Newspaper article The Christian Science Monitor

The Politics of a Tax-Free Cyberspace

Newspaper article The Christian Science Monitor

The Politics of a Tax-Free Cyberspace

Article excerpt

Cut taxes to shrink government.

For some officials in President Reagan's administration, that was the strategy behind the massive 1982 tax cut.

The same idea is also part of the story behind the current political battle over the taxation of electronic commerce.

Republican presidential candidates and congressional leaders say the current three-year moratorium on states and other governments imposing sales or other taxes on Internet transactions should be made a permanent ban.

Democratic presidential candidates Al Gore and Bill Bradley have not taken a stand. Considering the financial support Democrats have been getting from executives in the New Economy, they may be wishing the issue would go away.

But Congress has made sure it won't.

Investigating online tax impact

Last year, US lawmakers created the Advisory Commission on Electronic Commerce to devise an Internet-tax policy. The commission has been running around the country hearing testimony on the pros and cons of taxing dot-com sales. Its report is due next April, in the heat of the political campaign.

When the 19-member commission held hearings in San Francisco last week, one antitax witness was Christopher Wysocki, president of the Small Business Survival Committee (SBSC). His 35,000-member group includes several thousand small firms dependent on the Internet.

In general, SBSC members want to restrain Washington. When Mr. Wysocki got his job five months ago, the SBSC board told him he could support practically any proposal that reduced taxes or shrunk government.

"Hundreds of thousands of men and women have been able to start a small business or home office as a result of technology and e- commerce," argues Wysocki. Don't damage that.

But many state and local government officials fear that a greater shift to online business will deprive them of needed tax revenues. They are joined by bricks-and-mortar merchants with stores on Main Street and in malls who see an unfair disadvantage if they must pay tax on their sales and their virtual competitors do not. …

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