If the recent events in Africa and the Middle East have told us anything, it’s that the Internet is important. I mean really important.
So important, in fact, that our federal government has enacted an impressive amount of legislation to keep it free, open, and accessible.
Free? As in no taxes? Well, yes, sort of.
Long ago, in the dim past, when the Internet as we know it hit Main Street (that’s around 1990 for anyone who’s keeping track), the Internet was blissfully free of government regulation and taxation at any level. That blissful state began to change by the mid-90s as local and state governments recognized a potential cash cow.
But the federal government, in one of its more generous — and prescient — moments, realized that the free and open access to information provided by the Internet was too important to allow that access to be impeded by taxation. So in 1998, President Bill Clinton signed into law the Internet Tax Freedom Act. This law bars federal, state, and local governments from taxing Internet access and from imposing discriminatory Internet-only taxes — things like bit taxes, bandwidth taxes, and email taxes.
The Internet Tax Freedom Act has been extended three times by Congress, the most recent being the 2007 extension, which was signed into law by President George W. Bush. The belief in Internet Tax Freedom crosses party lines.
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The current moratorium on the Internet access tax runs out in 2014. In an attempt to permanently eliminate the tax, Senator John Ensign (R-NV) has introduced S. 135: The Permanent Internet Tax Freedom Act of 2011. The bill 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.
Sounds great, right? Sure, as long as you don’t live in one of 10 states that cut a deal with the federal government when the first Internet tax moratorium took effect. Those ten states are Hawaii, New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas, Washington, and — you guessed it — Wisconsin.
According to the Wisconsin Department of Revenue, “Sales of Internet access services are subject to Wisconsin sales or use tax if the service originates or terminates in Wisconsin and is charged to a service address in Wisconsin. Although the federal Internet Tax Freedom Act was recently amended to extend the moratorium on the taxation of Internet access services until November 1, 2014, Wisconsin remains exempt from the moratorium. Therefore, Wisconsin sales and use taxes continue to apply to the monthly fees paid by customers to access the Internet.”
Not all of Wisconsin’s representatives think the tax is a good idea. Rep. Jim Sensenbrenner (R-5th district) has opposed the tax in the past, saying “As one of only a handful of states that taxes Internet access, Wisconsin’s growth and ability to remain competitive in the technology sector is seriously hampered. Removing this tax is a step toward eliminating Wisconsin’s ‘high-tax’ reputation.” However, Rep. Sensenbrenner has yet to declare his support for the permanent Internet tax ban.
With Republicans now controlling the Wisconsin State government, will the Internet access tax be slated for elimination? Perhaps. Only time will tell whether a belief in the importance of unimpeded access to the Internet trumps an easy access to millions in revenue.