OT Just when you thought it was safe to surf the Internet

BillyBoy wrote on 11/11/2003, 6:48 PM
This is basically a wake up call. File under STUPIDITY of our politicians. I'll explain. Something happened this November 1st. Something bad if you live in the United States. A law expired. That's usually a good thing. Not this time.

What expired on 11/1 was the so-called ban on prohibiting any local or federal taxing body from imposing taxes for Internet use. You see there was a federal ban, but the law just ran out. If they didn't renew it and they didn't becuase of four bone head senators, two from each party blocked it from coming up for a vote and the Republican "leadership" did nothing.

Now any state, any city, county, anybody that's a taxing body, yes even all those school districts, for example, anybody that has a legal right to tax is free to pass some goofy local law taxing YOUR use of the Internet because there now is no longer any federal proabition.

It gets worse.

There are literally hundreds of thousands of taxing bodies in the United States. Because of how the Internet works data travels in packets. Much of the traffic like email and me writing this message and you reading it is the result of any number of packets taking who knows what route to get from point A to point B. Now that can be taxed as its pases from state to state. Having a web hosting site can be taxed based on the number of hits it gets.. Just dialing into your ISP can be taxed and so on. You get the picture.

It gets still worse.

Because you have no real control over how Internet traffic moves you could live in lets say Texas and send a email to someone in California. Well now its technically possible for taxing bodies in Texas and every stop along the way to California to take a bite. Imagine the accounting nightmere. In theory you could find a 100 page bill in your mail box. A penny here, two cents there, ouch.

Still worse...

The biggest reason of course is now states could pass laws demanding all online merchants collect sales tax for out of state purchases. That's what many states have wanted for a long time.

I'm not saying its for sure going to happen, only that the only thing stopping it from happening is now off the books. Don't forget to send your senator a thank you note.

For more details take a look at this brief story or just search for Internet and tax bill or something similar.

http://www.infoworld.com/article/03/11/07/HNsenatorsobject_1.html?platforms

Comments

johnmeyer wrote on 11/11/2003, 8:23 PM
There is another great article, in the Wall Street Journal, that further describes the situation:

The Long Arm of the Tax Man

Up until a few days ago, it looked like the ban on Internet taxes would be extended (i.e., no new Internet taxes), but according to this Washington Post article last Friday, that legislation has stalled.

Internet Tax Ban Stops Dead in Senate

Regardless of where you sit on this issue -- some think we need to pay more taxes so we can increase government services, others think the government spends way too much already -- there is one undeniable fact: The percentage of your income that you are paying in all taxes (income tax, sales tax, excise tax, gasoline tax, "luxury" tax, hotel tax, travel tax, "sin" tax (liquor and cigarettes), telephone tax, cable TV tax, business tax, estate tax) is larger -- and larger by a huge amount -- than it has ever been in the history of this country.

The usual answer is that the "rich" don't pay their fair share of taxes. This is an easily disproved myth. Click on the link below, and you will see that the top 5% of wage earners paid 53.25% of all Federal taxes in 2001. (Scroll down to the table labeled "Adjusted Gross Income Shares." )

Federal Individual Income Tax Data

This table also shows that the top 1% now pay twice the total share of all tax receipts as they did twenty years ago, and the top 5% pay a 50% larger share of taxes. This is the result of many people's desire to have the wealthy pay their "fair share" of taxes. This is either a good thing or a bad thing, depending on your political views. However, there is one extremely important point to make. This is at the very heart of what happened here in CalEfornia (Arnold's pronunciation) with the recall last month.

Here it is:

When recession hits, middle and low income people still earn the same amount, but the high wage earner's income plummets. And so too, do the taxes they pay on that income.

You can see it in the charts: The top 10% contributed 3% less of total tax dollars in 2001 than they did in 2000. There was no change in tax law during that time (Bush's tax cuts didn't happen until 2002). Since the middle and lower wage earners were still earning the wage (some got laid off, but the big income earners -- like the "dot com ers" -- lost theirs too. Thus, overall tax receipts went down by a huge amount.

