Jack Kemp

Ronald Reagan said famously, "The trouble with those on 'the left': if they see something move, they'll tax it, if it keeps moving, they'll regulate it, and if it stops moving, they'll subsidize it." We would add, as longtime "tax cutters," that unfortunately, all too often, that phenomenon is also occurring on "the right."

Sens. Chuck Grassley, R-Iowa, and Max Baucus, D-Mont., are co-sponsoring a bill to tax private equity firms that go public, as "ordinary income," not as a partnership. Sen. Lindsey Graham, R-S.C., and Sen. Charles E. Schumer, D-N.Y., are willing to put a 27 percent tax (aka "tariff") on China, if China doesn't de-link the yuan from the dollar. Now Sens. Lamar Alexander, R-Tenn., and Thomas R. Carper, D-Del., want to permit the future taxation of Internet services via their new temporary Internet tax moratorium bill that ostensibly closes tax loopholes.

For everyone's background information, we want to explain some of these Internet nuances, and why the tax-free moratorium should be made permanent. Today's Internet is an exciting and ever-evolving engine of phenomenal technological growth for our digital economy. The Internet also knows no political boundaries. Democrats and Republicans alike have identified high-speed Internet deployment, affordability and accessibility - for Americans from across all social backgrounds, in both rural and urban areas - as an important policy goal that all can agree upon.

Since 1998, an existing Federal moratorium placed on unfair state and local taxes on Internet access and commerce has protected the average Internet surfer, small and large businesses, shoppers, students, seniors, policy experts, researchers and many others from multiple and discriminatory taxes on their varying levels of Internet usage.

Twice, this moratorium has been extended in Washington, in 2001 and 2004, both times with a large number of bipartisan co-sponsors and ultimately, bipartisan votes on the House and Senate floors. Unfortunately, the current Internet tax moratorium is again set to expire in late November 2007.

Sens. Ron Wyden, D-Ore., and John McCain, R-Ariz., and Reps. Anna Eshoo, D-Calif., and Bob Goodlatte, R-Va., have introduced legislation to make this moratorium permanent. Passage of the Permanent Internet Tax Freedom Act of 2007 would provide the crucial first step needed to ensure that Internet access is not subject to discriminatory taxes that would limit consumer choice, hurt innovation, and undermine our global competitiveness.

Jack Kemp

Jack Kemp is Founder and Chairman of Kemp Partners and a contributing columnist to Townhall.com.
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