Congress considering tax on "all data communications"

This is still a few steps away from being a reality, but the Congressional Joint Committee on Taxation is floating a proposal that the 3% Federal excise tax on telecommunications, which up until now only covered regular telephone lines, be extended to include "all data communications services to end users." According to CNET, that includes broadband, dial-up, cellphones, and VoIP (that means Skype, too). No legislation has been passed or anything, and there's also some alternative proposals that would "merely" extend the tax to cover cellphone calls and/or VoIP calls (as if there weren't enough weird little taxes and regulatory fees added to cellphone bills already). Either way, sounds like the party's over!

[barb dybwad @ Dec 19th 2005 12:09AM]

You knew it was on the way. Ugh.

Seems to me that phone carriers already impose a de facto "tax" on data communications. I mean, what am I really paying sprint an extra $15 a month for - the "privilege" of using my phone minutes to send "data" instead of "voice." Is voice not data? Seems pretty semantic to me.

[josh @ Dec 19th 2005 12:09AM]

/sic

the govt is never wrong (cough cough iraq cough). lets see what other bright ideas they will come up with to help pay off that disaster. They could make a killing taxing air. We citizens have gotten away with free air for waaaaay too long.

[MikeV @ Dec 19th 2005 12:09AM]

What happened to the previous bills that forbid taxes on internet services? Are those due to expire and not be renewed? What's even worse is that in addition to the Federal 3%, Virginia residents could be paying a 5% tax for the same to the state! That's why I moved to VoIP to begin with! To get away from that crap! I was paying over $10/mo in taxes and other fees when I got rid of them!

[MikeV @ Dec 19th 2005 12:09AM]

Oh, and the state tax would include internet service AS WELL AS phone service (including VoIP), and also possibly cable and satellite TV service!

[Gregory Krohne @ Dec 19th 2005 12:09AM]

The US federal government only has the means and authority to tax US citizens and transactions. Wouldn't it be funny if it became cheaper to get your broadband, phone, and/or TV services through another country like Canada, Mexico, Bermuda, or the Bahamas?

[Bill @ Dec 19th 2005 12:09AM]

Wohoo! Yeah, I'm not already paying enough. More please! I'm so used to being taxed on everything that another small tax shouldn't phase me. Good thing a lot of little taxes don't add up to much.

Small taxes are easily passed because they are small. Then a few years down the road there is a small increase. And then another small increase. Eventually the tax is no longer a tiny thing but it was easily justified because it was done in small increments. The money raised has already been spent and nobody likes benefit cuts so the tax is permanent and irrevocable.

I guess I'm in the minority who thinks we should cut spending and reduce taxes. I'd like to keep more of what's mine, please.

[010111 @ Dec 19th 2005 12:09AM]

i'll gladly pay around $8 per month in an internet usage fee or 'tax'. in exchange... i'd like to download as much music as i feel like and from whatever source i feel like regardless of copyright.

thanks!

p.s.
maybe movies also. (you can tack on another $12 or so for that.)

[Lisa M @ Dec 19th 2005 12:09AM]

Locally,I'm paying more for taxes and service fees than I am for actual usage. I cancelled my lost distance phone service for this reason. What a way to jump start the economy!!!

[pixelnate @ Dec 19th 2005 12:09AM]

This is exactly the reason the Bostonians dumped tea in the harbor so many years ago. Taxation without representation. We have no one in office to defend the users of these technologies, and those old fogies have no clue about anything tech related. I mean, what's another 3%. Makes me want to scream. Grab your torches and pitchforks, it's time to march on Washington, and demand an end to senseless taxes.

[Jeff @ Dec 19th 2005 12:09AM]

I'm so sick of these tax-and-spend Republicans.

[YukonDawg @ Dec 19th 2005 12:09AM]

Yes, Jeff, brought to you by the same people that think we need another tax cut for the wealthy and corporations (like Sprint, Cingular, Verizon, etc...)

[colin @ Dec 19th 2005 12:09AM]

Tax on Skype?

Does Skype operate from the US?

I know the US govt. sometimes thinks it runs the world, but it still doesn't control taxes for companies in other countries unless there will be customs bots built into routers (running Windows CE embedded to get some more tax on that purchase) and perhaps a WS-USTax web services protocol?

[Peter Rojas @ Dec 19th 2005 12:09AM]

Wow, before people freak out, if this doesn't end up just being a tax on ISPs then what'd they'd likely be taxing is Skype Out, which does interface with the regular phone network, and does require people its users to pay (which is how you'd be able to tax them). It'd be the same kind of tax they'd levy on Vonage, CallVantage, etc.

[aluxeterna @ Dec 19th 2005 12:09AM]

I'm not against taxes in general--there are plenty of things we take for granted in this country that simply cost a hell of a lot of money. HOWEVER: These little taxes that the policymakers slide in piecemeal, because they think nobody will raise a stink, are a bunch of crap. They are regressive as hell, they add up to a LOT of taxes, and I'd rather raise my income tax (as much as I hate it) than tax everything in little, increasingly burdensome amounts. But, we're so terrified that the superwealthy might have to pay more in taxes if we raise the income tax, so instead, we raise taxes on the things everybody uses and needs, taking the same amount of money out of everyone. The game of 'hidden' taxes is antithetical to transparency in government that our democratic republic requires.

