Yesterday I noted a WaPo story about House Majority Whip Roy Blunt (R, Missouri), who tried at the last minute to slip a provision that limited the sale of tobacco products over the Internet into the bill that created the Department of Homeland Security. This morning, I found this &c piece which gives Blunt some benefit of the doubt. What caught my eye, though, was a statement made by Senators Orrin Hatch and Herb Kohl, who are sponsoring a bill in the Senate to do the same kind of Internet tobacco crackdown that Blunt shilled for earlier. Here's how the senators characterize selling ciggies in cyberspace:
"unfair not only to ... individual states, but also to the brick and mortar retailers ... placing these businesses at an unfair commercial disadvantage."
The Internet economy, as spam shows, turns out to be like a garden: Leave it alone and you will not get (as you might assume in theory) a profusion of wild and interesting growth. No--you'll get the entire space choked off by the most noxious and aggressive weed. And spam has reached the point where it calls for a mighty pesticide. An entire range of federal regulations is going to be necessary if the Internet is to be kept usable; and enacting such regulations responsibly will take legislative prudence and care. A do-not-spam list is a first imperative. But it is also a social necessity that the principle of taxing the Internet be established soon. This will mean retiring the (in retrospect) absurdly named Internet Tax Freedom Act of 1998, which placed a moratorium on certain Internet taxes, and was extended in 2001 until November of this year.
It was always unfair not to tax business on the Internet, of course. There is no reason that Amazon.com should enjoy a pricing advantage (a de facto government subsidy) over a corner bookstore. But the most damaging part of the moratorium turns out to have been the most innocent-looking: that it banned charges for Internet access. Something like e-mail "postage" will be required if we are going to change the economic incentives that have invited pornographers, snake-oil salesmen, and other social predators into Americans' living rooms, in some cases hundreds of times a week. There are reasonable ways such postage can be collected. A penny-per-e-mail charge would drive most spammers out of business, subject them to jail time for tax evasion if they hid their operations, and cost the average three-letter-a-day Internet user just ten bucks a year. If even that seems too hard on the small user, then an exemption could be made for up to 5,000 e-mails per annum. If the postage were decried as a tax hike, then it could be used to fund one-to-one tax cuts in other areas--like sales taxes for the brick-and-mortar retail stores that have labored under such an unfair tax disadvantage for the past half decade.