Internet access tax moratorium stalled in Senate

The President has been fond of telling Republicans in Congress that they need to get off the stick and do their jobs. Granted, this is often on subjects where there are deep philosophical divides between the parties, but if he comes in off the golf course long enough he might notice that some work is still being done on the hill. And though it may sound miraculous, there are a few items which still enjoy a fair amount of bipartisan support. One of these legislative unicorns is the proposal to make permanent a moratorium on internet access taxes. Well, the House passed it this week on a voice vote.

The House on Tuesday approved a measure to make permanent an existing federal moratorium on Internet-access taxes, opening the door to a clash with the Senate later this year.

In a sign of its bipartisan popularity, the measure passed the House on a voice vote.

The 15-year-old moratorium on Internet-access taxes prevents most states and local governments from applying access taxes on Internet connections, of which there are about 262 million in the U.S. It is set to expire later this year.

So there you have it, folks. Looks like we’ve got a win-win situation on our hands. This no-brainer should be sailing through the upper chamber and onto the President’s desk in no time flat and we’ll avoid… wait. What’s that you say? It’s not going to?

The move to extend the moratorium creates an opportunity for senators who want to combine it with legislation allowing states to collect online sales tax from many out-of-state Internet merchants. Right now that is difficult for states, because the Supreme Court said in 1992 that a state can’t force an out-of-state merchant to collect its sales tax unless the merchant has a physical presence in the state.

With the moratorium bill now moving from the House to the Senate, key senators are expected to add the online-sales-tax legislation. That bill passed the Senate last year, but has been bottled up in the House.

Well, well… if it isn’t our old friend the Marketplace Fairness Act. And it seems that there are certain members of the Senate – no matter which party they are from – who are willing to hold the internet access tax moratorium hostage unless they can get the MFA tacked on to it as a rider. And if this strategy fails to be resolved in the next four months or so, all of you could potentially start paying taxes for your web access at home just as most of you already have for phone or other data driven services. And let’s face it… at this point pretty much everyone has internet access.

We’ve discussed the MFA at great length here, but no matter how you feel about it, it has no place riding along on this bill. If it’s going to pass, it needs to have the support to stand on its own feet. There’s a bill ready to go in the Senate with sponsorship from both parties, but it has to get past Harry Reid. This tax moratorium is low hanging fruit and should already have been taken care of before everyone started sliding toward vacation mode.