Congress, the Internet, and Those “Very, Very Small” Taxes

The Senate may not extend the prohibition on Internet taxes. The impact of this will be significant and potentially destroy the positive impact of this new technology.

A few years ago, I worked with a business partner to set up a business providing services to the Federal government. Neither of us lived in Washington, DC and a lot of people said it couldn’t work outside of DC. We were one of the first companies to start using the Internet and it was a primary reason the business became successful.

I sold the business and moved to a rural area and with other family members set up an Internet based business in Tennessee. Our server is in Alabama. Our webmaster is in Florida. Our readers live all over the world.

I am still amazed at how this can work. Articles written in a remote Tennessee county are delivered in minutes or seconds to federal offices in New York, Washington, DC, San Francisco and Naples, Italy.

Some readers tell us should be located in Washington to be closer to the action. They may be right. I used to live there and it’s not a bad place to live. The restaurants are great, the people are intelligent and ambitious and bustling activity is everywhere. Many of our news stories emanate from the actions and decisions people are making in Washington. We could probably make more money there (or at least make some money). But there is a lot of pavement, too much traffic, and it’s very expensive. The Internet gives us a choice that didn’t exist until very recently.

One of our senators is Lamar Alexander. I have never met him but I don’t think he understands the Internet or the impact it is having on ordinary people.

A few years ago, could not have existed. The Internet makes that possible. But Senator Alexander wants to allows states and local governments to start taxing e-mail, Internet searches, and even accessing this new technology. Today, local governments can’t levy these taxes because of a federal law prohibiting them from doing so. This moratorium expires on October 31st. Senator Alexander is one of the Senate co-sponsors of a bill designed to let that happen. After this Friday, state and local governments can and certainly will start doing so. Minnesota Senator Mark Dayton has already suggested “looking at some very, very small charge for every e-mail sent.”

The Internet is a revolution. It impacts our lifestyles. It empowers individuals. It makes rich and powerful politicians nervous. People can communicate quickly, easily, and inexpensively. It can threaten the status of powerful politicians by quickly and easily disseminating information on their decisions and their actions.

Supreme Court Justice John Marshall said during the early years of the US Supreme Court that the power to tax is the power to destroy. Taxing e-mail and Internet searches will destroy thousands of new businesses. It will take away the ability of ordinary people to communicate quickly and effectively.

If any medium or industry falls under the Interstate Commerce Clause of the Constitution, it has to be the Internet. Senator Alexander apparently wants to let states that need more money start taxing e-mail that passes through servers on their taxing turf. Those “very, very small charge[s]” Senator Dayton sees in our future will quickly add up and those free e-mail newsletters from companies like USA Today, the New York Times, Hallmark cards, confirmation of prescriptions through Blue Cross (yes, and the one from won’t be free anymore. Many won’t exist because of the “very, very small” charges levied at every level.

It isn’t clear if the Senators who want to ban the prohibition on Internet taxes, don’t use the Internet, don’t understand it or are afraid of it.

But if you want to see the Internet continue to expand into our everyday life, you need to tell your Senator your views right away. Just go to to get the name and e-mail address of your Senator. Or contact Senator Lamar Alexander’s office by e-mail at or fax him at 202-224-4944 or call his office on 202-224-4944

If you want to express your views, don’t wait to do it. The prohibition on imposing Internet taxes expires Friday.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47