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Amended Internet Tax Ban Will Not Include VoIP

Zonk posted more than 6 years ago | from the nickel-and-dime-you-to-death dept.

The Almighty Buck 139

Spritzer writes "Yesterday, the House Judiciary Committee approved an amendment to the Internet Tax Freedom Act of 1998 which would prevent the tax ban from expiring. However, the amendment also eliminates tax protection for VoIP services. 'The amendment, offered by committee Chairman John Conyers Jr., a Michigan Democrat, would extend the ban on Internet access taxes until Nov. 1, 2011. ... The Conyers amendment would allow nine states with Internet access taxes to continue them. It would also narrow the definition of Internet access, excluding services such as VoIP from the tax ban.'"

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139 comments

Read my lips (4, Funny)

seanadams.com (463190) | more than 6 years ago | (#20953111)

NOT NO BAN on new taxes, EXCEPT NOT on voip, but NOT after 2011.

Re:Read my lips (3, Insightful)

TimeTraveler1884 (832874) | more than 6 years ago | (#20954909)

Honestly, I'm tired of all this tax BS. Tax my net income and be done with it. Having taxes simplified would in fact save money for all. Just think about all the money spent on supporting, enforcing, collecting, evading and what-not, on multiple taxes. I know, I know, I'm thinking like an engineer and not a politician or tax-attorney.

Re:Read my lips (1)

Spokehedz (599285) | more than 6 years ago | (#20955363)

The problem with getting this ratified/approved is the people who would be hit the hardest with a flat-tax (read: wealthy individuals) would have the legal team, time and money to fight the flat-tax, whereas the people who would benefit from it (read: 'middle-class') simply do not have the money, time or legal team to lobby for it.

Re:Read my lips (1)

SiChemist (575005) | more than 6 years ago | (#20955539)

What makes you think that the wealthy would be hit hardest by a flat tax? That is NOT true, at least not in the US.

Re:Read my lips (1)

Spokehedz (599285) | more than 6 years ago | (#20956231)

Umm... With a flat-tax, you pay more if you make more. As it is now, there are hundreds (thousands?) of little loopholes and tax breaks--which some of them would still exist with a flat-tax--which the wealthy people know about, or make enough money for them to apply to them, or they pay someone else to know for them.

As it is now, the wealthy pay less (percentage wise) than the poor in taxes because they maintain a much better understanding of the loopholes and laws. The poor do not, because they do not have the manpower/money to do so.

An example of this would be a guy who makes 30K a year, and pay 2K in taxes. They do it themselves, using TurboTax or something, and they end up getting about 1.5K of it back. Total taxes taken: $500

The wealthy guy, who makes 300K a year, pays about 30K in taxes. They have a team of accountants and tax experts that divide the money and contribute it to charities and write offs for business expenses. They end up getting back 22K, which he only ends up paying 7K.

Whereas a flat-tax would be whatever percentage they have to pay. You make 30K, you pay 10% which is $3K. You make 300K, you pay 30K. End of story. But it will never happen.

Re:Read my lips (1)

dwarfking (95773) | more than 6 years ago | (#20956881)

Not a flat income tax, but a national sales tax (i.e. consumption tax), with exceptions for food, medicine and a few other essentials.

Why should anyone have to pay for the right to work [usa-the-republic.com] ? That is what an income tax is, a fee you pay to work. I should be allowed to keep every single cent I earn if I choose to.

But, I have no problem with paying a consumption tax on things I want to purchase, and the larger the cost, the larger the tax I pay. So if you are wealthy, and spend it, you pay more.

The poverty pimps like to scream this is regressive as it causes the poor to pay more in taxes (which they don't pay today), which is garbage. If the poor can afford a wide screen color television, they can afford a few more dollars in tax on it.

There is a movement for this called the Fair Tax [fairtax.org] which gets attacked and blasted because it is backed by the likes of Neal Boortz (who by the way is a Libertarian, not a Republican), but it is well thought out and makes sense.

Of course it would eliminate the IRS and most accountants, and take power away from the vote-buying politicians (can't use the class envy card anymore), and would probably require the repeal of the income tax provision of the 16th amendment so a later Congress couldn't re-impose income tax on top of the sales tax (which you know they would do if given the chance), so you can expect all kinds of fights. I believe, however, at some point this generation of kids will take up the battle cry, though, so I have hope..

Our current giveaway^h^h^h^h^h^h^h^h entitlements programs are based on the fact there used to be more workers than recipients, now with baby boomers retiring, that is no longer a valid assumption and our kids (I have 3 grown and working) will be paying more and more of their paychecks for the right to work so as to be able to cover the continual growth of these government forced wealth redistribution schemes.

Re:Read my lips (1)

stinerman (812158) | more than 6 years ago | (#20957365)

The Fair Tax plan isn't too bad. The only problem with it is that it's not progressive enough for my tastes. Tweak it here and there and you might have a deal.

Re:Read my lips (1)

MrMarket (983874) | more than 6 years ago | (#20956493)

Most rich people only pay 15% on their income (capital gains). Warren Buffett [washingtonpost.com] only paid 17.7% income tax on $46 million in income. His receptionist paid about 30%. Why do you think Steve Job's "salary" is only a dollar?

Party's Over (2, Funny)

MrMarket (983874) | more than 6 years ago | (#20954997)

VOIP is passed out in the corner; Online Video is ordering shots for Online Retailers -- they won't last long. State Legislator is pissed that he was not invited and has called the cops to shut this party down.

Re:Read my lips (1)

ObsessiveMathsFreak (773371) | more than 6 years ago | (#20955075)

Sounds like any standard piece of legislation to me. This is why we have courts.

Exclude VOIP? (4, Interesting)

e4g4 (533831) | more than 6 years ago | (#20953199)

Hmm - how does Voice Over Internet Protocol not constitute internet access? Will this then be applicable to things like Skype, and other hybrid (i.e. video/voice/chat) VOIP services that don't resemble POTS so strongly?

