Steve Cameron: A slice of Internet pie

Steve Cameron

You don't need a degree in economics to add and subtract.

So let's try some simple math, shall we?

During the "debate" that preceded passage of the health care reform law there was a lot of huffing and puffing about cost.

Specifically, Republicans claimed they were opposed to any tweaking of the health insurance industry because, somehow, it would add to the growing national debt.

(Never mind, for now, whether or not that claim is true. The politically neutral Congressional Budget Office "scored" the new law as a net gain for the U.S. Treasury over both the short- and long-term.)

One thing that it's impossible to debate is that the United States is in debt.

Moreover, there is no quick fix on the horizon because, well, this country spends more than it collects in taxes, fees and other payments.

As I said, you don't have to be a Harvard economist to know that's a bad formula.

Furthermore, every politician -- no matter the affiliation -- will shout to the rooftops that we have to "do something" about this mounting debt.

No one ever ran for office successfully on the "spend like a drunken sailor" ticket.

Therefore, can we all agree that slashing the debt would be a good thing?

OK, fine.

Surely we also can agree on some simple math -- specifically, that to cut the deficit, we need to spend less or collect more.

Or both.

Spending less is now almost impossible. The two largest amounts gouging the federal treasury go to the military and to our absurdly broken health care system.

Oh, we can nickel and dime some savings here and there.

Cut back on school lunches, or put a few more jobless people on the street by halting additional unemployment benefits.

The amount saved by slashing several dozen social programs would buy maybe one new stealth bomber.

In other words, it's a waste of time even discussing that idea -- so this country must find ways to increase revenue.

My first choice would be the one almost all Republicans and their lobbyist benefactors hate the most -- increasing taxes on rich people.

In virtually every other country, the obscenely wealthy pay a disproportionate amount of tax -- on the theory that they can afford it.

Most other industrialized nations also have some form of national sales tax -- or "value added tax" -- that you pay on nonessential goods.

That makes sense, as well, but the United States was set up to give sales tax authority to individual states.

So where are we going to find additional revenue?

I'm guessing it will come from the Internet.

At the moment, almost all Internet-related transactions in this country are protected by the Internet Tax Freedom Act, which was passed in 1998 to encourage e-commerce and which has been renewed twice since then.

The current law, which doesn't expire until 2014, was extended unanimously by Congress in 1999.

And yet ...

No one really saw how fast the cyberworld and all its spinoffs would grow -- nor how much money would change hands through Internet transactions.

Political winds could be changing.

Why should your neighborhood store have to nick you for sales tax, when an online company does not?

When the Internet was new and struggling to gain a foothold in the business world, breaks like that might have made sense.

Not now.

France already has instituted an Internet-use fee of just less than 1 percent, and similar taxes are coming all over the world.

Internet providers and companies that peddle goods and servers online are howling at the possibility of any taxation, of course, claiming they'll all go broke in weeks if the government takes a little slice of their pie.

That's nonsense.

These are now massive, hugely successful operations that are getting a free lunch -- not to mention a massive competitive advantage over brick-and-mortar competitors.

Just pick any Internet sales outfit -- Amazon, for instance.

You think a 1 percent sales tax on Amazon's transactions would break the company?


At the moment, generally cowardly legislators don't want to get too close to Internet taxation. These people take a lot of money from industry lobbyists, remember.

But somewhere down the road, we have to find more revenue -- and the most logical place to look ...

The spot where buckets of profit is being made without taxation ...

Well, boot up your computer, and I'll bet you can figure it out.

Steve Cameron is a freelance columnist. He can be reached at stevecameron1000@gmail.com.