Maine lawmakers clearly made high-speed broadband a priority in 2015 — introducing 35 pieces of legislation aimed at building out fast, affordable Internet access across the state. And with Congress’ passage of a $1.15 trillion spending package late last year, federal legislators made clear their preferences as well. That massive bipartisan budget legislation is far from ideal, but one of the bright spots for taxpayers is an extension of a vital federal law that bans state and local taxes on Internet access. Unfortunately, the extension has a shelf life. Come September, millions of Americans could face double-digit increases in their Internet service bills.
Thankfully, the House of Representatives recognized this threat to consumers and has included a safeguard in a legislative package dealing with U.S. customs issues. The provision, known as the Permanent Internet Tax Freedom Act, will supersede the temporary language included in the budget deal as long as the Senate follows the House’s lead and passes the customs bill.
It seems complicated, but the issue boils down to this: some leaders in Congress’ Upper Chamber — such as Illinois Sen. Dick Durbin, a Democrat, and Tennessee Sen. Lamar Alexander, a Republican — are attempting to derail permanent protection from Internet taxes, despite its overwhelming support on Capitol Hill. They see an opportunity to tie less popular tax issues to the Permanent Internet Tax Freedom Act.
If this situation continues and the Permanent Internet Tax Freedom Act stalls, we could all see new state and local taxes piled on top of existing Internet service prices. In a recent editorial, The Wall Street Journal noted, “The taxers shouldn’t hold hostage the Internet Tax Freedom Act that has broad bipartisan support and that represents a sensible effort … to protect interstate commerce from the predations of parochial politicians.”
But Sens. Angus King and Susan Collins, often cited for their capacity to build coalitions in Congress, may be the key to preventing a costly deadlock.
When the first Internet Tax Moratorium was signed into law in 1998 by President Bill Clinton, the adoption rate for this new information technology soared because costs to consumers (such as taxes) were kept low. In the meantime, while private investment into online infrastructure grew by leaps and bounds, so did the Internet’s capacity and speed. This in turn led to more economic opportunities for small and large businesses, not to mention their workers and customers.
To finally push the Permanent Internet Tax Freedom Act to the president’s desk, leaders in the Senate must rise above the political nonsense and avoid repeating past mistakes — such as trying to link the tax ban’s fate to a separate bill called the Marketplace Fairness Act. This highly controversial legislation, co-sponsored by both of Maine’s senators, would give the go-ahead for states to enforce taxes on businesses outside their borders that sell to customers through the Internet and mail orders. In 2013, Collins actually backed the Marketplace and Internet Tax Fairness Act, which combined the two nonrelated matters into one bill. This would be a disaster for the principles of equal protection and fair tax administration.
The Permanent Internet Tax Freedom Act is a critical measure for families and businesses throughout Maine and across the nation. Hundreds of congressional co-sponsors have affirmed this fact over the years. As such, Collins and King, along with the rest of Congress, should avoid linking the issue of collecting Internet sales taxes in the Marketplace Fairness Act to protecting Americans from Internet access taxes in the Permanent Internet Tax Freedom Act. Taxpayers should not be forced to give up something just to get something they’ve deserved from their elected officials all along.
The best part is, it doesn’t have to be this way. Bipartisan common sense can prevail if lawmakers recognize the importance of keeping massive new tax loads from weighing down the next stage of the Internet’s evolution. Acting quickly on the Permanent Internet Tax Freedom Act is the perfect way of doing so. The Senate should start off 2016 on the right foot by passing the Permanent Internet Tax Freedom Act and ensuring the future of Internet access for all Mainers.
Pete Sepp is president of the National Taxpayers Union (ntu.org), a nonpartisan citizen group founded in 1969.