Re:Exclude VOIP? (2, Informative)

Gregb05 (754217) | more than 6 years ago | (#20953271)

I assume that the ban on VOIP regards telephone-like systems, and not stuff like Ventrilo.

If you're paying for VOIP phones, I would believe that you're subject to taxation, much like if you're paying for phone service.

Disclaimer: IANAMOC

Re:Exclude VOIP? (3, Funny)

Phisbut (761268) | more than 6 years ago | (#20953773)

Disclaimer: IANAMOC

Ok, this one I really have trouble deciphering...

  • I am not a man of content?
  • I am not a murderer of California?
  • (with Mario's voice) I am not-a made of cheese?
  • I am not a Mister O'Connor?
  • I am not a model of competence?

Help me on this one...

Re:Exclude VOIP? (3, Funny)

Gregb05 (754217) | more than 6 years ago | (#20953857)

I am not a member of Congress.
And let's be honest here, I'm not a model of competence either.

Re:Exclude VOIP? (1)

pintpusher (854001) | more than 6 years ago | (#20954075)

Ah, but you are a master of cryp.... um... crypticness!

Re:Exclude VOIP? (1)

Bellum Aeternus (891584) | more than 6 years ago | (#20957407)

Ahhh... so you're suggesting that he run for office then?!

ENUM (0)

Anonymous Coward | more than 6 years ago | (#20953331)

The only way to tax VoIP and not other internet services is to go after the companies which offer VoIP services (SIP registrars, POTS gateways). Even though I find it patently absurd to single out one kind of communication service, I imagine that it could lead to less centralized, true end-to-end VoIP ("ENUM"). Companies like Skype and Vonage are only necessary as a temporary bridge while the POTS is still relevant. Except for their function as gateways, they only cause problems.

Re:Exclude VOIP? (4, Insightful)

Beyond_GoodandEvil (769135) | more than 6 years ago | (#20953343)

Hmm - how does Voice Over Internet Protocol not constitute internet access?
You looking at this the wrong way, this isn't about rational laws, this is about states seeing a decline in revenue due to people giving up their (taxed)landlines for VOIP(currently untaxed). So to keep the state coffers full, we slip in an exemption for VOIP so states can keep collecting money on phone service.

Re:Exclude VOIP? (1)

nomadic (141991) | more than 6 years ago | (#20953467)

You looking at this the wrong way, this isn't about rational laws, this is about states seeing a decline in revenue due to people giving up their (taxed)landlines for VOIP(currently untaxed). So to keep the state coffers full, we slip in an exemption for VOIP so states can keep collecting money on phone service.

Ummm...if that's the goal, then how is that law not "rational"? Seems a pretty rational way of approaching things.

Re:Exclude VOIP? (1)

Gregb05 (754217) | more than 6 years ago | (#20953783)

It's not "rational" because it's the same sort of line for internet services as with VOIP, the difference is that VOIP plugs into a phone.

The argument is that this looks an awful lot like Congress saying that you can be taxed on the water that you use on your lawn, but not the water you drink. It's the same water, how could you tell either way?

I don't have VOIP services, so my ability to care, as well as my knowledge on the subject, is limited.

Re:Exclude VOIP? (1)

nomadic (141991) | more than 6 years ago | (#20954003)

The argument is that this looks an awful lot like Congress saying that you can be taxed on the water that you use on your lawn, but not the water you drink. It's the same water, how could you tell either way?

Well I do think its rational that a legislature could look to the use of a product rather than the means the product utilizes to effect that use. For example, in your analogy, wouldn't it make sense for a legislature to say "clean, cheap drinking water is a right...let's put as few restrictions on water put to that use as we can". Another example might be the fact that in a lot of places trucks have to pay more tolls than cars.

Re:Exclude VOIP? (1)

Gregb05 (754217) | more than 6 years ago | (#20954899)

Eh, I think we're looking at it the wrong way, anyhow. VOIP (as a phone replacement) involves a lot more than internet packets; There would be places where the digital signal would be converted into the analog signal for use with normal phones, and since phones are taxed, it's reasonable to tax VOIP.

Plus there's the whole service provider thing, where your VOIP service may not be provided by your ISP, so while it operates over the internet, there's a difference in what precisely they're taxing.
Pick your analogy:
  • Taxing VOIP:Taxing Internet
  • Taxing the truck driver:the taxing of gasoline
  • Taxing your maid service:Taxing your house
  • Taxing the waterpark:Taxing water
Hard to find an analogy here, they ARE different services, but equally taxable. That Congress wishes to tax just VOIP isn't my problem.

Re:Exclude VOIP? (1)

wolrahnaes (632574) | more than 6 years ago | (#20956041)

There would be places where the digital signal would be converted into the analog signal for use with normal phones, and since phones are taxed, it's reasonable to tax VOIP.
See that just makes it more complicated though. What if I only call IP to IP? What if I have a shared line appearance in another state, how are things divided up? Hell, what about another country?

I work for a VoIP provider, I have customers all over the world. The accounting department will commit mass suicide if something like this goes through, given the effort involved in figuring out how the taxes will work.

Let's say 555-321-1234 is set up as a line appearance on phones in Cleveland, Denver, and Kiev (Ukraine for those not versed in geography). How the hell will that one work from a tax perspective? Landline providers don't have that problem because they don't have the flexibility to do something like this, but IP providers do.

Re:Exclude VOIP? (1)

Gregb05 (754217) | more than 6 years ago | (#20956457)

You'd pay a tax on your monthly bill?

Re:Exclude VOIP? (1)

Deagol (323173) | more than 6 years ago | (#20954729)

The argument is that this looks an awful lot like Congress saying that you can be taxed on the water that you use on your lawn, but not the water you drink. It's the same water, how could you tell either way?

I know! They can dye the potable water an obnoxious pink color. That way, if you're caught with a pink lawn (remember that experiment in elementary school with the celery and food coloring?), they'll hit you with a big fine.

