The Internet Tax Freedom Act passed the House by voice vote this week, and now heads to the Senate. The best news is that it’s a permanent extension. In place since 1998, Harry Reid’s Senate only permitted a one-year extension last year because he wanted a hostage for other negotiations. But the law becomes increasingly important in the age of so-called net neutrality (which takes effect today), because it prevents taxation on Internet and email services in America’s 9,600 tax jurisdictions. House Judiciary Chairman Bob Goodlatte warned that the FCC’s decision to regulate the Internet like telecommunications “emboldens states to apply these telecom taxes to Internet access immediately, should ITFA lapse.” Goodlatte also laid bare the problem with Internet taxes, saying that granting states such powers would allow “lawmakers to dodge accountability for the burdens associated with their policy choices by shifting them onto non-residents who cannot hold them accountable at the ballot box.” Furthermore, he said, “[I]f Congress lets ‘economic presence’ rather than ‘physical presence’ become the standard, states will mostly exempt resident companies from tax obligations while imposing them on out-of-state companies.” In other words, taxation without representation. For those with any sense of American history, that phrase should ring loud and clear.
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