The Coming 15.3 Percent Internet Tax

The internet is a tax free environment, right? Not a chance, my friend. The states are after sales tax revenues and now the federal government is proposing a 15.3 percent internet tax.

There is plenty to get mad about when it comes to the Great Recession. One thing that doesn't get nearly enough mention is the transfer of debt from the private sector to the public one. From bad mortgages to flailing auto manufactures to [don't get me started] to big to fail banks, all the bad debt accumulated was transferred on to the ledger of the federal government. We won't even get into the situation with states.

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All and all, the government is now thrashing around for tax revenues and guess who is going to end up paying. Yes, you and me. So, have you heard about the 15.3 percent tax that will be applied to the internet? No? It is no surprise. The tax is what I like to call a horizontal shifter. It isn't really a new tax per se. Instead, it is an old tax that is being applied to a new medium. Let's take a closer look.

The tax in question is known as the Universal Service Fund Tax. It is a 15.3 percent tax that is currently applied to telephones regardless of whether they are landlines or mobile. The FCC controls the tax. The Chairman of the agency is Julius Genachowski. He testified in August of 2010 before Congress and noted that he wants to have the tax applied to broadband internet access as well. That would be the service you are using now to read this article.

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There is going to be some debate on this proposed internet tax sooner or later, right? It is unlikely. The FCC Chairman appears as though he is going to try to pass it as a broadcasting rule. Yes, he'll simply issue an order and suddenly we will all be paying the tax. Oh, and it might be far more than 15.3 percent. Using this procedure, the number could be set at any figure.

Ah, and you thought government without representation went out with the British.

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