Don’t Tax the Internet
Columnist Thomas L. Friedman has written that the transformational changes being wrought by the Internet require a reconvening of the Founding Fathers because he believes we are due for as revolutionary a period as the period between 1776 and 1787. He further predicts that the states will lead the revolution as they lose their tax base to e-commerce. Harold Furchtgott-Roth, a member of the Federal Communications Commission, feels strongly that the exploitation of telecommunications and e-commerce competition can’t be centrally managed and that we should allow thousands of “flowers to bloom” and generations of archaic telecommunications regulation to be swept away in the process. I agree, and would add that a rush to tax these new revenue streams would be counter-productive to wealth and job creation that are as yet inconceivable. According to the Cato Institute, state and local governments are awash in funds, and between 1992 and 1998 state revenues grew at almost twice the rate of inflation. As Max Schulz of The Washington Times has written, “the Founding Fathers in their wildest dreams could never have imagined computers or the Internet. But in their wisdom they defined the regulation of interstate commerce as one of the few clearly marked responsibilities of federal authority.” We should make the Internet tax moratorium permanent and let the flowers bloom.