February 9, 2005 12:24 PM PST

Data, Net tax plan divides Republicans

A recent congressional report saying that new taxes could be levied on all Internet and data connections is pitting two influential groups of Republicans against each other.

Sixteen members of Congress have slammed a suggestion from Congress' Joint Committee on Taxation that a tax originally created to pay for the Spanish-American War could be extended to all Internet and data connections this year.

In a letter to the committee sent Tuesday, the House members said they were "perplexed" that the committee would "gratuitously suggest tax increases" that would slow the growth of the U.S. economy. The committee is headed by two Republicans, Sen. Charles Grassley of Iowa and Rep. William Thomas of California.

"Consumers who now enjoy freedom from regressive taxes on Internet access are not tax cheats," the letter says. It charges the committee with finding ways to justify tax hikes when its report was supposed to be about identifying people who were dodging taxes.

"I think the problem lies not with the senators but with staff that is involving itself gratuitously in proposals to raise taxes on the Internet," Rep. Chris Cox, a California Republican who signed the letter, said in a telephone interview with CNET News.com.

George Yin, the tax committee's chief of staff, was not immediately available for comment.

Currently, the 3 percent excise tax applies only to traditional telephone service. But because of technological convergence and the dropping popularity of landlines, the Joint Committee on Taxation said extending the century-old tax to broadband and data links was an "option."

The committee's report, published in late January, said that tax law could be rewritten so the telecommunications levy would cover "all data communications services to end users," including broadband; dial-up; fiber; cable modems; cellular; voice over Internet Protocol (VoIP) and DSL, or digital subscriber line, links. Another option it listed was extending the tax only to VoIP providers, including Internet-only ones like Skype.

Congress enacted the so-called "luxury" excise tax at 1 cent a phone call to pay for the Spanish-American War back in 1898, when only a few thousand phone lines existed in the country. It was repealed in 1902, but was reimposed at 1 cent a call in 1914 to pay for World War I and eventually became permanent at a rate of 3 percent in 1990.

Republicans signing the letter to the tax committee include Chris Cannon, R-Utah; Walter Jones, R-N.C.; Chip Pickering, R-Miss.; Ron Paul, R-Texas; Jeff Miller, R-Fla.; Mark Foley, R-Fla.; Mike Rogers, R-Mich.; Fred Upton, R-Mich; Patrick McHenry, R-N.C.; Jerry Weller, R-Ill.; Rob Simmons, R-Conn.; Charles Bass, R-N.H.; and Vito Fossella, R-N.Y.

Two Democrats, John Lewis, D-Ga. and Anna Eshoo, D-Calif. also signed the letter.

Members of the Joint Committee on Taxation include Orrin Hatch, R-Utah; Max Baucus, D-Mont.; John Rockefeller, D-W.Va.; and representatives Bill Thomas, R-Calif.; and Charles Rangel, D-N.Y.

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You ever notice...
how many times Orrin Hatch's name comes up when it comes to technology. The man is true politician. Talks out both sides of his mouth and hasn't a clue what he's saying. I am really suprised that Utah keeps him in office.

Since we are on the subject of taxes. Why don't we just tax air. I don't mind paying taxes, but this is getting ridiculas. Before long they are going to tax your taxes.
Posted by System Tyrant (1453 comments )
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They already tax your taxes.
Your money is taxed when you pay a Federal Income Tax. When you use part of that income to pay a Federal tax on an item or service, that part of your income is taxed again. I remember a time when the IRS allowed a deduction for most of this kind of double taxation, but we'll never see those days again. If the members of Congress were not exempt to most legislation that is passed, we would probably be living under a completely different set of rules today.
Posted by br77575 (46 comments )
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Are they insane?
Bravo to Chris Cannon, R-Utah; Walter Jones, R-N.C.; Chip Pickering, R-Miss.; Ron Paul, R-Texas; Jeff Miller, R-Fla.; Mark Foley, R-Fla.; Mike Rogers, R-Mich.; Fred Upton, R-Mich; Patrick McHenry, R-N.C.; Jerry Weller, R-Ill.; Rob Simmons, R-Conn.; Charles Bass, R-N.H.; Vito Fossella, R-N.Y.; John Lewis, D-Ga. and Anna Eshoo, D-Calif. for having the guts to stand up against the insane idea of taxing all data communications. This has to be the most moronic ideas I have ever heard. Do these idiots want to totally cripple the US economy? Why is it that politician can't just find a way to get along with less? Why is it they have to come up with new taxes? And why is it that there aren't more Republicans getting mad about this? This kind of bad behavior is just disgusting and does nothing but hurt this country. We are not an under-taxed nation and the government needs to find a way to do more with less just like the rest of us.

<a class="jive-link-external" href="http://russ.johnsonville.net" target="_newWindow">http://russ.johnsonville.net</a>
Posted by russ960 (22 comments )
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Messed up
I can't believe you Americans are still "paying" for a war that took place over 100 years ago! That's ridiculous, whilst the goverment pumps hundreds of billions of dollars elsewhere. I mean, how much could a war 100 years ago really have costed? Even then, why would they propsose putting such a tax on a realm that didn't exist at that time?!?!?

There's a many..many things that don't make sense to me about the American government...or at least how its run...this just adds to that.
Posted by Anomoly9 (83 comments )
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Just goes to show ya  its always somethin!
About a week ago I commented on CNET article Congress proposes tax on all Net, data connections on this same TAXING subject, in my Thars Gold In Dem Thar Hills of Cyber-Utility Bills response.

<a class="jive-link-external" href="http://news.cbsi.com/5208-1028-0.html?forumID=1&#38;threadID=4485&#38;messageID=27376&#38;start=-1" target="_newWindow">http://news.cbsi.com/5208-1028-0.html?forumID=1&#38;threadID=4485&#38;messageID=27376&#38;start=-1</a>

Is it just my phone and broadband utility bills, but are not all who are tethered to, and communicate through, Cyber-Space getting TAXED &#38; FEEed To The MAX by the Feds and their state and local-municipalities already?

Whats up with Chris Cox, Rep CA, BLAMING THE STAFF saying the &the problem lies not with the senators but with staff that is involving itself gratuitously in proposals to raise taxes on the Internet, The old BLAME THE STAFF ploy. THE STAFF takes direction from and works for them, don't they? Next they'll say, Stop us before we tax again or The devil made us tax it.

Then they go and attempt to blame we INFO-COMM techno-geeks saying, technological convergence has caused dropping popularity of landlines and is the contributing reason for them to consider adding Internet taxes. I still have my land-line phone and am still paying their 3% Excise Tax plus Universal Fee, 911 Fee&et al on it. Now they want to laminate another tax layer over these existing taxes &#38; fees on communications.

To paraphrase SNLs Roseanne Rosanna Danna, Just goes to show ya  with Congress its always somethin! If they dont tax one thing, theyll figure a way to tax something else!
Posted by Catgic (106 comments )
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