Re:Exclude VOIP? (1)

mikael (484) | more than 6 years ago | (#20955759)

Ummm...if that's the goal, then how is that law not "rational"? Seems a pretty rational way of approaching things.

Because by definition it creates ambiguity ... VoIP = Voice over Internet Protocol

Now, how many applications allows people to record speech, transfer it between computers, and play it on another system in real-time?

Telephone internet services like Skype are the obvious target, but Multiplayer games could also fall under that category with speech use. Basically, anything that transfers audio data (compressed or not) in real-time, or both audio and video in real-time (eg. future translation services).

If you write a subscription based application that allows people to communicate in real-time using text, that's not taxable. Similarly with video. But as soon as you use audio data, that's taxable.

What happens if someone creates a system that converts to audio to one end into text at the other (for deaf people), or a system that converts text to audio (for blind people). If the conversion from audio to text is done at the originating end, that's not taxable, but if it was done at the opposite end, it would be, due to the transfer of audio data.

Re:Exclude VOIP? (1)

russ1337 (938915) | more than 6 years ago | (#20953721)

You looking at this the wrong way, this isn't about rational laws, this is about large TELCO'S seeing a decline in INCREASING PROFITS due to innovative and competition. So to keep their profits high and investors happy, they slip in a few free lunches for lawmakers so they include an exemption for VOIP so the Teclo's can keep the competition down.
there, I fixed that ..... 'er I mean changed it to how I see it.

Then what's the point? (1)

Afecks (899057) | more than 6 years ago | (#20954293)

I thought the whole point of taxing individual services was so that the incoming tax money was directly proportional to the outgoing expenses? For whatever reason we needed a tax on POTS, fine. Now, if that tax money is no longer needed to maintain POTS then why do you still need that money for VOIP?! Also, if this shit isn't supposed to matter then why bother breaking the taxes up at all? Why not just increase the income tax? Makes so sense having separate taxes for services that don't actually reflect their usage, even if the goal was to keep the state coffers full.

Re:Exclude VOIP? (1)

Bob-taro (996889) | more than 6 years ago | (#20953437)

Hmm - how does Voice Over Internet Protocol not constitute internet access? Will this then be applicable to things like Skype, and other hybrid (i.e. video/voice/chat) VOIP services that don't resemble POTS so strongly?

The summary is confusing, IMO. The only thing the article says about VOIP is:

But other lawmakers have expressed concerns about a permanent ban, saying it would hurt the ability of state and local governments to raise funds. A permanent ban would give lawmakers little recourse against telecommunications companies that try to sneak other services, such as VoIP, into the tax ban, critics have argued.

So it sounds like VOIP is not excluded from the tax ban. Apparently some congressmen are concerned about loss of telephone tax revenue as people switch to tax-free VOIP.

Re:Exclude VOIP? (1)

Bob-taro (996889) | more than 6 years ago | (#20953673)

Oops! I read it again, and I guess VOIP is excluded. Actually, it says, "services such as VOIP" are excluded. I wonder what the other services are.

Re:Exclude VOIP? (1)

e4g4 (533831) | more than 6 years ago | (#20953683)

Actually - I read that as VOIP certainly being excluded from the ban (though I agree there isn't much in the article). But my point really is how are they defining VOIP - I think there are and will be plenty of services that utilize packetized voice over the internet that don't necessarily resemble "Internet Phone Service" but by my definition certainly are VOIP. If you're going to ban a tax on "Internet Services" it seems awfully strange to exclude certain things that are no less internet services than any thing else.

Re:Exclude VOIP? (1)

Metaphorically (841874) | more than 6 years ago | (#20954401)

Actually - I read that as VOIP certainly being excluded from the ban (though I agree there isn't much in the article).


Is there any way we can see the proposed amendment instead of just the blurb that Infoworld decided to print? I know Sunlight Foundation [sunlightfoundation.com] backs sites that publish some of this stuff but I have no idea where to find a document like this.

As for how to define VoIP and decide what phone services are close enough to the Telcos territory to get smacked they'll just make up some vague text they can use to sue competitors with later. I wouldn't be surprised if a telco industry body wrote the text of the amendment for them.

Re:Exclude VOIP? (1)

f1055man (951955) | more than 6 years ago | (#20956299)

I'm fairly certain its bill number HR 3678. Go to thomas.loc.gov and search for the bill number, or just below the search box you can find a bill by sponsor, in this case Representative Conyers, John.

IANAL, but I believe this is the relevant section (sorry bout formatting):
SEC. 4. DEFINITION.

INTERNET ACCESS- The term `Internet access'--
A means a service that enables users to connect to the Internet to access content, information, or other services offered over the Internet ;

B includes the purchase, use or sale of telecommunications by a provider of a service described in subparagraph (A) to the extent such telecommunications are purchased, used or sold--

--1 to provide such service; or

--2 to otherwise enable users to access content, information or other services offered over the Internet ;

C includes services that are incidental to the provision of the service described in subparagraph A when furnished to users as part of such service, such as a home page, electronic mail and instant messaging (including voice- and video-capable electronic mail and instant messaging), video clips, and personal electronic storage capacity; and

D does not include voice, audio or video programming, or other products and services (except services described in subparagraph A, B, or C that utilize Internet protocol or any successor protocol and for which there is a charge, regardless of whether such charge is separately stated or aggregated with the charge for services described in subparagraph A, B, or C. So essentially this amendment was written by someone who has never used anything more advanced than a 4 function calculator.

Re:Exclude VOIP? (1)

Metaphorically (841874) | more than 6 years ago | (#20957349)

That's helpful. The names on the bill are

Mr. CONYERS (for himself, Ms. LINDA T. SANCHEZ of California, Mr. CANNON, Mr. BOUCHER, Mr. WATT, Mr. ISSA, and Mr. SENSENBRENNER)


Going by the data on the 2005-2006 cycle at OpenSecrets [opensecrets.org] , most of them get a fair chunk of money from some telcos.

