Bridge Span 13-15: Who Supports The New Attack on the Internet?

The data is in and there is little room for argument, elected officials who support the so-called “Marketplace Fairness Act,” which if enacted would allow states to collect sales tax on purchases from out-of-state retailers that do not have physical locations in their jurisdiction, will have few voters supporting them.  In fact, the issue is a complete loser across the board, except for one glaring exception.

Mercury, a public affairs firm, conducted a poll that was released last month and provides abundant evidence that the American people have heard enough about the national sales tax collection scheme to be placed on merchants that use the Internet and have utterly rejected it, with 57% opposing and only 35% supporting such efforts.

One might believe that since anti-tax conservatives hate this idea they must have driven up the numbers.  It is true that conservatives oppose the idea by a 37.5% margin, but moderates reject it by a 15% margin and even liberals more often reject than accept the idea.  Taken another way, you can pick your favorite ideological or even swing voter category, such as women, young women, moderates, independents or split ticket voters, and find that they all reject the idea.

Of course we expect people to reject having taxes forced upon them, right?  As it turns out, while voters are not fans of a tax it is not the tax that most turns people away – it is the radical expansion of government power.  When the expansion of state tax collection, for example allowing California to reach outside of its state to collect tax and subject residents of Texas to audits, is fully explained those opposing the idea leaps to 70% with less than 23% liking the idea.

Perhaps it is simply a biased poll?  A Gallup poll from June says otherwise, as the results were remarkably consistent with the Mercury poll.

All said, no matter what excuse some might try the bottom line is that American voters oppose the very idea by massive margins, and the more they learn about it the less they like it.  In fact, the GOP feels so strongly that 71% of GOP voters will vote for a candidate who opposed a national sales tax collection mandate for online merchants before they would vote for anyone who supported such an ill-conceived notion.  71%!  Few other issues would rally that base so effectively.

This is an across-the-board rejection of big government on the Internet.

Imagine the sad faces of those 21 GOP Senators who already voted for the legislation, especially if they draw a primary opponent in this election cycle.  Establishment Senators Mike Enzi of Wyoming, Lamar Alexander of Tennessee and Lindsey Graham of South Carolina, and other 18 Senate Republicans can only hope that voters pay little attention to their voting records. 

Supportive politicians can rely on that glaring exception, and still have one group to support them — consumers who have never shopped online (that is 15% of the electorate) slightly prefer the plan by 8%.  So the base of support works out to be 8% of 15%, or 1.2% of the electorate. 

Looks like those who support the “Marketplace Fairness Act” are truly on the side of the 1%.

Bridge Span 13-14: Mobile Shout Out From the White House

An industry can take some comfort in its accomplishments when it is used as the benchmark for measuring success made affordable.   As reported in late August President Obama was discussing health care insurance during a radio interview, when, in referencing the Affordable Care Act he said, “We were just talking with some folks earlier about the fact that, for a lot of people, it will be cheaper than your cell phone bill.”

Expanded services, an increasing number of plan and device options, more usage, and now being held up as an industry noted for its affordability – the wireless industry is on a roll!

A recent report by the Consumer Electronics Association (CEA) “Smartphones: Consumer Behavioral Trends,” indicates that the smartphone continues its development as a communications and data hub.  The numbers are not so surprising for an even a casual observer of technology use, but now they are demonstrated with empirical evidence.

While a typical smartphone user is still using the device as a phone, about 20% of the time, they are more than twice as likely, at 43%, to be using it for communications of other sorts, such as email, text or social networking.  Fourteen percent of the time they are surfing the Web.

The variety of apps being used is also impressive, even if somewhat predictable.  From weather to social networking to navigation and of course video, smartphone users are heavy app users.

As CEA chief economist Shawn DuBravac comments, “The degree to which consumers use their smartphones primarily as data information hubs, mostly forgoing devices’ traditional purpose, is significant.  Smartphones have become the viewfinder of our digital life. How smartphone utilization evolves has incredible implications moving forward.” http://www.telecompetitor.com/cea-u-s-smartphones-used-114-minutes-daily-only-23-minutes-for-talking/  One implication?  All of this activity by users requires more data connectivity.

Data connectivity to millions of users who are on the move using games, video and voice is no small feat.  And even thought two-thirds of online U.S. consumers already own smartphones, the appeal, and the corresponding challenge for providers, only continues, as 45% of all consumers expressed an intention to purchase one in the next year.  Those who don’t own a smartphone? Sixty-one percent intend to snap one up soon.  More challenges to be met by industry as they serve more connectivity to more people more often.

The President is correct to use the mobile industry as a benchmark of service and product success at affordable prices, and consumers clearly agree given the continuing strong demand.  But he is wrong to analogize to the “Affordable Care Act” when a recent CNN/Opinion Research shows that 57% of consumers do not want it, and with various pieces being rolled back because they actually fail to work.

Government could learn many valuable lessons from the wireless industry about delivery of complicated products done in a way that consumers enjoy and at price level that cause the President to gush.  Perhaps the President himself has made the best case for making sure that government is out of the way of wireless, and allowing this highly competitive industry to continue its success.

Bridge Span 13-13: A Permanent End to Online Discrimination

For more than 15 years, four different times, the battles against the pro-tax thugs who want to loot the Internet with multiple and discriminatory taxes have continued. The latest battle is forming up as detailed in a new piece I wrote for IPI.  Once again making the Internet moratorium permanent, and removing the many grandfathered exceptions made for various states, and to prohibit multiple or discriminatory taxes online, is up for debate as the clock begins to run out on the current moratorium.

To further this end Senators Wyden and Thune introduced the Internet Tax Freedom Forever Act in the Senate, and this week Congressmen Goodlatte and Eshoo introduced the Permanent Internet Tax Freedom Act in the House.

The reality has changed since the moratorium was first put in place in 1998 as increasingly, online access means mobile access.  When the law was drafted mobility was defined as how far a PC could be moved before the telephone line snapped out its wall jack.  These days not getting perfect reception anywhere and at any time seems cause for outrage.

 

And while access taxes are certainly a bad idea when applied to fixed access their discriminatory roots are amplified when applied to mobile access, as such tax is nothing more than a double tax on the same service.  Already wireless taxes are at abusive levels.  Nationally, the average tax rate on wireless service is now at 17.2%, or 232% higher than the 7.4% average sales tax rate imposed upon other goods and services.  For more on overall tax burden placed on wireless check out this entertaining video.

 

And the opportunities for increasingly creative multiple or discriminatory taxes are endless if one understands how mobile works, and if the moratorium were no longer in place. (another entertaining video)

 

The Internet tax moratorium was always supposed to be permanent.  The drafters of it could never imagine a time when discriminatory taxes placed on those who operated online would be acceptable, or when double taxing the provision of Internet access would be good public policy.

 

Fifteen years after it was first enacted it is time to finally make permanent the Internet tax moratorium, finally turning away those who are unfairly looking for an easy tax payday.