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I already own a hybrid (a Ford Escape) but am toying with the idea of going for the gusto by trading in the old Ford for a gas-sipping Honda Civic or Toyota Prius hybrid. When I bought my Ford, Uncle Sam sweetened the deal by giving me a tax credit of around $2,000, so my expectation was a similar financial incentive if I went for a more economical model. Not so fast! In its infinite wisdom, the federal government created one of the dumber set of guidelines you could ever imagine.

Once a manufacturer (for instance, Ford, Honda, Toyota, etc.) exceeds sales of 60,000 hybrid vehicles, the IRS phases out tax credits over the course of a year. Since Toyota is killing it with the Prius, it passed the 60,000 mark years ago.

So here's the net effect. If you decide to buy a Prius, decrease the United States' dependence on foreign oil, help improve national security, and do your part to reduce carbon emissions, you get nothing in return because the federal government came up with some lame-brain quota system based on manufacturers and brands of cars. Ridiculous!

I know I'm out on a limb, but I firmly believe that with gas at over $4 per gallon in many areas, the federal government should be reducing the speed limit, pushing states to eliminate tolls, and absolutely persuading taxpayers to buy cars with higher mpg. Given the energy goals we hear everyday from the presidential candidates, the cap on hybrid tax credits is just plain stupid.

The Bush administration on Wednesday hit out at the European Union for imposing taxes on imports of certain electronics in alleged violation of an existing trade agreement.

U.S. Trade Representative Susan Schwab said the United States has filed a formal complaint with the World Trade Organization, which means that U.S. and European officials now have 60 days to consult about the dispute. If they don't reach a resolution at that point, the United States can call for a panel to determine whether the EU is complying with its World Trade Organization obligations under the 1996 Information Technology Agreement (PDF).

U.S. Trade Representative Susan Schwab

(Credit: U.S. Trade Representative)

The ITA, as it's known, counts 71 signatories, including Japan and China, and dictates that a "wide range" of high-tech products must be imported duty-free, according to the U.S. Trade Representative. But Schwab said EU customs officials now claim they can charge taxes on certain products--namely, certain multifunction printers, cable and satellite set-top boxes, and flat-screen monitors--because they incorporate newer features or technologies than those spelled out in the original agreement.

"The EU should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products," Schwab said in a statement. "Therefore, we urge the EU to eliminate permanently the new duties and to cease manipulating tariffs to discourage technological innovation."

Schwab said the U.S. has been raising its concerns with EU officials for the last 20 months but has failed to see progress. She said Japan also plans to join the formal case.

EU representatives were not immediately available for comment.

American high-tech companies were quick to applaud the USTR announcement. The Information Technology Industry Council, whose members include Apple, Dell, Epson, Hewlett-Packard, and Sony, said it's concerned that European countries are currently posing taxes as high as 14 percent on imports of flat-screen monitors, set-top boxes, and multifunction printers. Approximately $70 billion of those products were exported globally in 2007, according to the USTR.

"The EU is violating the letter and spirit of the ITA, which has been the most successful, pro-innovation and pro-growth agreement of the past decade," said John Neuffer, an ITI vice president. "The EU is taxing innovation by removing products from the ITA's zero-tariff status simply because companies have found ways to improve them for businesses and consumers."

Grand Theft Auto: Atlanta, anyone?

That title may not be far off, if the state of Georgia gets its way. Its latest goal, in the name of economic development, is to become the video game production capital of the United States.

Sonny Purdue, governor, Georgia

(Credit: Georgia Governor's Office)

Earlier this week, the state's Republican governor, Sonny Purdue, signed into law a proposal to offer greater tax incentives not only to game producers, but also to music video, movie, and TV production projects.

"The new incentives will put Georgia among the top five states in the U.S., in terms of financial competitiveness for entertainment projects," Ken Stewart, commissioner of the Georgia Department of Economic Development, said in a statement. "We expect to see an increase in the number of industry jobs and overall economic impact for the state in the coming years."

Under the 2008 Entertainment Industry Investment Act, eligible companies that spent at least $500,000 on production costs in the state would be eligible for a 20 percent tax credit on that investment, up from the 9 percent that was previously on the books.

The companies can qualify for an extra 10 percent tax credit, too, but only if they agree to embed promotional ads and animated Georgia logos in their content.

According to a statement from Peach State, the entertainment industry has contributed more than $1.17 billion to Georgia's economy since 2005, when the first wave of tax credits took effect. Georgia, of course, is home to Turner Broadcasting System, the high-power media empire that includes CNN, Cartoon Network, and game network GameTap.

New York's expansive new online sales-tax requirements are drawing mixed responses from major e-tailers that haven't previously collected such fees in the Empire State.

Despite a pending lawsuit challenging the law's constitutionality, Amazon.com has said on its Web site that it still plans to abide by the law and add sales tax to orders shipped to New York when the mandate kicks in June 1.

But online outlet store Overstock.com wants nothing to do with collecting the new tax, according to reports at the Affiliate Tip blog and The New York Times.

