April 2013

Push to Require Online Sales Tax Divides the GOP

Legislation that would force Internet retailers to collect sales taxes from their customers has put antitax and small-government activists like Grover Norquist’s Americans for Tax Reform and the Heritage Foundation in an unusual position: they’re losing.

For years, conservative Republican lawmakers have been influenced heavily by the antitax activists in Washington, who have dictated outcomes and become the arbiters of what is and is not a tax increase. But on the question of Internet taxation, their voices have begun to be drowned out by the pleas of struggling retailers back home who complain that their online competitors enjoy an unfair price advantage. Rep Scott Rigell (R-VA) calls them “the hardworking men and women who have mortgaged their homes to buy or to rent a little brick-and-mortar shop.” And each time Norquist and others in the antitax lobby take a loss, they start to seem more vulnerable, Republican lawmakers acknowledge, with ramifications for the continuing fights on the deficit and the shape of the tax code.

9,646 Tax Burdens on the Internet

[Commentary] Last week 74 US senators voted to allow a bill to proceed that would force online retailers to collect sales taxes for the states and localities where their customers live. John Donahoe, CEO of eBay, sent a blast email to Americans who use the online buying service urging them to tell "Congress 'No!' to new sales taxes and burdens for small businesses." The bill would put at risk the Internet's status as the vibrant home of low regulation and low taxation.

It's true that many online stores benefit from not charging sales tax, but they also don't use the services of states where they have little or no presence. Online stores would have to do something physical stores have never done for most sales: assess taxes based on where their customer lives. Physical stores apply their own local tax to most purchases. It's not just rates that vary but rules that determine what's taxable and what isn't. We take the largely free and untaxed Internet for granted, but often forget it was the rare act of politicians voting to keep their hands off that made today's Internet possible.

The Internet Tax Freedom Act of 1998 stopped the federal government, states and cities from taxing Internet services directly. Congress has always had the power to force collection of sales tax online but until now was reluctant to get in the way of the smooth operations of the Internet. As more online retailers add local services, they'll become subject to local sales taxes. In the meantime, the country is better off letting online retailers focus on building their products and services, not on forcing them to become tax experts on thousands of tax rules among states, counties and cities.

Look Out Google Fiber, $35-A-Month Gigabit Internet Comes to Vermont

A rural Vermont telephone company might just have your $70 gigabit Internet offer beat. Vermont Telephone, whose footprint covers 17,500 homes in the Green Mountain State, has begun to offer gigabit Internet speeds for $35 a month, using a brand new fiber network.

So far about 600 Vermont homes have subscribed. VTel’s Chief Executive Michel Guite says he’s made it a personal mission to upgrade the company’s legacy phone network, which dates back to 1890, with fiber for the broadband age. The company was able to afford the upgrades largely by winning federal stimulus awards set aside for broadband. Using $94 million in stimulus money, VTel has invested in stringing 1,200 miles of fiber across a number of rural Vermont counties over the past year. Mr. Guite says the gigabit service should be available across VTel’s footprint in coming months. VTel joins an increasing number of rural telephone companies who, having lost DSL share to cable Internet over the years, are reinvesting in fiber-to-the-home networks.

Consumers' shift to older iPhones raises concerns on Wall Street

In recent months, such an unusually large proportion of consumers are opting to buy older iPhone models that some analysts have begun to wonder whether Apple has lost its ability to create new versions that have enough dazzle to justify their high prices. Not only has the shift toward cheaper phones nibbled away at Apple's profit margins, it's been dramatic enough for some analysts to view the iPhone 5 as a disappointment.

Rep. Chaffetz: Don’t want government ‘searching my Facebook page’

Rep. Jason Chaffetz (R-Utah) warned that the government’s search for information online is approaching a “dangerous line” of infringing on people’s liberties. Speaking on CNN’s “State of the Union,” Rep Chaffetz said that there has to be a balance between liberty and security, even as the government works to hunt down potential terrorists.

California's online privacy laws need an update

[Commentary] Tech giants such as Facebook and Google make a fortune from the data they collect from users and share with other firms. Californians should have a right to know what personal information these companies have gathered on them and sold to firms whose core business is peddling consumer information. Long Beach Assemblywoman Bonnie Lowenthal has introduced AB 1291, which would require disclosure of Internet companies' use of personal data. Part of the legislation needs work, but the intent is spot on. The Legislature should work out the kinks and send the bill to the governor.

