U.S. Senate passes Internet Tax Freedom Forever Act

Yesterday, the U.S. “Senate voted to keep internet access tax free – permanently,” Kelly Phillips Erb reports for Forbes. “If that feels like a small achievement, it’s not. Taxing internet access has been barred by law since 1998. However, over the last 20 years, the prohibition wasn’t a permanent law: it was a moratorium. To keep the moratorium in place, Congress had to extend it. And extend it again. So they did so in 2001, 2004, 2007 and 2014 and a series of band-aids through 2015 – eight times in total.”

“In 2015, the House finally approved H.R. 235, the Permanent Internet Tax Freedom Act, which ‘amends the Internet Tax Freedom Act to make permanent the ban on state and local taxation of Internet access and on multiple or discriminatory taxes on electronic commerce,'” Erb reports. “A companion bill, the S.431, the Internet Tax Freedom Forever Act, was read in the Senate but as of the end of last year, went nowhere.”

“Eventually, the measure was tacked onto the Trade Facilitation and Trade Enforcement Act,” Erb reports. “That bill passed the Senate today by a vote of 75 to 20 and the White House has signaled that President Obama will sign it into law.”

Read more in the full article here.

U.S. FCC Commissioner Ajit Pai made the following statement in response to the U.S. Senateís passage of the Permanent Internet Tax Freedom Act as part of the Trade Facilitation and Trade Enforcement Act of 2015:

This is a great day for American consumers. The U.S. Senate passed the Permanent Internet Tax Freedom Act with a strong bipartisan vote. This confirms a national consensus that state and local taxes on Internet access should be taken off the table once and for all. These taxes would make (and in some places already have made) broadband more expensive, reducing consumers’ ability and willingness to get online. This, in turn, would reduce private sector investment in deploying broadband, especially in rural areas, and inhibit entrepreneurship. I hope the bill is enacted soon — Americans need and want the certainty that the digital world will be spared the taxman. — U.S. FCC Commissioner Ajit Pai

MacDailyNews Note: The act’s language is just a few lines long:

SEC. 922. PERMANENT MORATORIUM ON INTERNET ACCESS TAXES AND ON MULTIPLE AND DISCRIMINATORY TAXES ON ELECTRONIC COMMERCE.

(a) PERMANENT MORATORIUM.—Section 1101(a) of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by striking “during the period beginning November 1, 2003, and ending October 1, 2015″.
(b) TEMPORARY EXTENSION.—Section 1104(a)(2)(A) of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by striking “October 1, 2 2015″ and inserting “June 30, 2020″.

“The first clause at part (a) establishes a permanent ban on the tax. The second clause at part (b) establishes a firm end date of June 30, 2020, for the handful of states which currently impose a tax on internet access,” Erb reports. “Those states are Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin.”

15 Comments

  1. Interesting that the majority of those states that already have internet taxation, including Texas, New Mexico, North and South Dakota, Wisconsin, Ohio…are all run by Republican governors and largely Republican legislatures. Esp. consider Texas, one of the most Republican states in the union. Shame on Texas for their taxes. I guess when it comes to technology, Republicans don’t mind taxes so much.

    1. No shame on Texas for their taxes. While I don’t agree about an internet tax, Texas is only one of seven states with no income tax, just usage and property taxes.
      Usage taxes, I feel, are the only truly fair taxes. You pay for what you use. You have lots of money, have three houses, jets, and are a big consumer, you pay more taxes. Don’t make much money, rent, and can’t buy much, you’re automatically paying fewer taxes.

      1. Usually, though, if you consume the amount to have the things you state, you pay no taxes. If you’ve got that much money and don’t have an accountant that can set you up such that you’re not paying less than you should, you’re not doing it right 🙂

        Generally it’s a statement I agree with, just realize that you’d have to change a LOT more and the actual result could surprisingly be MORE convoluted than expected.

      2. Use taxes, like sales taxes, tolls on roads, property taxes, etc can seem more fair but in reality can also be the most regressive taxes around.

        Because all people need to spend money on the basics like food and housing and clothing,etc…for poorer people this eats up a greater percentage of their income vs the very wealthy, and so a sales tax, for instance, ends up penalizing the poor and benefiting the wealthy.

  2. Internet ACCESS taxation and SALES taxation, along with OTHER Taxation are all different. We aren’t tax free.

    WADE: Pointing out the REPUBLICAN taxes isn’t drawing you any favors considering the Socialist Democratic Front Runners BOTH are promising MUCH HEAVIer Tax increases in the future, if they are elected. And their’s won’t be by STATES but by Federal, with NO escape of another state to which you could move in protest.

    Be careful what you castigate, the opposing side wants you to do that while they ensnare you as you look at what YOU call the enemy.

    1. I am not trying to create some contest of political sides for this post. I am merely pointing out the irony that the Republican party, which prides itself on being anti-tax, is actually at the state level the party that most favors internet taxation. So the GOP is not always the party most against taxes.

  3. Occasionslposter1: it’s Democrat(the party) not democratic which the DNC is assuredly not. The send super delegates to their conventions to override the voters choice if it’s someone called Bernie or should Hilary be indicted and they want to nominate ok’ Joe Biden.

    1. Utah is another heavily Republican state! What is it about Republicans that they so want to tax internet usage? Guess they may be too busy trying to protect tax breaks for oil companies and other old legacy businesses.

  4. We The People win, for a change.

    Being cynical: I suppose our corporate overlords didn’t pull the puppet strings on this one because they figured an Internet access tax might squelch their income from the peasantry. (I equate corporatocracy with neo-feudalism. For ore examples, go read the TTP and TTIP ‘treaties’ that establish corporatocracy planet-wide).

  5. Every Congress is sovereign. This “forever” exemption can be undone at any point in the future, by this Congress and any future Congress. Even the Constitution can be undone, but it takes supermajorities of Congress and the states to pull that off.

  6. IIRC, when internet sales were just getting started the sales tax free environment was considered necessary as that market was so “fragile”.

    It’s not fragile anymore, but the brick and mortar stores have moved into a very fragile position. Remember Borders Books? Amazon killed them off with ease and B&N have been through some rough times.

    Personally I would like to see some competitive balancing on the tax side. I can handle paying my share without crying about being taxed. Jobs in the brick & mortar sector are that important IMO.

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