A few weeks ago, New York's governor signed a new law that requires any company that pays New York-based entities for "directly or indirectly referring customers" to its retail business to collect sales taxes from New York-based customers. It's an attempt to get around a 1992 U.S. Supreme Court decision in the Quill v. North Dakota case that says retailers aren't required to collect sales taxes from customers who live in states where the businesses don't have a physical presence.

New York's new law directly implicate Amazon, Overstock, and other companies that operate "affiliate" programs, which, in the e-tailers' cases, means they offer commissions to external Web site owners who link to their products and prompt sales. Amazon has hundreds of thousands of such affiliates, although in its court complaint against New York state, the company said it wasn't sure exactly how many were truly located in New York.

Overstock, for its part, is opting to cut off its 3,400 affiliates in New York, telling the Times that it couldn't afford to deal with collecting sales taxes in the state, although it, like Amazon, believes the new policy is unconstitutional. An e-mail from Overstock's affiliate program manager republished by the blog Affiliate Tip characterized the situation as "temporary."

Reportedly inspired by an ongoing legal skirmish in New York, tax officials in Texas are investigating whether Amazon.com should be collecting sales taxes from the Lone Star State's residents.

According to recent reports in the Dallas Morning News, the Texas Comptroller's office is currently looking into whether the Seattle-based e-tailer can be held responsible for paying as many as four years' worth--potentially millions of dollars--of back taxes. Some Texas officials said they weren't aware that Amazon had been operating a distribution center in Irving, Texas, since 2006, until receiving a call from a Morning News reporter last week.

Amazon, for its part, told the newspaper that the state is "fully aware" of its Texas operations and that the company is already in compliance with the state's tax laws. Amazon said state law doesn't require it to collect taxes on its Texas facility, which is operated by a subsidiary called Amazon.com.kydc, the Morning News reported.

But a spokesman for the Texas Comptroller's Office said it was nevertheless continuing a "thorough" investigation of the matter and wasn't sure how long it would take to complete.

It's just the latest chapter in the broader debate over sales taxes on Internet-based purchases. In 1992, the U.S. Supreme Court ruled in its landmark Quill v. North Dakota case that retailers aren't required to collect sales taxes from customers who live in states where the businesses don't have a physical presence, or "nexus."

So far, nothing has happened to change that decision, though Congress has considered taking steps in that direction, and some states are banding together in a strictly voluntary effort known as the Streamlined Sales Tax Project, which is designed to make tax collection easier for retailers.

Technically, Americans residing in states with sales taxes--Texas included--are already supposed to keep track of out-of-state purchases and cough up the necessary sales tax on April 15 through a concept known as a "use tax."

State officials, however, argue that most Americans don't actually do so, potentially depriving them of millions of dollars in revenue, particularly as e-commerce sales continue to grow. The Dallas Morning News article said Texas officials estimated losing $541 million in uncollected sales taxes in 2006 to online commerce.

Earlier this month, Amazon sued New York state over a new law requiring sales tax collection by companies that pay New York-based entities for "directly or indirectly referring customers" to their businesses. That provision directly implicates Amazon "affiliates" through its "Associates Program," to whom it pays a commission for linking to products for sale on its Web site, and the Internet merchant argued that the law is "invalid, illegal, and unconstitutional."

According to its Web site, Amazon currently collects sales tax on items sold and shipped to the states of Kansas, Kentucky, North Dakota, and Washington. Some of its merchants, such as Target, collect taxes in other states as well.

As expected, Amazon.com is hitting back at New York over a new law requiring online retailers to collect sales taxes from customers residing in that state.

In a complaint filed on April 25, Amazon asked the New York State Supreme Court to declare the recently passed law "invalid, illegal, and unconstitutional." (Wired.com, which reported the lawsuit earlier this week, has posted a PDF of the document.)

New York has long required vendors to collect taxes from customers in its state if they "solicit business" there, according to Amazon's complaint. But a few weeks ago, the state passed a new law, as part of its state budget, that expanded the meaning of "solicit" to include any company that pays New York-based entities for "directly or indirectly referring customers" to its retail business, or risk "hefty civil and criminal penalties," Amazon wrote in its complaint.

That expanded definition clearly implicates Amazon, which says it has hundreds of thousands of independent Web site "affiliates" through its "Associates Program" to whom it pays a commission for linking to products for sale on its Web site.

Amazon in its complaint contended that the statute violates the equal protection clause of the U.S. and New York constitutions because it "intentionally targets" the company, noting that some state officials have even described the new policy as the "Amazon tax."

The Seattle-based e-tailer also argues that the statute is unconstitutional because it imposes tax-collection obligations on an out-of-state retailer without a "substantial" physical presence in New York. Amazon, for its part, said it "does not own, lease or otherwise occupy any physical property in the state, and none of its employees works or resides in the state."

A 1992 U.S. Supreme Court decision in the Quill v. North Dakota case currently limits states' ability to collect sales taxes from out-of-state retailers. It says retailers aren't required to collect sales taxes from customers who live in states where the businesses don't have a physical presence, or "nexus." New York's new statute represents one attempt at getting around those limitations.

