by Elizabeth M Young

Created on: February 16, 2010

The internet is a system that is actually set up for direct access by service providers. Service providers get investors to help them to cover their set up and overhead costs. The service providers then charge the rest of us for access to the Internet. Done.

The service providers pay taxes on the net profit and net personal income that they realize from their efforts to provide access and to collect the fees from the average Internet consumer. The major providers also collect various taxes that are set up on various areas of the telecommunications income, since they generally bundle television and telephone services along with the Internet access.

When we purchase products and services on line, sales and other taxes should be collected by the vendors and remitted to the appropriate taxing levels of government, where on line sales are taxed. At any rate, the seller must report income that is made on line and remit the appropriate tax on their income.

There is already enough tax to go around. The Internet, itself, cannot actually be taxed, as it is a virtual environment where various vendors pay fees for access, then ply their wares, whether the wares are access, services or products. Many internet activities are free of charge. The site is funded by advertising and other dollars, then taxed on the income that comes from advertising and other services.

When the government attempts to set up a formula for taxing a virtual environment, it will be an interesting process, indeed.

State and local governments have no business taxing business activities on the internet when the state and local governments have no physical investment or cost burden related to the internet.

State and local governments should receive federal inter government transfers for anything of a national nature that incurs local costs. Examples of Internet activities that incur state and local costs are crimes and complaints that are committed during on line transactions, but which require action and intervention by state and local authorities and courts.

Otherwise, since advertising and fees reimburse capital investment and overhead, it is difficult to see how the Internet system would incur a tax or how that tax on the average consumer would be justified or constructed.

Monitoring for national security, criminal, and legal purposes is not unheard of and should go on when there is a hope that on line predators, terrorists, hackers and others are creating problems that are a harm to society. Just as such activities go on in the real world to make the populace and the property safe, there is no reason for the Internet to be a wild and lawless place.

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