Conyers had contributions from National Cable & Telecommunications Assn, Comcast Corp, AT&T Inc in the range of over $9,000 each (they are all in the list of his top contributors at Open Secrets [opensecrets.org] ).

Sanchez had contributions from AT&T Inc of $10,000.

Cannon had contributions from AT&T Inc, Verizon Communications, and National Cable & Telecommunications Assn for amounts from $10,000 to $15,000.

Boucher had contributions from AT&T Inc, Verizon Communications, and National Cable & Telecommunications Assn for amounts from $8,000 to $14,000.

For Watt I don't see anything obvious in his list of top contributors [opensecrets.org] for that time.

Issa got $10,000 from National Cable & Telecommunications Assn and $11,000 from AT&T Inc.

Sensenbrenner got $10,000 from National Cable & Telecommunications Assn and $6,500 from AT&T Inc.

Nothing conclusive or anything. There were also contributions from a lot of other companies who might feel differently about the VoIP tax part of this bill, like Comcast and L3 Communications, but it's all food for thought.

Re:Exclude VOIP? (2, Informative)

Stonent1 (594886) | more than 6 years ago | (#20953607)

How does it not constitute internet access? Simple. Lets say Verizon or AT&T comes along and says, "We're no longer running copper POTS lines to houses, we are only using fiber" But the problem ends up being those people still need phone service.

So what they do is run fiber to the house and install a VOIP box on a limited bandwidth connection (such as 128k), but they configure it to block all traffic except the ports that their VOIP service uses. So now you have phone service as you normally would, but if you want internet, you have to call them and upgrade to another package. The hardware is already in your house, you just need to plug into it once they unlock the service.

Re:Exclude VOIP? (0)

Anonymous Coward | more than 6 years ago | (#20957453)

LOL

You think Hillary Clinton is a communist. I'd love to see what you'd do if you actually met a real live member of the PFC (French Communist Party) in France.

Re:Exclude VOIP? (1)

omeomi (675045) | more than 6 years ago | (#20954303)

Hmm - how does Voice Over Internet Protocol not constitute internet access?

OOh! That's an easy one. See, you're thinking about this from a technical standpoint. Of course there's no difference technically. However, you have to think like a congressman. Who has a lot of money to give to your campaign? Who has really nice jets that they use to fly you to golf outings? Who? Oh, yes! It's the phone companies! That's why it's different! Because even though they say competition is important to a free market, they don't really mean _free_ market. Just free enough that they can still collect money from big business.

Silly (0)

Anonymous Coward | more than 6 years ago | (#20953205)

It's all just bits - encrypted bits, if necessary.

Re:Silly (1)

Stooshie (993666) | more than 6 years ago | (#20954291)

I'm not entirely sure how you would encrypt a single bit!

Re:Silly (0)

Anonymous Coward | more than 6 years ago | (#20954407)

The same way you encrypt more bits: You flip it or you don't flip it.

Re:Silly (0)

Anonymous Coward | more than 6 years ago | (#20954801)

Easy, flip or don't flip the bit based on a secure algorithm

Re:Silly (1)

veganboyjosh (896761) | more than 6 years ago | (#20954951)

I'm not entirely sure how you would encrypt a single bit!

rot 1?

When is VOIP not VOIP? (4, Insightful)

Captain Zep (908554) | more than 6 years ago | (#20953327)

The idea that some internet based services are taxable and some aren't, when there's no reliable way to classify them makes for a rather broken system.

If pure VOIP starts getting taxed, then it'll just be adjusted so that it's not technically a VOIP service. E.g. is it VOIP if it includes video? What about in-game voice systems? What if it does some random surfing in the background at the same time? Is a system that sends voice clips via email a VOIP system? What if I'm exchanging music or sound effects - do they count as a 'voice'?

Z.

VOIP-to-POTS (0)

Anonymous Coward | more than 6 years ago | (#20953455)

My guess is they are going after VOIP services that connect you to the POTS network. But if everybody used IP-to-IP phones you could avoid using a taxable VOIP-to-POTS service. It will happen.

Re:VOIP-to-POTS mod parent up insightful (1, Insightful)

Anonymous Coward | more than 6 years ago | (#20954995)

finally someone gets the jest of it. this article proves just how dumb so many slashdot users are. it's pathetic to see what some people have come up with as a solution. it proves that they didn't even understand the problem.

it's getting really lame around here.

Re:When is VOIP not VOIP? (0)

Anonymous Coward | more than 6 years ago | (#20953473)

There is a very simple classification: Do you get a phone number which can be direct-dialed from the POTS?

Re:When is VOIP not VOIP? (1)

Captain Zep (908554) | more than 6 years ago | (#20953695)

Well if that was the classification rule then it would really be a tax on POTS/VOIP bridges, not on VOIP itself, since a VOIP system doesn't have to be connected to the POTS. Admittedly, not being connected to POTS in any way limits the usefulness - at least until most people switch away from POTS.

Z.

Re:When is VOIP not VOIP? (0)

Anonymous Coward | more than 6 years ago | (#20954063)

Correct, but that way it sort of makes sense: There are taxes on POTS lines and VoIP is just another "last mile" implementation if used with POTS gateways. Then you still effectively use the POTS and can (potentially) benefit from 911 service, universal availability of the phone network, etc., so the taxes are at least fair. If you only use VoIP over the internet, then you don't get any of the benefits, so you shouldn't be taxed.

Re:When is VOIP not VOIP? (0)

Anonymous Coward | more than 6 years ago | (#20953643)

My ISP has fees for it, I cant get a straight answer as to the purpose of these fees
I keep asking but never get a clear answer

Re:When is VOIP not VOIP? (1)

Metaphorically (841874) | more than 6 years ago | (#20954287)

If pure VOIP starts getting taxed, then it'll just be adjusted so that it's not technically a VOIP service. E.g. is it VOIP if it includes video? What about in-game voice systems


There are a lot of parts of tax law that are subject to interpretation. Just because it's subjective doesn't prevent them from saying you owe them money.