Here in CalEfornia, we had a huge concentration of those "dot com ers" that had tons of stock option income one year, and then nothing the next. Because tax revenue comes disproportionately from these wealthy people, tax receipts plummeted. The state suddenly didn't have revenue for even basic services like teachers. Due to some quirks in how Gov. Davis wanted to apportion the cuts, our local school district was asked to cut 40% in one year (unbelievable, but true). As a result, our county, which has only 33.85% registered Republican voters, voted 46% for the recall (statewide, the recall passed 55.4% to 44.6%). That's a lot of angry Democrats and Independents.

The point of this is: Our taxes are at an historical high, and you risk creating a huge train wreck if you pass virtually all of the burden to a segment of society whose income fluctuates wildly.

P.S. The answer? Flat tax. Read Steve Forbes, Jack Kemp, and of course, the father of flat tax, Professor Art Laffer. Tax income at one flat rate (or several rates if you still want to tax the wealthy at a higher percent), and then get rid of ALL the other taxes.

Including the pending Internet tax.

Final point: Take care who you vote for in the next election. This tax issue is not entirely a Republican or Democrat thing. Both parties spend like drunken sailors, and the Republican's -- usually noted for tax decreases -- have raised taxes the past two years in most states that they control (Colorado is a shining exception).

What this has to do with video editing? I haven't got a clue.
Jessariah67 wrote on 11/11/2003, 9:26 PM
Unfortunately, they still haven't come up with a way to tax stupidity and fiscal irresponsibility. If that ever happened, MOST politicians would have to get second and third jobs to pay their share and thus not have the time to keep passing laws that interfere with the REAL prodcutivity & ingenuity that has made this country the great place it is.
PH125 wrote on 11/11/2003, 11:29 PM
The idea of it it simply outrageous. If it was passed by any municipality, no matter how local, there would be massive protests.
TheHappyFriar wrote on 11/11/2003, 11:33 PM
I like the flat tax idea. Sure, I make about $17,000 a year, but I belive in being fair.

Wha tsucks about the possible internet tax is that every place that an internet sale goes through (and by sale I mean anything that required money to get that service) could tax us. So, if, say I bought my next $300 CPU out of CA, I would get charged sales tax for CA, NY (where I live) and ANY place inbetween. Don't forget town and school can charge tax too! So, if my CPU went through 7 states with n average tax of 8%, the CPU would cost me about $468, BEFORE shipping.

I wouldn't mind paying a sales tax on the state i BOUGHT the product in. That would be fair. But, if people got charges hundereds for Tax on buying something on the Net, internet sales would drop greatly. And I'd hop the border to Canada to buy my goodies. :)
busterkeaton wrote on 11/11/2003, 11:42 PM
Taxes are not at a historic high. You sound like AM radio. Do you know what the tax rates were in under Eisenhower?
BillyBoy wrote on 11/11/2003, 11:57 PM
The thing that bugs me about it isn't double taxation, that they couldn't get away with so for example if you live in New York and buy something in California where a lot of Internet mailorder computer merchants are located what would likely happen is all the states would get together with various reciprocity agreements. So in this example if you bought a computer in California via the Internet it would act as an agent for New York and collect the New York sales tax, keep a service fee for their trouble and forward the balance to New York who would do the same for transactions the other way around . States along the way would get nothing out of any sales tax.

The really dirty part would be use fees like I originally mentioned. So in theory if some smart money grubbing obnoxious politician in some "fly over" state like Iowa or Nebraska passed some law where there's a lot of Internet traffic passing through their state the nightmere is all that traffic could face something like a toll both. Not only would Joe six pack start screaming bloddy murder, imagine the accounting headaches of billing especailly for the tens of thousands of mom and pop operations that now have carved out a little piece of the Internet.

