- - Monday, September 22, 2014


In a recent column (“Making the Internet more expensive for consumers,” Web, Sept. 18), Pete Sepp of the National Taxpayers Union mischaracterizes my $7 billion annual estimate of the potential sales-tax revenue permanent renewal of the federal Internet Tax Freedom Act (ITFA) could strip from state and local tax bases. Mr. Sepp asserts that state and local taxes on Internet-access services will rise by $7 billion if Congress fails to renew the law before it expires in December. That is a misrepresentation of the estimate, however. States would have to affirmatively decide to tax the service, and there is little enthusiasm among state and local officials to do so. Indeed, several states have repealed their Internet-access service taxes. It is highly unlikely that more than a handful of states would consider taxing the service if ITFA lapsed, and none did so in the 13 months in which the law lapsed in 2003-2004.

We support state and local governments’ right to tax Internet-access services in the same way they tax other comparable services. For example, there is no justification for leaving a state free to tax cable-TV service but barring it from taxing the Internet access that allows a subscriber to stream the same movies and TV shows via Netflix. However, that should be a state decision, for which taxpayers are capable of holding their officials accountable.


Center on Budget and Policy Priorities


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