Here's an easy scenario: VoIP gets taxed when it comes from Vonage or Skype or one of the obvious ones. This goes on for a few years and over time people realize that it's cheaper to buy a World of Warcraft subscription and go use voice chat in Azeroth than it is to buy any phone-only service. The IRS gets wind of it and issues a bulletin clarifying that chat services included in a game are considered VoIP and are therefore taxable at a rate of blah, blah, blah.

It's not any different from a clarification that explains the greens fees on golf-outings where you talk about business aren't tax-deductible.

And yes, I think taxing VoIP (or any other protocol) is stupid and I hope it doesn't happen. But that doesn't mean it won't.

Re:When is VOIP not VOIP? (1)

srleffler (721400) | more than 6 years ago | (#20956417)

The distinction is likely to be based on whether it connects to the POTS phone system. If so, it will probably be taxed.

Re:When is VOIP not VOIP? (1)

firewood (41230) | more than 6 years ago | (#20957145)

The more evil interpretation is that unless one can prove that an internet packet wasn't VOIP content, some jurisdiction will try to tax it as VOIP. The possibility of using a tunnel to hide VOIP will just make all such tunnels taxable.

So let me get this straight.... (1)

neokushan (932374) | more than 6 years ago | (#20953329)

They want to keep the ban on taxing Internet access but not ban taxing things that you actually use that access for?

Isn't that synonymous with saying "We'll never charge you for this, but if you want to do more than just look at it from across the room, you'll have to pay for the privelage"?

Re:So let me get this straight.... (1)

bconway (63464) | more than 6 years ago | (#20953571)

Remember the argument we always use about patents and how an electronic version of something isn't any more unique than the non-electronic version (bar tabs and 1-click)? Same deal here. Phone taxes provide revenue for a state, regardless of the medium. If you take those away, as some short-sighted people want, the money will need to come from somewhere else, and it will. There's no such thing as a free lunch.

Re:So let me get this straight.... (1)

Captain Zep (908554) | more than 6 years ago | (#20953835)

>Phone taxes provide revenue for a state, regardless of the medium. If you take those away, as some short-sighted people want, the money will need to come from somewhere else, and it will.

I agree, and that's fine.

Put the tax on something clearly defined, rather than trying to tax 'certain kinds' of internet communications. That way, everyone knows where they stand, nobody needs to worry about having to classify what kind of data you are sending, and there'll be no need for lots of lawyers arguing over whether a particular service offering is or isn't VOIP for tax purposes.

Z.

Re:So let me get this straight.... (1)

HTH NE1 (675604) | more than 6 years ago | (#20956013)

You're right! If people avoid paying taxes on traditional phone service by not using traditional phone services, there won't be any money to maintain the traditional phone services no one is using!

Re:So let me get this straight.... (0)

Anonymous Coward | more than 6 years ago | (#20953601)

Since most congress-critters see and understand VOIP as the same a land-basedphone line, the next logical step for them is to allow the ability to tax it, much like they do normal telephone lines.

They'll tax voip only selectively (1)

suv4x4 (956391) | more than 6 years ago | (#20953509)

What's the point of taxing voip when there's untaxable free voip like Skype out there (and not just).

It just makes business harder for those entrepreneurs trying to offer voip as a solid alternative to land phone lines, you know "voip for the rest of us".

Stupid.

Re:They'll tax voip only selectively (1)

Metaphorically (841874) | more than 6 years ago | (#20954113)

I agree that it's stupid but could you explain again how Skype is untaxable?

It's funny that the original reason for a ban on taxing Internet access had something to do with getting people to innovate without the burden of taxes and yet as soon as we see some innovation it's time for it to get taxed.

Re:They'll tax voip only selectively (1)

suv4x4 (956391) | more than 6 years ago | (#20954707)

I agree that it's stupid but could you explain again how Skype is untaxable?

I could go on and on, but let's say it's somewhat similar to why P2P networks are hard to control.

What we'll end with is offshore hosted VoIP apps running encrypted traffic on a random port. Then you need to tax all encrypted traffic. But you can't, at least until 2011.

And thus, VoIP will be only selectively taxed.

Re:They'll tax voip only selectively (1)

Metaphorically (841874) | more than 6 years ago | (#20956783)

I can see how you can hide it easily but that doesn't mean you're not supposed to pay the tax on it, just like in a lot of states you're supposed to remit sales tax for out-of-state purchases. So in practice the tax isn't collected but it's not that a tax isn't levied.

Re:They'll tax voip only selectively (0)

Anonymous Coward | more than 6 years ago | (#20955209)

Skype can be taxed, but to avoid tax we'd just end up with free P2P voice apps that didn't have a centralized company. Like the Napster-to-Kazaa migration. The Fed would potentially have to tax everyone in the country for something they can't track.

Encryption (1)

Drakin020 (980931) | more than 6 years ago | (#20953583)

What if you encrypted your traffic...Would they then know that it was VOIP traffic?

Makes sense to me (3, Insightful)

drhamad (868567) | more than 6 years ago | (#20953587)

This actually makes sense to me, as much as most of /. will hate it. It means states, and even the feds, can't insert taxes on access or on most things, but it excludes from that ban a service which has a direct analogue in the ... analog world. Taxes on phone services such as the Universal Service Fee go (at least theoretically) to extending access to people that don't have it.

Here's what it really comes down to - as taxes decrease from one source, they must increase from another. The government isn't spending less money, so if less people have phone lines, they must make up the money some other way. Like it or hate it, that's the fact. And yes, this means that eventually, there will probably be an internet sales tax. It's just a matter of what congressmen are willing to be vilified in the eyes of the public, in order to get it done. And if there isn't, it just means income tax (both fed and especially state) must be increased, or some other form of taxation found. Your tax burden in general should never be decreased - it's just a matter of how it's taken from you.

Re:Makes sense to me (1, Funny)

Anonymous Coward | more than 6 years ago | (#20954635)

I look forward for Mr. Bush to veto this once it gets to his desk. After all, he said "no new taxes".

