Center Support's
Internet Tax Fairness Act of 2001

In the letter reproduced here, the Center for Individual Freedom expressed its strong support for the introduction and swift passage of the Internet Tax Fairness Act of 2001.

July 19, 2001

The Honorable Bob Goodlatte
United States House of Representatives
2240 Rayburn House Office Building
Washington, DC 20515

Dear Representative Goodlatte:

On behalf of the Center for Individual Freedom, I am writing to express our strong support for the introduction of the Internet Tax Freedom Act of 2001. Swift passage of your legislation will encourage growth in electronic commerce, as it makes permanent the Internet tax moratorium and establishes bright line nexus standards for states’ imposition of business activity taxes.

As the deadline for the moratorium approaches, it is imperative that Congress act to ensure the Internet remains free from new and discriminatory taxes that would hamper its expansion. Additionally, Congress should secure its commitment to narrowing the digital divide by making permanent the ban on Internet access taxes. The Internet Tax Freedom Act of 2001 accomplishes these goals.

In addition to making permanent the Internet tax moratorium, the Center supports the much needed provisions in your legislation that establish concrete physical presence or "nexus" guidelines that uniformly define how states may levy business activity taxes — a recommendation by the Advisory Commission on Electronic Commerce, authorized by the Internet Tax Freedom Act of 1998. The passage of these provisions will eliminate the creative attempts by numerous states to tax the income of companies outside their borders. Furthermore, these provisions will minimize costly litigation seeking such clarity, and will create a stable and legally certain business climate that will encourage interstate commerce and growth in the overall economy.

The Center holds the belief that the much talked about "simplification" issue should be eliminated from the debate on Internet taxation. If current state tax systems are not adequate for the new economy, states already have it within their power to collect taxes from their citizens for remote online purchases. The failure of the states to collect sales and use taxes from their citizens on such purchases is simply that — the failure of the states. But it should not be the role of Congress to provide a mechanism for states to shift their tax collection burden to out-of-state retailers. Contrarily, Congress’ role should be to ensure the states do not unfairly export this burden, thereby obstructing interstate commerce. We applaud the Internet Tax Freedom Act of 2001, a clean, concise and understandable bill that does not encumber the continuation of the necessary moratorium.

The Center for Individual Freedom is a non-partisan, non-profit organization with the mission to focus attention on individual freedoms and individual rights guaranteed by the U.S. Constitution. As free-market advocates, we oppose over-burdensome state and federal regulations and taxing regimes that will impede the evolution of electronic commerce.

Sincerely,

Jeffrey Mazzella
Vice President, Legislative Affairs