstate commerce.

Read McClure's entire TCS article for the other three lies.