Re:Makes sense to me (2, Insightful)

goldspider (445116) | more than 6 years ago | (#20954799)

"Here's what it really comes down to - as taxes decrease from one source, they must increase from another."

Why?

"Your tax burden in general should never be decreased - it's just a matter of how it's taken from you."

Why?

Perhaps I'm taking you out of context, but to suggest that taxes should never be decreased... well it's just wrong.

Re:Makes sense to me (1)

drhamad (868567) | more than 6 years ago | (#20955163)

"Your tax burden in general should never be decreased - it's just a matter of how it's taken from you."

Why?

Perhaps I'm taking you out of context, but to suggest that taxes should never be decreased... well it's just wrong.


Tax burdens cannot be decreased as long as spending is the same (or higher). Of course we can decrease taxes if our spending goes drastically down, but given the same amount of spending, your burden cannot decrease - as it is, the government spends more than it takes in.

Re:Makes sense to me (0)

Anonymous Coward | more than 6 years ago | (#20954849)

No offense, but you would be modded from 'Insightful' to 'Informative' if you'd get your word usage right. i.e.,
In your sentence containing, '...if less people have phone lines, ...',
the correct word is 'fewer'.

USAGE NOTE: The traditional rule holds that fewer is used with expressions denoting things that can be counted (fewer than four players), while less is used with mass terms denoting things of measurable extent (less paper; less than a gallon of paint). However, less is idiomatic in certain constructions where fewer would occur according to the traditional rule. Less than is used before a plural noun that denotes a measure of time, amount, or distance: less than three weeks; less than $400; less than 50 miles. Less is sometimes used with plural nouns in the expressions no less than (as in No less than 30 of his colleagues signed the letter) and or less (as in Give your reasons in 25 words or less).

Hope this helps.

Best regards,
The NOFTRITIUOTWL
(National Organization for the Reduction in the Improper Use of the word 'less')

Poison Pill (1)

Nitack (1046362) | more than 6 years ago | (#20954879)

Internet sales tax is a poison pill that will damn near kill internet businesses. It is not the increased prices that would hurt them but rather keeping track of what to pay to whom. There are over 25,000 different tax jurisdictions in the US alone. I live in the City of Fairfax in Virginia. They have their own 1.5% sales tax. If internet taxing was put into place some one would have to keep track of what tax is applicable to what zip code, be able to assess that for every customer upfront, and then remit possibly 25,000 different payments every month. This could dramatically increase the overhead of larger internet businesses like Amazon, erasing any savings on overhead compared to brick and mortar competitors. For a smaller internet business like Kens Solar, they just simply would shut down because the cost of keeping up with the different tax codes would kill any profits.

The only way internet sales taxes are workable is if the Feds set a flat rate across the board and designated who could collect. If the flat rate was 5% they would need to designate how much went to each interested party (Fed, State, County, City). They would also need to supply a more streamline remittance process because no small company could process or keep track of where their tax collections needed to go. My guess is Verisign may be the company to handle something like that.

Re:Agree... or not (1)

drhamad (868567) | more than 6 years ago | (#20955273)

I was going to say that I agree with you that the dramatic number of tax jurisdictions would make tracking internet tax very difficult... but the more that I think about it, the more I disagree.

First: Software to track taxes already exists, because of sales tax - big companies that have locations in many places already have to track this. It isn't as extensive as full internet tax would need to be (assuming every jurisdiction passes one, which is unlikely, but who knows) but the software would grow with the need. Yes, payment would be a bitch, I can't argue that.

Second: I do agree a flat rate across the board makes a lot of sense.

Third: Why is erasing some of the advantage of an internet business a bad thing? Personally, I'd love to see brick and mortar be able to be more competitive. How many of us abuse brick and mortar stores by going in, looking at things, then ordering them online for a few bucks (or a lot of bucks) savings? That's not fair to the b&m. Further, if it gets bad enough (and it is pretty bad), b&m's start shutting down, and then we really have nowhere to go. You may not lament the loss of these "rip off" stores, but when you want to go look at something and have nowhere to go, it's a serious problem. I'm not sad if internet companies have more overhead. Not to mention that b&m's have to charge you taxes, so why shouldn't net companies?

Re:Agree... or not (1)

Nitack (1046362) | more than 6 years ago | (#20955477)

It is a little more complicated than that. The way b&m Stores work is that for each location they determine what tax jurisdictions apply to them and that individual store applies those taxes to each purchase at that location. Retail software is designed that way. An internet business can not apply that same system unless there was a flat tax. You would have to do a zip code to tax jurisdiction match for every single purchase which is not as easy as it sounds. It requires a lot of research and in the end, even if you contract it out, you would have to do that on the fly on the web page. That would get expensive enough, but the problem is that your biggest issue would actually be remitting all of those taxes. Take a mid sized internet business like www.thinkgeek.com... do you think they have the resources in place to keep track of what remittances need to be sent where and get them all out?

Re:Poison Pill (1)

Envy Life (993972) | more than 6 years ago | (#20957531)

If internet taxing was put into place some one would have to keep track of what tax is applicable to what zip code, be able to assess that for every customer upfront, and then remit possibly 25,000 different payments every month.

If the flat rate was 5% they would need to designate how much went to each interested party (Fed, State, County, City). They would also need to supply a more streamline remittance process because no small company could process or keep track of where their tax collections needed to go.
These two statements are a bit contradictory. While it's reasonable to assume small businesses don't have the wherewithal to collect and pay country-wide sales tax, they already have mechanisms in place to collect state sales tax. Those same mechanisms would basically work for all states (i.e., a larger tax database). Remittance becomes an issue, but proposing the goverment becomes that clearinghouse is just pushing the burden to goverment... rather private companies spring up and act as a tax clearing house to relieve that burden from small companies, which then incurs a much smaller cost than each small company hiring the personnell to deal with the taxes.