Your privacy, under attack

[Commentary] Your privacy is being debated by lawmakers in Sacramento and Washington D.C., and there's a good chance you're going to lose out.

In Congress, a poorly written bill could erode your privacy, while in the California Legislature, a good bill that would protect your privacy is coming under fierce attack. Internet companies -- including Google, Facebook and Amazon -- have for years been collecting vast amounts of personal data about their users and often share that information with other companies, particularly Internet marketing firms. The two bills under consideration could significantly affect who has access to that personal data and how much users must be told about how their data is used. The bill before Congress, the Cyber Intelligence Sharing and Protection Act, or CISPA for short, is nominally intended to allow the government and companies to more effectively respond to coordinated computer attacks on their networks. The bill, which passed the House earlier this month but has now reportedly stalled in the Senate, would allow companies to share with federal agencies information about cyberattacks without requiring those agencies to get a warrant.

The California bill, by contrast, could be a boon for consumers' privacy. Dubbed the "Right to Know Act," and sponsored by Assemblywoman Bonnie Lowenthal, D-Long Beach, it would update an existing state law requiring direct marketers to disclose to their customers, when requested, the information they collect about them and with whom they share that information. Internet marketers claim the bill is unworkable, that it would put an undue burden on them and would open them up to frivolous lawsuits from customers claiming they didn't get the information they requested in a timely fashion. But direct marketers have had to live within this kind of law for the past eight years, and online companies that operate in Europe already have to comply with similar transparency laws there. You can bet that the real reason they're putting up such a fuss is because they don't want you to know just how much information they're collecting or who they're selling it to. According to the bills' analysis, some companies have placed as many as 100 tracking tools on their websites. The information they're harvesting can include sensitive financial, health and location information.

According to supporters of the bill, access to that kind of information has caused real harm, including the unwilling outing of gay teens and physical harm done to women whose location was disclosed to their abusers. "People want to have control and knowledge about what information is being gathered and what it's being used for," said John Simpson director of the privacy project at Consumer Watchdog, an advocacy group. "That's not an unreasonable expectation." Hear, hear.

Center Will Offer New Tools for Measuring the Impact of Media Beyond Numbers

What is the difference? If your question is like that one, more practical than philosophical, the University of Southern California’s Annenberg School for Communication and Journalism may soon have an answer. With $3.25 million in initial financing from the Bill and Melinda Gates Foundation and the John S. and James L. Knight Foundation, the college’s Norman Lear Center is about to create what it is calling a “global hub” for those who would measure the actual impact of media — journalistic, cinematic, social and otherwise.

Martin Kaplan, the director of the Lear Center, will join its director of research, Johanna Blakley, as a principal “investigator” for the new enterprise. He spoke last week about the futility of counting page-views, “likes,” and retweets when trying to figure out whether an opinion piece, a documentary film or a television show actually moved anyone. “Those measure how many people saw something,” he said. “That’s not the same as an outcome.”

Giving a Wide Berth to Artists of Cable TV

[Commentary] We used to turn on the television to see people who were happier, funnier, prettier versions of ourselves. But at the turn of the century, something fundamental changed and we began to see scarier, crazier, darker forms of the American way of life.

Click on ambitious cable channels now, and you will find a high school science teacher who makes meth when he is not dissolving his enemies in vats of acid (“Breaking Bad”); a successful Madison Avenue advertising executive whose entire life is a lie (“Mad Men”); a forensics investigator who is a serial killer on the side (“Dexter”); and a New Jersey gangster, this one in Atlantic City, who is very much the family man (“Boardwalk Empire”). It has been a winning formula, but the execution risk is high. In “Difficult Men: Behind the Scenes of a Creative Revolution,” to be published in July by Penguin Press, the author, Brett Martin, suggests that the programming was produced by men who were as tortured and sometimes as despotic as the antiheroes they hung their plots on.

Two Classics of the Soaps Are Heading to the Web

The soap operas “All My Children” and “One Life to Live” will start their second lives, and Jeffrey Kwatinetz and Rich Frank will start to find out if they’re right. The two men have poured money and nearly two years of their time into an Internet revival of the soaps. They’ve done this because they believe, as Kwatinetz puts it, that “this is the inflection point for online television.”