Anti-Internet tax bill heads to House floor

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A House panel on Wednesday moved forward with legislation to permanently bar state and local governments from taxing access to the Internet.

The Judiciary Committee sent the Permanent Internet Tax Freedom Act to the House floor on a 30-4 vote.

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Committee Chairman Bob Goodlatte (R-Va.) called the Internet a “meritocracy” and “the new frontier and medium of opportunity" that should not be hampered with a tax.

“If the moratorium is not renewed, the potential tax burden on consumers will be substantial,” he added, saying that low-income households, who pay a greater share of their income in communications taxes, could be hit worst.

Since 1998, most state and local governments have been banned from enacting taxes on Internet service. But that law expires in November.

The bill passed by the committee on Wednesday would permanently extend the ban on taxing access to the Internet and require the eight states with current taxes that were grandfathered in after 1998 to eliminate them. 

Goodlatte said that it was long past time for those states to move along.

“It has been 16 years,” he said, “time enough to change their tax codes.”

Reps. Jerrold Nadler (D-N.Y.), Bobby Scott (D-Va.), Judy Chu (D-Calif.) and David Cicilline (D-R.I.) voted against the legislation.

Many Democrats tried to push back on the bill by backing an amendment from Rep. John Conyers (D-Mich.), the ranking member on the committee. 

His measure would have extended the prohibition for just four years and allowed states already accepting taxes to keep on bringing in that revenue. The Conyers amendment was defeated 12-21.

“Eliminating those protections would cost states and local governments to lose hundreds of millions of dollars through reduced tax revenue,” Conyers said, noting that Texas could lose as much as $350 million a year.

“Do we tell states you cannot levy taxes on electricity generation or transmission?” added Nadler, who supported the amendment. ”Those are state decisions. I thought members of this body, especially those on the other side of the aisle, supported states' rights.”

Rep. Darrell Issa (R-Calif.), however, responded that the bill was merely “changing the bias” toward banning taxes, but Congress could easily change it again in the future.   

“We’re simply saying do not tax the goose that lays the golden egg,” he said.