Furthermore, (and most importantly) any tax on communications should be considered in direct violation of the 1st ammendment. The internet is an outlet for free speech. NOTHING MORE. What's next, a decible tax? If you speak louder than a whisper, you owe the gov't? This joint committee ought to be tried for treason. Their lack of patriotism disgusts me.

[Ricky @ Dec 19th 2005 12:09AM]

@dexter,

you might be right, but the idea of more little charges on my cell phone bill is ridiculous. Looking at my latest Cingular bill, there's already:
Regulatory Cost Recovery Fee - .56
Federal Universal Service Charge - 1.55
Texas Infrastructure Fund Reimbursement - .92
Texas Universal Service - 2.95
9-1-1 Service Fee - .50
Federal Excise Tax - 1.25
State Sales Tax - 4.82

I would rather not see a "Federal Data Tax - ???" on there as well. Most of those I have no idea what I'm even paying for!

[Dexter Weatherby @ Dec 19th 2005 12:09AM]

Ricky,

Right, phone service and usage taxes suck. I'm not saying I like them or want them, I'm just try ing to say that saying companies like Skype are subject to these taxes is crazy. It's not the intention of the bill.

Again, I disagree with the bill, but it's not a tax on everything on the internet, your not going to be taxed for IM'ing or Skyping, or Vonaging for that matter. Well lets be honest, you probably will be, but just not with this bill.

[Tidal @ Dec 19th 2005 12:09AM]

We need to contact our representative and tell them NO on this bill. Thats the best we can do right now... see the link for more info.

[DarkSciolist @ Dec 19th 2005 12:09AM]

Actually, the tax on "all data communications" doesn't seem to make any sense on any level... Lets say you charge a tax on a landline phone as they do-- Dialup uses the landline phone by modulating and demodulating sound over it, and there is nothing really distingusihing between a data call and a voice call that would require a new tax... All a data call on a landline is- is a new way of making a voice call, so you are already paying the tax to utilize the communications line and it would be a double tax. Just because I am not speaking doesn't mean a computer isn't doing the equivilant over the same line. It isn't like a computer does some sort of magic to utilize the line in a way that is any different from voice.

Going on to broadband-- a tax on this would make some sense because it isn't currently regulated as a phone line is... and this is something that I could see as being in the works, however what I cannot see as making sense is charging for VoIP in addition to broadband, as the same arguement for VoIP would hold true except in the opposite direction (dial-up and landlines). Charging taxes for broadband would be charging for the communications method, and then charging a tax on VoIP would be a double tax. All VoIP offers is a protocol designed to send speech over a data line. It is still data, and if there was a broadband tax-- you would already be paying a tax on a data line, and VoIP taxing would be uselessly reduntant because it is only a new way of utilizing a data line.

Taxing VoIP is essentially the same as taxing e-mail, the FTP protocol, or even the HTTP protocol: All Seperately. The concept is asinine, because data is data is data.

This shouldn't work, but if it were introduced it would, and nobody is going to care enough to fight it... Additional reduntant taxes on new ways to use old technologies is just wrong if the required base technology is being taxed to begin with.

[Mike @ Dec 19th 2005 12:09AM]

Hold on... Federal Excise Tax on data?

I really want to know why the heck we're still paying a tax that we implemented to fund the War of 1812?

I've always wondered why I have to pay that on my phone bill (even asked some CSRs at Verizon just to have fun messing with them and they have no clue what the tax is for). Now they want to extend it to data???

[eric @ Dec 19th 2005 12:09AM]

Those darn tax and spend republicans. When will it ever end. Well, I guess its technically not a "new" tax.

[Sean @ Dec 19th 2005 12:09AM]

Guess no one read to the bottom of the article:

"Members of the Joint Committee on Taxation include Sens. Charles Grassley, R-Iowa; Orrin Hatch, R-Utah; Max Baucus, D-Mont.; John Rockefeller, D-W.Va.; and representatives Bill Thomas, R-Calif.; and Charles Rangel, D-N.Y."

I see an equal amount of Democrats on that committee as Republicans. What we need is new blood in Washington who understands technology and the finer points of the Constitution.

[ECM @ Dec 19th 2005 12:09AM]

"What we need is new blood in Washington who understands technology and the finer points of the Constitution."

Get this man a congressional seat!

[umijin @ Dec 19th 2005 12:09AM]

Well, they gotta pay for their wars somehow, don't they?

I wonder how they'll package this... "Be a patriot and pay your webtax so that we can keep this country free of terrorists."

Geez...

[UncleVisen @ Dec 19th 2005 12:09AM]

I guess when it comes down to it they're being pressured by the business orientation of the web. It's not like it used to be. I remember back in high school - back when tables were "the thing" and images were "really cool" - when the net was a ubersource of information and sharing. Nowadays it's a wealth of garbage and marketing pitches.

Gotta wonder who's leaning on the House to push this Bill? Bill? Hm... Funny, that. Probably not connected, but I wouldn't be at all surprised to learn that the desire for this Bill was founded in business district, which is having a hard time paying it's own way with so many freely available services. I guess there aren't enough people clicking on ads.. (but then that wouldn't likely affect this would-be tax, now would it?). Online shopping has gone down in the last year, and ironically, it's their own fault!

How can you make a profitable market out of a venue you can't ultimately control? That's what his is really about, isn't it?

Isn't it neat to watch 'em fumble? Trouble is, even though I'm Canadian, I'll eventually suffer the brunt of having to pay for scraped knees... it's just a matter of time before we follow suit. Boy, am I proud now. *sigh*