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States
Watch Prosperity as Their Prey
by George F. Smith  "Invention
is continually exercised to furnish new pretenses for revenue and
taxation. [Government] watches prosperity as its prey, and permits
none to escape without a tribute." ~ Thomas Paine, Rights of Man
State governments, searching desperately for more pockets to pick
because of “revenue shortfalls,” are casting a predatory eye at the
internet. Not e-commerce – they’re already feeding on that,
though from the states’ standpoint their share is never enough.
What has the states drooling
is the connection fees we pay for internet access -- it amounts to a
huge pile of money. In typical unconstitutional fashion, the
federal government had passed a law telling the states not to touch it,
but the bill expired last weekend. Meanwhile, the Senate is making plans
to renew it under S.150, which would broaden the tax ban and make it
permanent. Lobbyists for the states are fighting it.
According to tech writer Declan McCullagh, the Senate is trying to tell
the states: “[You] may no longer tax telecommunications services (such
as those for telephones, cell phones and pagers) to the extent that
‘such services are used to provide Internet access.’” [1]
But this, he adds, “would prevent state governments from cashing in on
a mammoth source of revenue as emerging technologies like VoIP and Wi-Fi
telephones gain acceptance and more and more handheld devices include
Internet access features.”
Senator Lamar Alexander of Tennessee is leading the charge for state
lobbyists. In a speech on Oct. 22, he argued sardonically that if
internet access is allowed to escape the states’ taxing power, why not
exempt everything else, too? Bad idea, said Alexander; let’s add
internet access to the list of “food, medicine, electricity, natural
gas, water,” and other things states now loot. [2]
Quite unintentionally, he raises a good question – instead of taxing
Net access, why not drop the tax on the others instead and shrink the
size of government?
Markets produce jobs, wealth, and rising standards of living.
Governments undercut market processes; they produce nothing. Most
government today is organized crime elevated to a position of social
respectability. Heavy taxation, along with central bank inflation,
provides the sweetener that attracts the flies to politics.
When the lobbyists picked Alexander, they went to the right man. His
resume is a primer on how to use the political process for personal
advantage. When he was elected governor of Tennessee in 1979, his
net worth was $151,000. By 1991, when Bush Sr. made him Secretary
of Education, his net worth was estimated between $1.5 and $3 million.
Politics pays. As governor, Alexander invested $8,900 in company
for which he helped land a state contract worth $250 million, giving him
a yield of $140,000. On another occasion, he was one of six
investors who purchased a $1 stock option in a newspaper firm that he
later sold for $620,000. The list of dealings is long and includes
a few made by his wife, Honey. [3]
The lobbyists for the Net access grab represent the National Governors
Association, for which Alexander served as chairman in 1985-1986.
If Alexander can turn the states loose on Net access revenue, no doubt
his net worth will not suffer.
David Quam, the director of state-federal relations for the NGA, fears
that S.150 would make a mess of state enrichment fantasies because it
would “take all the telecommunications transmissions used for Internet
access and make them a nontaxable event.” As if to paraphrase an
Ayn Rand fictional villain, Quam added, “There’s a real risk that
the future of telecommunications becomes tax free.” [4]
This is the modern state brain at work. It claims a moral right to
the wealth of producers. To statists, the money they’re after is
not someone else’s; it’s theirs by right. The theory goes that
without government, all of us, including internet access providers,
would be at the mercy of barbarians. Taxes, therefore, are the
necessary means of keeping Attila away.
If government were restricted to its legitimate function of defending
individual rights, which would imply a system of voluntary taxation,
there might be some merit to this argument. Instead, government
has been draining our wealth and curtailing our liberty for the personal
profit of those in power. Thanks to its monopoly on aggression, no
one stands in its way. When government turns its guns on its
citizens, it leaves civilization behind.
Tax historian Charles Adams notes that “patriotism is soluble in taxes
– it dissolves easily.” [5] What
he means is, when people are confronted with high taxes they have a
propensity to rebel, evade, or take flight. Writes Adams: “Tax
laws have taken away liberty more often than foreign invaders.”
Compared to the rebelliousness of our colonial ancestors, our reaction
to taxes is “embarrassingly mild,” he says. Americans are too
complacent. “We have great fear of the tax man—our ancestors
had malice aforethought.” [6]
Without such malice aforethought, we might still be drinking East India
Tea – and the Net itself would be no more than a slave’s daydream.
1
Are
taxes on the way for Net access?, Declan McCullagh
2 Ibid.
3 Lamar
Alexander’s skeleton closet
4 http://www.msnbc.com/news/988632.asp?vts=110420031150
5 Adams, Charles, For Good and Evil: The Impact
of Taxes on the Course of Civilization, Madison Books, Lanham,
MD, 2001, p. 448
6 Ibid., p. xxii
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