Tags: Internet Tax Freedom Act | Senate Democrats | House GOP

Senate Dems Blocking Permanent Ban on Internet Taxes

By    |   Friday, 12 Sep 2014 10:34 AM


Federal law has prevented taxes on Internet access and email since 1998, but that may change after the November elections, with the Democrat-controlled Senate refusing to act on extending the law after House Republicans passed a permanent extension in July.

The Internet Tax Freedom Act is set to expire on Nov. 1, reports The Wall Street Journal  in an op-ed Friday, noting that in July, the House passed a permanent extension of the law by a bipartisan voice vote.

The 1998 bill prevented states and localities from taxing services that are bundled as part of an Internet access package, including email, instant messaging and DSL services.

While the Internet has remained tax-free since 1998, other wireless services, such as cellphones, are subject to tax rates, depending on state tax rates. Nationally, wireless service has an average tax of 17 percent, and in some places it is as much as 20 percent.

However, the Senate refuses to act on its own permanent extension, introduced by Sens. Ron Wyden, D-Oregon, and John Thune, R-South Dakota, earlier this summer. The Internet Tax Freedom Forever Act would make the existing ban on Internet access and other e-commerce products permanent.

But Senate Majority Leader Harry Reid, D-Nevada, has been working with Wyoming Republican Sen. Mike Enzi and Democratic Illinois Sen. Dick Durbin, "holding the email tax ban hostage unless their colleagues also agree to give states and localities new powers to reach outside their borders and demand tax collections from online merchants," the op-ed says.

"The Internet tax moratorium, first enacted in 1998, has been an important part of expanding access to the Internet and in promoting the growth of the Internet economy. Unfortunately, countless Americans who use the Internet could suddenly find themselves facing a tax hike if Congress fails to act before the current moratorium expires on Nov. 1," Thune told Newsmax in June.

This past week, House Republicans added a short extension to the bill on a continuing resolution designed to prevent another government shutdown this fall. The measure is up for a vote next week, but would keep the federal ban active only until Dec. 11.

A Senate funding bill is expected to have a similar deadline, meaning the pact will expire during its lame-duck session following the November election, and "the tax-the-Internet caucus can then seek to gouge consumers" while Reid is still in charge of the Senate, the opinion piece notes.

House leaders would do better to rewrite the funding bill and extend the tax ban into 2015, says the opinion piece, as "online consumers deserve at least as much protection as the crony capitalists who live off the Export-Import Bank, and the House has decided to let that outfit live into next summer," the op-ed said.

Preventing the tax to consumers' monthly Internet bills has been a House success story, "but voters deserve to know that a Democratic-controlled Senate has done nothing to prevent new taxes online, while Republican Senate Minority Leader Mitch McConnell favors a clean, permanent Internet Tax Freedom Act."


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Federal law has prevented taxes on Internet access and email since 1998, but that may change after the November elections, with the Democrat-controlled Senate refusing to act on extending the law.
Internet Tax Freedom Act, Senate Democrats, House GOP
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2014-34-12
Friday, 12 Sep 2014 10:34 AM
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