Technically, of course, Americans in states with sales taxes are supposed to keep track of out-of-state purchases and cough up the necessary sales tax on April 15--a concept known as a "use tax." But state officials argue most Americans don't actually do so, potentially depriving them of millions of dollars in revenue, particularly as e-commerce sales continue to grow.

Amazon also argues that the new statue is "overly broad and vague." The company said it has "no way of knowing" whether affiliates who provide New York addresses are actually legal residents of New York--or whether their particular advertisements "qualif(y) as a direct or indirect solicitation on behalf of Amazon."

The litigation is hardly unexpected. Even Neal Osten, federal affairs counsel for the National Conference of State Legislatures, told CNET News.com recently that his lobby group for state politicians would actually discourage the somewhat unique approach taken by New York because it is "probably going to be litigated and will therefore cause delay" in collecting taxes. Other states are seeking to at least some recover sales taxes potentially lost to Internet purchases by signing up for an as-yet voluntary program known as the streamlined sales tax project.

Amazon's complaint instructs the New York State Department of Taxation to file its response with the court within the next few weeks. A department representative told The New York Times on Thursday that the state won't publicly comment on the lawsuit until that document is filed.

Now this is a passionate user base.

Protesters turned out to riot and burn photos at a press conference in Seoul Wednesday held by former Samsung top lawyer, Kim Yong-Chul, and the Associated Press got a great photo of the civil disobediance in action.

We're not allowed to run AP photos (we don't pay for the service, but if anyone has their own photos, please send them my way at Erica dot Ogg at cnet.com), but Engadget has the image, so be sure to check it out.

The company's former lawyer held the press conference to call for punishment of Samsung's former chairman, Lee Kun-Hee, who stepped down Tuesday after being indicted on tax evasion charges.

The rioters are apparently angry with Kim, whose admission to prosecutors about the existence of a $215 million company slush fund used to bribe public officials touched off a high-profile investigation into South Korea's largest company, which has long been a symbol of national pride.

Lee was cleared on charges related to the slush fund, but was also indicted on breach of trust for helping to arrange the sale of company stock to his son and unfairly low prices.

Nine other Samsung executives were indicted on charges similar to Lee's.

Samsung Chairman Lee Kun-Hee was indicted on charges of evading taxes on billions of dollars he hid in stock accounts under the names of his aides, The New York Times is reporting.

Samsung Chairman Lee Kun-Hee

(Credit: Samsung)

He also faces criminal charges of breach of trust, stemming from his involvement in arranging for company subsidiaries "to sell stock to his son" at "unfairly low prices" to help his son "take over management control," The Times says. Lee was cleared, however, of more serious allegations he starting a slush fund worth $215 million used to bribe prosecutors, judges, and other public officials.

Nine other Samsung executives were indicted on charges similar to Lee's, but none were arrested. Lee wasn't arrested either.

Still, the charges aren't good for the image of South Korea's largest company. Samsung operates in many industries, but is primarily known for its electronics. The company is one of the largest television manufacturers in the world, and is also a leading handset maker.

Lee thus far has maintained his title, however Samsung is planning a related restructuring, the details of which will be disclosed next week, according to The Wall Street Journal.

A bipartisan bill introduced Tuesday in the House of Representatives would ban new state or local takes on mobile phone services for a period of five years. Sponsored by Rep. Zoe Lofgren (D-Calif.) and five co-sponsors, the bill is known as the Cell Tax Fairness Act (HR 5793 ).

In a statement, Lofgren said that between January 2003 and July 2007, the taxation rate on wireless services increased four times faster than the rate for other taxable goods and services. As a result, consumers pay 15.19 percent in federal, state, and local taxes on their cell phone bill, compared with 7.07 percent in taxes for most other goods and services.

"The Cell Tax Fairness Act will help ensure that consumers make choices about communications technology based on the merits of that technology, rather than on the rate of taxation," Lofgren said. The legislation "does not take away any existing revenue for state or local governments."

The bill, which is similar to Senate legislation introduced last year, would not affect current taxes, nor does it call for a ban on any new federal taxes. Furthermore, the ban would not apply to fees meant to subsidize emergency 911 services nor the universal service charge, which funds telecommunications infrastructure for low-income and rural residents. The federal excise tax on phone services, which was originally created to support the Spanish-American War, was dropped by the Internal Revenue Service and the Department of the Treasury in August 2006.

The wireless industry's lobbying arm, the Cellular Telecommunications Industry Association (CTIA), is supporting the bill, calling it "a step in the right direction." In its own statement, the association joined Lofgren in saying that a ban on new taxes would help encourage new innovation in the wireless sector. "We should do everything in our power to remove the roadblocks--such as excessive, discriminatory wireless taxes--that stand in the way of progress," said CTIA President and CEO Steve Largent.

Cell phones taxes and fees have been the target of a few bills in Congress since the Democrats regained control of the House, but lawmakers and the CTIA haven't always seen eye to eye. Separate bills in both the Senate and the House propose eliminating early termination fees and handset locking. The latter issue has become particularly controversial following AT&T's well-publicized lock on the iPhone, even though handset locking has been standard practice in the industry for years. Though the Senate bill won support from Senators in a hearing held in October, Largent and the CTIA have declined to support it, calling it "unnecessary."