Re:Makes sense to me (0)

Anonymous Coward | more than 6 years ago | (#20957317)

Umm, as fewer people are using land lines, the government should, indeed, be spending less money on the infrastructure maintenance costs they incur from those landlines.
As fewer people drive to the 5/10c store, because they're buying their rubbers on the Interweb, then the government should spend less money paving roads to that store, less money cleaning the pollution from their cars, and less money enforcing smog checks for those people who SCRAPPED their cars altogether, since you can now buy whatever you want on the internet.

So, no. I take issue with your "as we get more efficient, the government should still spend the same amount."
Kind of how I take issue with the general "every time anything happens, the government should spend MORE money."

Does the gov't use VOIP? Or are they too content spending my hard-earned dollars on the old ANALog system?

This is /. Giving the government less money is a good thing, you insensitive clod.

Tax the hell out of voip. (1)

Brew Bird (59050) | more than 6 years ago | (#20953609)

Just like you pays sales tax for anything you buy online in your state, (there is a RL counterpart), access to PSTN should always be taxed. Either that, or standard PSTN based services need to have no tax on them. I'm sure businesses would welcome that, as taxes from varies entities often add 30 or 40% to their bottom line phone bill! I think we would all agree, however, that it needs to be like service, IE connected to the PSTN. IP to IP connections should remain untaxed, as the end users have paid and possibly/probably been taxed for the transport already.

Re:Tax the hell out of voip. (0)

Anonymous Coward | more than 6 years ago | (#20953863)

Either that, or standard PSTN based services need to have no tax on them.

Problem solved, or haven't you been paying attention? The copper is going, going, gone! Before long, the only telephone access left will be voip or cellular or the middle of nowhere rural places that just barely got copper in the first place and won't get fiber until 2200 and that nobody calls anyway.

Re:Tax the hell out of voip. (1)

Brew Bird (59050) | more than 6 years ago | (#20955059)

how can you possibly believe that. When we are hearing how little broadband penetration we have in this country? Both of them cant be true.

Re:Tax the hell out of voip. (1)

xarius76 (826419) | more than 6 years ago | (#20955357)

You think whoever provides that PSTN termination isn't already paying FCC taxes???? In order to GET to the PSTN, you have to go through some sort of termination provdier, whether that be yourself, vonage, or some other third party. They're already paying to get each call on the PSTN whether it by in the form of their contract for whatever type of connectivity they may have, or per minute fees being assessed by their actual termination provider (who in turn pays the taxes).

voip vs. other traffic (0)

Anonymous Coward | more than 6 years ago | (#20953645)

those 0's and 1's are taxable

Instant Tax Evasion, Just Add Software (1)

Metaphorically (841874) | more than 6 years ago | (#20953923)

So now if I set up a Softphone on my laptop and call an Asterisk server at home I can be charged with evading taxes? I mean, isn't VoIP just a set of protocols?

Re:Instant Tax Evasion, Just Add Software (0)

Anonymous Coward | more than 6 years ago | (#20954625)

It takes more equipment for the NSA to transcribe/store - hence the tax. LOL

Re:Instant Tax Evasion, Just Add Software (1)

MozeeToby (1163751) | more than 6 years ago | (#20956979)

I imagine that the actual law is a bit more specific than what we see here. I would think that the tax would apply to paid VoIP systems that interface with traditional landline systems. When you think about it, they almost had to do this. Within a few years all the telco's are probably going to be moving over to a VoIP system anyway, much like many cable companies already do.

Re:Instant Tax Evasion, Just Add Software (1)

Metaphorically (841874) | more than 6 years ago | (#20957475)

No, from elsewhere in this thread it looks like the bill is H. R. 3678 which you can search for (but not directly link to) at The Library of Congress [loc.gov] . The relevant part of the definition looks like:

`(D) does not include voice, audio or video programming, or other products and services (except services described in subparagraph (A), (B), or (C)) that utilize Internet protocol or any successor protocol and for which there is a charge, regardless of whether such charge is separately stated or aggregated with the charge for services described in subparagraph (A), (B), or (C).',


Matter of fact, I don't see anything in the whole bill that says "VoIP". The way I read it, it also excludes anything like TV or radio over IP.

i would love to see how (1)

superwiz (655733) | more than 6 years ago | (#20953985)

they plan to tax voip when you can implement it with open source solutions. no, my mom doesn't know how to do it. but taxes piss people off just enough that the chances of a nicely packaged solution appearing pretty soon are pretty high. get ready for becoming a criminal because you own a compiler.

Re:i would love to see how (1)

mr_mischief (456295) | more than 6 years ago | (#20954543)

I imagine the taxes are for things like SkypeIn and SkypeOut where people are placing calls and generating revenue for Skype, not for Ventrilo. It's easy to track what you pay Skype, no matter whether you use their software or an OSS clone of it.

Besides, the summary title really should say "would" rather than "will". A bill being approved by a committee may never come to a vote by the full House if the Speaker doesn't like it. It may not pass that vote if it gets it. It may fail to be approved by the Senate, or their version may take out the amendment. The two houses of Congress must approve the same version of the bill for it to go to the President for signing. If they can't agree on the exclusions, they'll probably still agree to extend the tax moratorium. How long to extend it for is probably a hot topic for debate anyway, so look for that to change. Then, if the FCC, the White House staff and the President decide that the bill doesn't look good, the President can veto it. In order to override a veto two-thirds (66%) of both houses must vote to override the veto after it has already taken place. It can be more difficult to get votes for a veto override than the bill originally received, although that's not necessarily the case.

In short, a bill won't make any changes at all as a bill. It only would if it becomes a law. The Clerk of the House has a nice gentle intro on how bills become laws [house.gov] , and for anyone who hasn't seen or heard the School House Rock clip (or who hasn't for 20 years and doesn't remember it), there's a lyrics page and wave file for "I'm Just a Bill" [school-house-rock.com] , and someone stuck the video clip (with low audio volume) on YouTube. It's all part of the Three-Ring Government [school-house-rock.com] , after all.

