Federalism

A Permanent Internet Tax Freedom Act

An idea whose time has come

It only took 18 painstaking years, but the Internet Tax Freedom Act (ITFA) is close to becoming a permanent reality. By an overwhelmingly bipartisan vote of 75-20, the U.S. Senate provided final congressional passage of H.R. 644, the Trade Facilitation and Trade Enforcement Act – which includes a permanent extension of ITFA. Having long supported this commonsense, consumer-friendly policy, members of the American Legislative Exchange Council (ALEC) celebrate this news as a great victory for millions of hardworking taxpayers across America.

Originally intended to be permanent, but negotiated to be temporary, ITFA bans state and local taxes on Internet access, while also prohibiting “multiple or discriminatory taxes on electronic commerce.” ITFA was sponsored by Congressman Chris Cox (R-CA) and Senator Ron Wyden (D-OR) and signed into law in 1998 by a large bipartisan majority. Subsequently, ITFA was renewed multiple times since 1998 by Congresses controlled by both parties, as well as both Republican and Democrat presidents.

Reflecting on her efforts to support a permanent ITFA since the beginning, ALEC CEO Lisa B. Nelson said, “This is fantastic news. I’ve had the pleasure of working alongside some of the best and brightest on this issue – leaders like George Allen, Chris Cox and Ron Wyden – to protect hardworking taxpayers. As a result of ITFA’s permanent extension, I’m proud to say that overzealous taxing authorities will be banned from harming innovation through discriminatory taxation of internet access and e-commerce.”

Before ITFA was signed into law, taxes on internet access were passed in seven states. These jurisdictions were “grandfathered,” meaning they were allowed to continue levying such taxes. The permanent extension of ITFA eliminates the grandfather exemption and provides meaningful tax relief.

There are legion more online tax policies to be improved, on behalf of all Americans, but for today we celebrate the permanence of one of the most important protections for taxpayers against discriminatory taxation.


In Depth: Federalism

Genuine accountability to hardworking taxpayers results when state and local legislators work with members of the community to determine a plan of action that is right for each individual state, city or town. Real solutions to America’s challenges can be found in the states – America’s fifty laboratories of democracy …

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