Don't tax this blog!

Although the blurb at the top of this page says I'm "Washington-based," that's not completely true. I'm "Washington-area-based." I live in lovely northern Virginia a few minutes south of the District and commute in to my day job each morning. One advantage of which is that I enjoy congressional representation, including the able advocacy of Sen. George Allen, who has come out in support of a bill that would prohibit the Feds from taxing Internet communication. Ain't he a great guy?

The Internet poses an interesting problem for those of a more pro-tax bent. Not only is much Internet activity currently untaxed, but the Internet is quickly providing the means to circumvent more traditional activities that are. One example is voice-over-Internet, or VoIP, telephony, currently subject to federal excise taxes under a provision in the tax code that will sunset eventually if it's not renewed. That provision was passed in 2004 partly to keep VoIP from cutting into tax revenues from standard landlines. And, although this article focuses exclusively on a current discussion about communications taxation, the issue is even larger. Ever notice how you don't always pay state sales tax on online purchases?

So perhaps the best way to put this article into context is to realize that the Internet is now going to provide the same tax competition inside the U.S. market that we already experience in foreign trade (just check out the Airbus-Boeing post below). It's wild-west untaxedness will put pressure on many of the consumption-based taxes we have today.