tschmidt
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1 edit | Many facets of tax policy We need to look at this issue carefully to balance the need for states to raise revenue and tax policy that interferes with innovation.
Taking a broad brush, one can break Internet taxation question into three categories: Access, Services and Transactions.
Access
States tax other forms of access I don't think the Federal Government should dictate whether or not they are able to tax the physical connection. I see little difference in this then taxes on Telephone, Cable, or Automobiles. That is an issue that should be resolved at the state level
Services
The Internet is a fundamentally new type of communication infrastructure. It is general-purpose able to carry any type of traffic. Historically each service required its own dedicated network, so taxes levied against Telephone service were really being levied/collected against the physical connection. Trying to force fit that to the Internet, where a service is just an applications riding on a general-purpose network is a mistake.
Currently this issue is typified by the debate over Voice over IP services. VoIP is an application, trying to tax specific applications is a mistake.
Transactions
There has be long rancorous debate over the issue of taxing Internet transactions, treating then the same as mail order or brick and mortar transactions. Personality I do not have strong bias between income based and consumption based taxation. Sales tax tends to be more regressive since the proportion of income spent on goods and service is higher at low-income levels then at high. Certainly, exemptions can be carved out but this adds to collection cost and creates a bureaucracy to determine what is and is not taxable.
Another issue is the Internet is international. A seller is faced with the prospect of dealing with government entities all the way down to the city level. This seems to be an inefficient way to collect revenue.
My personal choice is to eliminate sales tax altogether and transfer the burden to Income tax. This ought to be a more efficient collection mechanism and focuses tax collection on those who use the various government services, hopefully making a better connection between tax collection and the benefits government delivers. |
