No Internet tax? Then why no phone tax, electricity tax, or gas tax?

Earlier this month, President Bush signed Sen. George Allen’s Internet tax moratorium bill into law. This bill created a four-year moratorium that prevents the feds, states, and localities from imposing taxes on Internet access, email, and certain purchases made over the Internet.

It’s no surprise that a free market lawmaker like George Allen would sponsor such legislation. The surprise is that it passed by an overwhelming 93 votes.

This is a great step for the politicians, as the ability for Democrats and moderate Republicans to turn down potentially hefty tax revenues is like a drug addict turning down free crack.

But this no-tax moratorium begs the question: If politicians successfully argued that no tax on the Internet is a good thing for Americans and the economy, then why can’t they argue the same point for taxes that exist on more vital goods and services, such as phone service, gas, and electricity? This 93-vote majority should immediately be used to eliminate a number of other taxes, using the same rationale.

The argument for a ban on Internet taxes is that they would increase the cost of monthly access fees charged by Juno, AOL, high speed providers, and others by 20-25% – to the point where many individuals and small businesses could not afford access to the Internet and, as Grover Norquist of Americans for Tax Reform put it, could not “share in the wealth of opportunities that the World Wide Web has offered.”

Norquist said that Internet taxes would “hit schools, libraries, hospitals, and families – those who use the Internet for research, education, [and communication].” Allen’s bill “encourages innovation and economic growth by freeing [taxpayers] of excessive taxation and regulation.”

I certainly agree with this assessment, but again I ask, isn’t tax-free telephone service a more important need than tax-free Internet service? If I’m suffering from a heart attack, am I going to e-mail 911 and wait for a response, or am I going to call 911? And if I’m using a dial-up Web service, how am I going to get tax-free Internet access if I don’t have a phone line? If you add up the taxes and fees on your phone bill, they can approach 23%! Why isn’t phone service tax-free, too?

Isn’t having electricity in your house so you can store and cook food, have light in the dark, and wash your clothes, more pressing than having tax-free Internet service? Besides, without electricity, you can’t run your computer to get on the Internet anyway! Why isn’t electricity tax-free, too?

And isn’t tax-free gasoline more important than tax-free Internet service? I think it’s a pretty darn good argument for the strength of the American economy that people can drive to work each morning. How much more robustly could our economy flourish if state and federal governments didn’t tax the heck out of every gallon of gas? Next time you complain that gas companies are colluding against you because gas prices went up by 10 cents, remember that Virginia and the feds tax you an additional 37 cents on every gallon, regardless if the price is $1.98 or $1.08. Why isn’t gas tax-free, too?

And remember, all these taxes on gas, phone service, clothes, food, utilities, and other necessities are all paid with after-tax dollars!

That means you’ve already paid income tax on the money you’re trying to pay your bills with, so that dollar your employer paid you is now only worth about 58 cents when it gets to your wallet (after federal, state, Social Security, and Medicare taxes are taken out). When you pay your Verizon bill with that 58-cent dollar, you’ll pay another 23% tax on your phone service. So the government double-taxes you, and the dollar you earned from your job can only buy you about 44 cents of phone service. Another dollar you earned can only buy you about 42 cents in gas. The rest goes to government.

Don’t misunderstand me – I think banning taxes on Internet access is an important thing, and Sen. Allen is one of the good guys when it comes to tax policy. But our 92 other senators shouldn’t be patting themselves on the back just yet for saving us from Internet taxes, because, by the same rationale, they still have a lot of work to do to save us from a multitude of other taxes than are even more dangerous to Americans, our businesses, and our economy.

Even though the new law gives me tax-free Internet access, it won’t be much use to me if – because of high taxes and surcharges – I won’t be able to afford a phone to get an Internet dial-up line, I won’t be able to afford electricity to run my computer, and I won’t be able to afford gas to get to work every day so I can pay my monthly Internet service bill.