Tax Reform

Whose Money is it, Anyway?

As a part of Congress’ recent scramble to pass a spending package, Representative Bob Goodlatte (R-VA) and others have spearheaded efforts to reignite interest in the Permanent Internet Tax Freedom Act (PITFA).

Jonathan Williams, Vice President of the ALEC Center for State Fiscal Reform and Bartlett Cleland, Vice President of the ALEC Center for Innovation and Technology, recently wrote about the history and pro-taxpayer impact of PITFA.  In short, PITFA would make permanent the Internet Tax Freedom Act (ITFA). In 1998, ITFA put a moratorium on “taxes on Internet access,” among other things. However, preexisting laws in seven states were “grandfathered” in and consumers in those jurisdictions suffer additional taxes on their internet access.

PITFA would eliminate the grandfather exemption by 2020, reducing the tax burden on millions of consumers. Perhaps forgetting that wealth is generated by the individual and not by the state, some big-government advocates and pundits have rekindled the tired refrain: Where will our underfunded government get its revenues now? We are subjected to arguments the welfare of state should be above the rights of the taxpayer.

Balking at Texas’ potentially losing grandfathered status, Congresswoman Sheila Jackson Lee (D-TX) seems solely interested in securing the government’s revenue stream, saying, “Even though there is a four-year lapse, you are grandfathering this, and my own state of Texas will lose $358 million.”

Opponents of PITFA exhibit a fundamental misunderstanding of what an internet access tax moratorium would accomplish. No money would leave Texas because of PITFA. Rather, the money would stay in the possession of Texas-based consumers where it belongs. Some estimates indicate the sort of taxes PITFA addresses could represent between $50 and $75 per customer per year; in many locations, that amount is more than the cost of an entire month of internet access.

If the consequences of banning internet access taxes are so dire, why would there be such broad support for the measure? Rep. Goodlatte’s standalone PITFA bill passed the House of Representatives by voice vote, a procedure generally used for non-controversial measures with significant bipartisan support. Counted among PITFA’s cosponsors are 31 out of a potential 77 House Members from the seven grandfathered states. Individuals support PITFA because they know it would have a measurable, positive impact on the states they were elected to represent.

Being from Texas, Rep. Jackson Lee should be very familiar with the benefits of pro-growth, pro-consumer policies, because the American people certainly are. Because of Texas’ long-time emphasis on limited government and adherence to free market policies, people are flocking to the Lone Star State. Between 2004-2013, on net, more than 1.2 million Americans moved to Texas from the other 49 states for the opportunity to participate in its economic successes. Over the past ten years alone, the population shift in Texas’ favor has resulted in four additional seats in the House, meaning Rep. Jackson Lee has Texas’ sound policies to thank for the increase in her state’s delegation. The state also routinely ranks highly in the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. As a state, Texas has done an excellent job in setting priorities, emphasizing economic freedom and allowing the private sector to innovate and create prosperity.

For years, ALEC has taken the lead in protecting the internet’s ability to drive innovation and create widespread opportunity, including maintaining model policy calling for a permanent moratorium on taxing internet access. It is the mission of ALEC to advance limited government to ensure widespread economic opportunities, and policies that keep money in the hands of the taxpayers are the best vehicle for cultivating the most growth and success. Unlike the positions touted by big government’s tireless advocates, the policies  ALEC supports produce maximum economic freedom for all taxpayers.


In Depth: Tax Reform

Mainstream economists, small business owners and taxpayers across the country understand that growth-oriented reforms mean increased opportunity for all. As demonstrated by the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, sound tax and fiscal policies are critical to economic health, allowing businesses and households to flourish. A …

+ Tax Reform In Depth