I'm not an alarmist by any means, but it really galls me that the Senate allowed the law banding this kind of cheap trick stuff to expire, which at least technically opens the door to states drowning in red ink to come up with creative ways to make a buck.

Grazie wrote on 11/12/2003, 12:26 AM
Lads, Lads , Lads . . .. If we eat something, it'll get taxed; if we employ something, it'll get taxed; if we drive something, it'll get taxed; if we have someting that is presently for free . . . . there you go!

Did you know that here in the UK Income Tax was an emergency tax placed on us to pay for the Napleonic Wars! Do we still have Income Tax? Does a bear deficate in the woods?

. . How much is it gonna cost to collect this tax? . . . . . Who is gonna benefit from this tax? Is it just going onto the Big Pot? What is the actual case for levying this tax? . . . Ah, "Tilting at Windmills" . . .

Quite frankly I aint surprised . . . . niether the "sleeping" or the perseverating politicians . . . . can we tax politicians production of "hot air"? - Bet we could fund the National Debt - or what it is called now-a-days . . .

Grazie
Erk wrote on 11/12/2003, 10:35 AM
Grazie -

".. here in the UK Income Tax was an emergency tax placed on us to pay for the Napleonic Wars!"

How's that going, anyway? Getting your money's worth?

G
johnmeyer wrote on 11/12/2003, 10:51 AM
Taxes are not at a historic high. You sound like AM radio. Do you know what the tax rates were in under Eisenhower?

Yes I do. See this table: Historical Federal Income Tax Rates The average Federal income tax rate for a median income family went from 5.64% in 1955 (middle of the Eisenhower presidency) to 11.79% (the beginning of the Reagan presidency). They have come down since then for median wage earners, but have gone up substantially on higher wage earners (see my previous post for the financial implications of this).

I know what you are talking about, however. Marginal rates were extremely high during the Eisenhower years (see Historical Marginal Federal Tax Rates). They actually reached 90%, both here and in England. However, due to massive tax loopholes available at that time, very few people paid anything like these rates, and those that did had average tax rates that were much lower.

Of course, this is just the Federal government, and just covers income taxes. One of the real problems is how many different ways various government agencies are figuring out to extract more money from your wallet. This is the whole point of this thread, namely the pending decisions that may add all sorts of new "Internet taxes."

See Receipt by Source table for more information on where taxes come from.

You are correct that I sound like AM talk radio. The people there have been talking about this for the past decade. Unfortunately, they have been doing so in a way that alienates or offends large numbers of people (especially Limbaugh). However, I submit that the reason why someone with as many glaring flaws as Rush Limbaugh (and I'm not just talking about his recent problems) can hold such a vast audience, has a lot to do with this very subject. People of all views (liberal, conservative, green, libertarian) are fed up with some aspect of government. Liberals are horrified by $87 billion going to the war in Iraq. Conservatives are offended by the prospect of a huge expansion in spending for prescription drugs. The spending needs to be brought under control, and one way to do it is to protest new taxes. Since the Boston Tea Party, this has been the quintessential form of American of protest.
jeremyk wrote on 11/12/2003, 11:04 AM
Oh, hey. Taxes are already flat. If you take into consideration all taxes, all income groups pay 16% - 19% of their income in taxes, some say. See this:

http://graphics7.nytimes.com/images/2003/01/20/business/21DOUBLE.chart.jpg

Just 'cause some right-wing outfit claims something is true, it ain't necessarily so.
Randy Brown wrote on 11/12/2003, 11:55 AM
I hope I'm not being rude by butting in here but I could sure use some help with my post " Someone please tell me why I'm getting separate video/audio files". Please forgive me if I am but it's a very important (annual) job for me and I have a Monday deadline and I don't know what to try next except to twiddle my thumbs until the brilliant minds here help poor little pitiful me: (
I know you don't want another Zippy SHOUTING AT YOU!!!! (although he does get a lot of response....hmmmm) no,no I would never do that of course but if you'll forgive me for butting in and just give it a read, I'll try to never be a pain again : )
Your pal,
Randy
JL wrote on 11/12/2003, 12:00 PM
"Unfortunately, they still haven't come up with a way to tax stupidity..."

