Press Releases

ITIF Assesses Potential Overhaul of U.S. Internet Tax Policy

WASHINGTON (March 19, 2013) - The Information Technology and Innovation Foundation (ITIF) released a report today analyzing the current state of Internet tax policy and the packages being considered to assist policymakers and the public in making better decisions on how to reform the system. A Policymaker's Guide to Internet Tax provides a comprehensive review of the proposals and their potential impacts on innovation and economic growth in the Internet sector.

"Too often Internet tax issues are confused, or even worse, lumped together by the bumper-sticker debate between 'Don't Tax the Net' and 'Level the Tax Playing Field,' but in fact these issues are distinct and deserve distinct policy responses," notes Rob Atkinson, President of ITIF and co-author of the report. "This report assesses each proposal on its own merit and provides recommendations on how policymakers can address the tax challenges we face, while protecting both consumers and future growth."

The report focuses on four pieces of federal legislation and offers recommendations on how Congress should proceed:

  • Extension of the Internet Tax Freedom Act, which prohibits taxing of Internet access, multiple taxes on Internet transactions, and discriminatory taxes on online transactions, and sunsets on Nov. 1, 2014. ITIF is in favor of making the moratorium permanent to prevent unnecessary and excessive taxation that could reduce the benefits of the digital economy.
  • The Digital Goods and Services Fairness Act would prohibit state and local governments from creating multiple or discriminatory taxes on digital goods and services. ITIF calls for passage of the bill because it will help ensure a fair, consistent, and non-discriminatory tax system.
  • The Wireless Tax Fairness Act imposes a five-year moratorium on all new discriminatory taxes on mobile phone services or providers. ITIF is in favor of the bill, to prevent undue taxation on the wireless economy, but argues the moratorium should be made permanent.
  • The Marketplace Fairness Act of 2013 authorizes states to require collection of sales and use taxes on goods sold online. ITIF calls for the passage of the bill to reduce discrimination against sales from traditional, brick-and-mortar companies, and increase overall tax fairness.

"These bills will have a significant impact on the U.S. tax framework as well as the future development of the Internet economy," Atkinson adds. "By analyzing the effect of each, we hope to improve the ultimate policies that are adopted." 

View the Report