THE BLOG

Congress and the Taxing of Technology

01/30/2013 10:58 am ET | Updated Apr 01, 2013

The approval rating for members of Congress is lower than the IRS and BP during the oil spill. Coming off a fiscal cliff deal that resulted in a tax increase on nearly every American, lawmakers are looking for ways to regain the public's confidence. While many inside the beltway are pointing to grand bargains on major issues such as deficit reduction and immigration, Congress has an opportunity in the next few months to pass three legislative initiatives that are bipartisan, support economic growth and, most importantly, protect consumers from further hits to their wallets.

During the first half of this year, Congress should work to reintroduce two pieces of legislation from last session -- the Wireless Tax Fairness Act and the Digital Goods and Services Tax Fairness Act -- as well as write new legislation to ensure a permanent extension of the Internet tax moratorium.

In the last Congress, the Wireless Tax Fairness Act received overwhelming bipartisan support in the House, but unfortunately was left off the busy Senate calendar at the end of the year. The bill would stop states and localities from piling on surcharges, taxes and fees to monthly consumer wireless bills. Today, wireless services have become the primary mode of communications for many Americans, particularly those of lower income, yet these user taxes are three times higher than sales taxes. Wireless services have become the primary means for consumers to access the Internet, get information, call employers, family and (if necessary) E-911. Why tax what should be encouraged? By enacting this legislation Congress would help consumers in low income and rural areas gain access to 21st century wireless communications.

Similarly, the Digital Goods and Services Tax Fairness Act, also popular for both Democrats and Republicans in the last Congress, should be considered again this year. The legislation, which focusses on the tax treatment for digital goods -- such as downloaded songs, videos and applications -- will prevent discriminatory taxation and double taxation of these goods. By passing this act, Congress would establish a framework that would protect consumers from today's web of pyramid taxation of digital downloads.

For example, if a Virginia consumer downloads a song while waiting for a flight at Baltimore-Washington International Airport, two states may try to tax the purchase. And, if the download comes from a company with services based in a third state like Texas, for example, all three states may try to tax a single download. What a nightmare. By enacting this legislation, the 113th Congress would demonstrate that consumers deserve clarity and should not be the victims of outdated tax policies. The bill will clarify which state has the right to levy the tax.

Lastly, during this Congress' two-year term, the Internet tax moratorium is set to expire. This legislation, which has been in effect since the days of Bill Clinton, stops states and localities from leveling special taxes on Internet access. The absence of these discriminatory taxes and fees is one reason for the rapid adoption of broadband over the last decade and a half and has meant that many consumers who would be unable to afford Internet access can now enjoy the benefits of being online. However, without Congressional action this measure will expire leaving local governments free to reach into consumers' pockets one more time. The 113th Congress can use the first few months of its term to stand up for consumers and make the Internet tax moratorium permanent. Such a measure has in fact just been introduced by Senator Ayotte. Republicans and Democrats in both chambers should work to quickly pass this piece of legislation, as well as other pro-consumer initiatives this year.

The legacy of the 112th Congress is one of gridlock and frustration. Now at a 14% approval rating, this does not have to be the case for this Congress this year. By working on items with a broad bipartisan consensus, Congress can help U.S. consumers and restore America's faith in government. Who knows, by June Congress may even be more popular than the IRS, traffic jams or used car salesmen.