Actually, many states now have figured out a way - it's called the lottery ;-)
busterkeaton wrote on 11/12/2003, 12:57 PM
"They have come down since then for median wage earners, but have gone up substantially on higher wage earners (see my previous post for the financial implications of this)."

According to a quick glance at the chart you offer, it seems the high point for all income leves was 1981 and they have been coming down since then. Also this seems to be the definition of progressive taxation which worked pretty well during the 90's once the government got serious about the deficit. Unfortunately, sane voices on the deficit are ignored in minority party and marginalized in the majority party.

"You are correct that I sound like AM talk radio. The people there have been talking about this for the past decade. "
Actually well-funded conservative think-tanks have been arguing this for three decades and pouring huge amounts of money places like the Cato Institute, the Heritage Foundation, Americans for Tax Reform, the Club for Growth, and Citizens for a Sound Economy in an effort to skew the debate. When the FCC in 1987 did away with the Fairness Doctrine, the ground was paved for what talk radio is today. The claim was that doing away with the Fairness Doctrine would lead to far greater diversity on the airwaves. Some probably believed that. Others knew better. Limbaugh's funders shared connections to the anti-tax groups and helped him buy his way on the airwaves nationwide before anyone had heard of him.

I found it interesting that when the common wisdom is there is a liberal bias in the media, the people pushing for changing the FCC rules to allow even greater media concentration of ownership were conservatives.
johnmeyer wrote on 11/12/2003, 3:25 PM
found it interesting that when the common wisdom is there is a liberal bias in the media, the people pushing for changing the FCC rules to allow even greater media concentration of ownership were conservatives.

If you can, read the Wall Street Journal editoral page today. There is a great editorial from two people at Stanford's Hoover Institue. While this is definitely a conservative organization, they are hardly wacko. Their editorial concerns a study they just completed that tried to objectively measure media bias. The study is admittedly very narrow in what it measures, but I think it made an honest attempt to quantify what is otherwise a very subjective subject. Their conclusion (not too surprising): the media (NY Times, Washington Post) is biased 2:1 in favor of liberals.
busterkeaton wrote on 11/12/2003, 4:47 PM
John,

Oddly enough I did see that already.

I see your WSJ editorial board and rasie you one Eric Alterman. Here is a quote from his column today:

Oh and this silly argument (WSJ)

Both articles concern Bernard Goldberg's Bias.

Obviously we are going to disagree, but I don't think either the editorial page of the WSJ or the Hoover Institution are interested in honest scholarship and disinterested studies. Hoover already inflicted Condi Rice on us whose tenure as National Security Advisor has resulted virtual open warfare among the various National Security agencies.

Regards,
Buster
johnmeyer wrote on 11/12/2003, 5:07 PM
It would be interesting to see a thoughtful exchange, preferably in writing, between Eric Alterman and Bernard Goldberg.

One interesting note in reading through Alternman's site is his concern with media concentration and its "consistently corrosive effect on journalism." I'm no fan of big mergers in any industry (oil, retailing, etc.) and therefore am against media consolidation as well. I think it makes companies inefficient and less likely to serve their customers. However, the real threat to bias -- whether it is from the right or the left -- comes from the Internet. The music industry found out the magnitude of this force, but what happened there is nothing compared to what is happening with the news. Matt Drudge and Michael Kinsley are just the tip of the iceberg. I am not yet sure that it is a good thing, but I do know that it is inevitable. Unfortunately, in the near term, it will probably lead to more polarization, not less. Good article on this point today in the NY Times: Hold the Vitriol
busterkeaton wrote on 11/12/2003, 5:57 PM
However, the real threat to bias

Do you mean to consolidation or to bias here?