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Friday, October 26, 2007

Senate Suffers Seven-Year Internet Itch

Last night, the Senate adopted a seven-year extension of the internet access tax moratorium by voice vote.

Seven years? Why not 11 or 13, which are also prime numbers. How was this number settled on and how did it win approval from Sens. Tom Carper (D-DE) and Lamar Alexander (R-TN), both of whom sought a four-year limit to the ban?

Carper and Alexander offered this, by way of "explanation":

This agreement is a common sense victory both for Internet users and for state and local governments. It continues the moratorium on Internet taxation, avoids unfunded federal mandates on states and cities, updates the definition of Internet access, and allows Congress to revisit the issue after seven years.

So how is it an improvement over the four-year House bill? And what about consideration of these important issues, obviated for the moment -- or until 2014 -- by the voice vote, examining the premise of the moratorium?

• the unfairness of a complete federal, state, and local tax moratorium for a sector enjoying a sustained period of robust growth and innovation;
• the unrealistic probability of states and localities imposing new internet access taxes when not a single one did so when the moratorium was allowed to lapse for 12 months over 2003-4; and
• the lack of a public interest in a moratorium, given studies showing no empirical evidence that internet access rates are lower in states that have levied a tax on Internet access and that internet access taxation has had no statistically discernible effect on computer ownership, and internet access conditional on computer ownership.