A Big New Tax Coming to Your Internet Bill

Since 1998 it has been prohibited by federal law for states and localities to tax Internet access. This policy, known as the Internet Tax Freedom Act, has been extended three times with broad bipartisan support. But it is set to expire again onNovember 1, and some Senate Democrats appear willing, this time, to allow it to actually expire if they can’t use it to leverage an unrelated tax issue. 

It’s a dangerous game that could cost taxpayers billions of dollars and worsen the digital divide by pricing some lower income Americans off of the Internet entirely.

The House, led by Judiciary Committee Chairman Bob Goodlatte of Virginia, passed a bill last month to make the ban on Internet access taxes permanent. It was a voice vote – meaning not a single member objected. “The permanent Internet Tax Freedom Act merely prevents Internet access taxes and unfair multiple and discriminatory taxes on e-commerce,” Goodlatte explained on the House floor. “It does not tackle the issue of Internet sales taxes.”

And that, for many senators, is the problem. The Senate has already passed a highly controversial bill authorizing states to collect sales taxes on out-of-state purchases called the Marketplace Fairness Act. But that bill – which is popular with retailers but not with most consumers, for obvious reasons – has not moved in the House.

More