State and Local Taxation of Electronic Commerce: The Forging of Cyberspace Tax Policy

By Prebut, David S. | Rutgers Computer & Technology Law Journal, Summer 1998 | Go to article overview

State and Local Taxation of Electronic Commerce: The Forging of Cyberspace Tax Policy


Prebut, David S., Rutgers Computer & Technology Law Journal


INTRODUCTION

The development of the information superhighway(1) is transforming traditional business practices and creating new competitive industries for the global economy. A major component of the information superhighway, the Internet, has vast potential for conducting electronic commerce and is currently generating significant tax policy implications at the federal, state, and local levels of government. Current tax principles, however, are not easily applied to the attributes of electronic commerce. Accordingly, taxing authorities must implement new and innovative taxing structures for electronic commerce so as not to hinder the progress of the Internet and the information superhighway.

This article analyzes the current development of state and local cyberspace tax policy, as electronic commerce is on the brink of becoming one of the most significant economic stimulants of the century. The discussion will begin by tracing the development of the Internet from its inception as a military project to its current use as a tool to facilitate electronic commerce. This article will then discuss how the judicial, executive, and legislative branches of the federal government have reacted to the state and local tax implications of electronic commerce. The federal judiciary may craft initial tax policy by applying existing tax law to cases involving electronic commerce.(2) The executive branch, particularly the Department of the Treasury, can generate tax policy initiatives.(3) Only Congress, however, may introduce and pass tax legislation combining both tax law and tax policy.(4) Finally, this article discusses the possible future of cyberspace tax law and policy and examines the Internet Tax Freedom Act which is currently pending in Congress.(5)

I. THE RISE OF THE INTERNET

The Internet, short for interconnected networks, is an international aggregation of computer and communication networks that includes the users of the network and the resources available on the network.(6) Though not an entity in and of itself, the Internet is a dynamic group of networks that is constantly changing as users enter and exit.(7) Instead of a central computer or central control location, the Internet has a standard method of transmitting data among different networks.(8) Information is able to travel over the multibillion dollar telephone networks thereby creating a virtual network running on top of the existing physical network of the telecommunications companies(9)

The Internet was originally a networking concept developed by the United States Department of Defense Advanced Research Projects Agency in 1969 designed "to allow computer scientists and engineers working on military contracts all over America to share expensive computers and other resources."(10) Initially, its intent was to connect a small number of large national networks, such as universities and high-tech Department of Defense contractors.(11) By 1978, however, the network had adopted a standard protocol thereby becoming more adept at connecting a larger number of smaller networks and had expanded its access capabilities to include a much broader class of networks.(12) Built on an existing foundation of standard interoperable protocols and technologies, the entire infrastructure of the Internet now constitutes a level playing field on which all companies, small and large, seek innovative applications and new technologies that add value to the existing framework.(13)

Expanded use and popularity of the network in the 1980s came about when the Department of Defense began to relax its hold on the existing network and the National Science Foundation ("NSF") began to develop a high-speed network of its own.(14) The National Science Foundation's network ("NSFnet"), which later evolved into the Internet, created supercomputer centers to link regional networks of research and academic sites.(15) Quickly, use of the NSFnet expanded beyond its research origins to include universities, government agencies, corporations, and the public at large. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

State and Local Taxation of Electronic Commerce: The Forging of Cyberspace Tax Policy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.