Re:i would love to see how (1)

superwiz (655733) | more than 6 years ago | (#20955369)

umm... when I asked "how", I didn't mean through what procedural process... I meant how they plan to (through whatever proper procedure) accomplish that which cannot exist.

When will they ever learn? (2, Insightful)

Dr. Mu (603661) | more than 6 years ago | (#20954365)

Sung to the tune of "As Time Goes By":

You must remember this:
A bit is just a bit,
A byte is just a byte.
The fundamental things apply,
As packets go by.

Trying to identify bits for their "content" is a little like trying to tell air molecules apart. Congress is now on the same slippery slope as the Bells, who want to charge extra for "premium" content.

Or do they they think the taxes can be collected by the VOIP companies themselves? But what if my VOIP provider is in Outer Elbonia? They have no infrastructure in my state, or any nexus, for that matter. If I pay my phone bill with a credit card or, better yet, by cash deposit on my next trip there, where's the mechanism for enforcement?

Again, Congresspeople, just because something scratches an itch and sounds "fair" doesn't mean it's even a tiny bit workable.

What's next (1)

aztektum (170569) | more than 6 years ago | (#20954549)

Essentially they put a tax on one service running over an untaxed line. I see where they are headed with this. They won't simply tax your connection, like they did phone lines, no they will tax individual services on that connection. Clever. Next they'll start taxing e-mail, then IM, then streaming video, etc etc....

Re:What's next (1)

Charcharodon (611187) | more than 6 years ago | (#20955097)

The concept of taxing email and IM became obsolete/impossible the moment people moved away from getting those services exlusively from their dial-up ISP. I'd like to see them try to track down every free email and IM service and try to squeeze money out of them. It just won't work.

What I can see is the Bells and other traditional POTS providers trying to weasel out of their traditional taxes owed to the government by claiming to be VOIP providers.

Re:What's next (1)

aztektum (170569) | more than 6 years ago | (#20955359)

So VoIP is an exclusive service of ISPs?

I propose a new internet access method (0)

Anonymous Coward | more than 6 years ago | (#20954577)

Internet Protocol over VoIP. If we do this, then we won't have to pay an internet tax, right? However, it seems awfully familiar....

Re:I propose a new internet access method (1)

HTH NE1 (675604) | more than 6 years ago | (#20956209)

Internet Protocol over VoIP. If we do this, then we won't have to pay an internet tax, right?
You should get right on writing up an RFC for that. I'll expect you to have a complete working proposal ready by April 2008.

I'm confused! (2, Insightful)

goldspider (445116) | more than 6 years ago | (#20954663)

The prevailing groupthink tells me that taxes are good, and the internet is good, but taxes on the internet are bad!

That violates the very laws of multiplication, and could threaten the universe as we know it!

Re:I'm confused! (1)

HTH NE1 (675604) | more than 6 years ago | (#20956377)

The prevailing groupthink tells me that taxes are good, and the internet is good, but taxes on the internet are bad!

That violates the very laws of multiplication, and could threaten the universe as we know it!
Not if good is negative and bad is positive, like in Bizarro World [wikipedia.org] .

Whoa There Cowboys (4, Informative)

HBergeron (71031) | more than 6 years ago | (#20954915)

This marks a particularly sad moment in the history of News for Nerds political activism.

While I agree that specifically allowing taxation of voip "for which there is a charge" (the language in the actual law) is a bad idea, it was a bad idea back in 2003 when it was included in the LAST internet tax renewal that became law. The voip language in the current bill is just a restatement of what has been law for 4 years. The fact that an editor here, particularly an editor who feels comfortable passing on political stories, is ignorant of a pretty important provision in one of the most prominent pieces of technology legislation (and a one page piece of legislation at that) does not give a lot of aid and comfort to those who support the tech community on these issues.

Now, if you want to complain about something, this new House bill, and the one currently in the Senate Commerce committee (Not the Wyden (author of the original internet tax ban) Senate bill S.156, or Eshoo House bill H.743) both include a revised definition that specifically only covers services offered by ISPs, opening up non-isp web services (net radio, youtube, joost) to taxation. Big surprise, these narrower definitions are the ones championed by Verizon and ATT and the now ironically named "don't tax the web" coalition.

Taxing Email (0)

Anonymous Coward | more than 6 years ago | (#20955239)

may not be the next step, but it is an eventual one. But how do you know how much to tax an email? Simple. By the number of characters, which in turn will lead to shorter emails and shorthand and before you know it it'll be like just like text messaging and the telegraph.

John Conyers Jr. (1)

Nom du Keyboard (633989) | more than 6 years ago | (#20955569)

John Conyers Jr. is a wennie who is NEVER to be believed when it comes to tax cuts or bans. I condemn the tiny district that continually re-elects him, and inflicts him on the rest of us!

Michigan is an infection (2, Funny)

lightsaber777 (920815) | more than 6 years ago | (#20956173)

I guess the only way to make Michigan's tax environment look better is to make everyone else's tax environment look just as bad.

Conyer's Commitment to his Constituency (0)

Anonymous Coward | more than 6 years ago | (#20956295)

Since Conyer's district is full of UAW workers, you guys should NOT be surprised by this. Don't you see the news with the UAW striking over stupid things like the jobs bank, "scheduled" overtime, and job security guarantees.

Buy more 'merican cars and you won't have to worry about this!!!!

Packets are packets (1)

Sloppy (14984) | more than 6 years ago | (#20956373)

If your VoIP is distinguishable from other low-latency-QoS traffic, you're doing it wrong. If you have any sort of centralized "provider" (other than maybe a jabber server for cases where a direct P2P connection can't be made), you're doing it wrong. If someone other than a general-purpose ISP is billing you for the packets that just happen to be the building blocks of your VoIP, you're doing it wrong. If it's possible for someone to measure it and tax it (or tap it and see anything other than cipertext), you're doing it wrong.

Of course, doing it wrong happens to be the norm, right now. I'm doing it wrong, too. We need new phone protocols, and interfacing with the POTS system needs to become an exception.

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