Connect with us

Business News

Senate wants to tax your online shopping and Netflix-binge habits #InternetFreedomAct

The intent of the Internet-related legislation is to keep states from enacting new taxes on Internet access. However, the Senate is proposing an Act that would give states the option to tax “remote businesses” i.e. online retailers selling within states’ borders.

Published

on

netflix

Keeping states from enacting Internet taxes

The inclusion of the Internet Tax Freedom Act (ITFA) in the Trade Facilitation and Trade Enforcement Act of 2015 had shown some promise when we reported on this critical moratorium a few weeks ago. The intent of the Internet-related legislation is to keep states from enacting new taxes on Internet access.

bar
However, the Senate removed the supporting language from the trade bill and included it instead in the omnibus spending package that passed both the House and Senate on December 18, 2015.

Senate proposing tax for online retailers

The moratorium on new taxes for Internet access has been extended until October 2016. While the White House has shown support for the legislation, through the President’s repeated statements in support of net neutrality, it’s the Senate that is prolonging the stopgap. Specifically, U.S. Senator Lamar Alexander (R – Tenn.), who also wants a vote on the Marketplace Fairness Act, of which he is the lead co-sponsor.

The Act would give states the option to tax “remote businesses” i.e. online retailers selling within states’ borders.

Interestingly enough, the White House has been in favor of Alexander’s legislation, with an endorsement via former White House press secretary Jay Carney as reported by The Hill in this 2013 article. Carney spoke then on “the need for federal legislation to level the playing field for our businesses and address sales tax fairness.”

Leveling the playing field

The debate stems from the impact to various parties from consumers to retailers. The legislators in support of a remote business tax have stated that the law will create a level playing field for brick and mortar retailers, providing much needed revenue to states in need.

The opposing view believes that consumers will bear the cost through discriminatory taxes at the state and local levels.

Taxing your Netflix-binge habit

The concern about discriminatory taxes seems well-founded with Chicago’s July 1, 2015 creation of the 9% “amusement tax” that affects entertainment both in person and electronic delivery. Charges are required to be paid for the privileges of “watching electronically delivered television shows, movies or video,” as well as “listening to electronically delivered music” and “participating in games, online or otherwise.”

The code states that the amusement tax applies only to rentals, and not “permanent” downloads. This local ordinance mostly impacts streaming online services including iTunes, Netflix and Hulu.

Amazon calls for streaming tax

Interestingly, online sales giant Amazon has long supported this legislation as evidenced by this 2013 article from The Hill, stating that “Amazon argues that a single national framework for tax collection is preferable to a patchwork of state laws.” Amazon’s greatest online rivals including eBay and Overstock who don’t have a physical presence in the number of states that Amazon does.

Amazon has been collecting sales taxes in those states where they have a physical presence, including Illinois as of February 1, 2015, and Michigan on October 1, 2015.

On an intriguing side note, former Obama administration press secretary Jay Carney was hired by Amazon in February of 2015 as senior vice president of global corporate affairs.

His position includes oversight of public policy and public relations.

Streaming tax goes largely unreported in state returns

In states that require state income tax returns, consumers have been required to self-report that tax. According to this Detroit Free Press article, Michigan state officials estimated that “only 2.5% of what was really due” was reported for untaxed online purchases in the 2013 tax returns.

States’ rights vs. Net neutrality

Whether Senator Alexander holds true to his principles of the past or will sacrifice net neutrality for states’ rights will play out over the next ten months. Keep in mind that Alexander stated in these remarks from November 7, 2003, on the Internet Tax Moratorium of  “no taxation of Internet access” and that “virtually all of us are willing to keep state and local governments from taxing Internet access.“

Many economists are skeptical, and even accusing Alexander as well as Senate Democrat whip Dick Durbin of holding the ITFA hostage for the sake of their own agendas. National Review economist Stephen Moore pointed out the hypocrisy of some of Durbin’s statements in his article. “… Now the man who says the Internet should be universally available and affordable hypocritically wants to tax it to make it less affordable. The primary victims, if Senator Durbin’s eleventh-hour tax gambit succeeds, will be poor households…”

Indeed, having access to the Internet has moved well beyond being a luxury to being a convenience for all users, regardless of their income and tax bracket.

#InternetTaxFreedomAct

Debbie Cerda is a seasoned writer and consultant, running Debra Cerda Consulting as well as handling business development at data-driven app development company, Blue Treble Solutions. She's a proud and active member of Austin Film Critics Association and the American Homebrewers Association, and Outreach Director for science fiction film festival, Other Worlds Austin. She has been very involved in the tech scene in Austin for over 15 years, so whether you meet her at Sundance Film Festival, SXSWi, Austin Women in Technology, or BASHH, she'll have a connection or idea to help you achieve business success. At the very least, she can recommend a film to watch and a great local craft beer to drink.

Continue Reading
Advertisement
1 Comment

1 Comment

  1. Anakai

    February 29, 2016 at 7:57 pm

    I guess that Constitution thingy that all those guys like to love on so much suddenly becomes irrelevant when it comes to picking your pocket.

    Section 1, Article 9.5:
    “No tax or duty shall be laid on Articles exported from any State.”

    Reading is evidently not a required skill for electing people to positions of authority that control millions of people.

Leave a Reply

Your email address will not be published. Required fields are marked *

Business News

Too connected: FTC eyes Facebook antitrust lawsuit

(BUSINESS NEWS) Following other antitrust hearings, we’re expecting to hear more about the FTC’s antitrust lawsuit against Facebook, soon.

Published

on

Facebook being crossed out by a stylus on a mobile device.

Facebook might be wishing it had kept the “dislike” button.

On September 15, the Wall Street Journal announced that the Federal Trade Commission was preparing a possible antitrust lawsuit against the social media titan. Although the FTC has not made an official decision on whether to pursue the case, sources familiar with the situation expect a determination will be made on the matter sometime before the end of 2020. Facebook and the FTC both declined to comment when asked about the story.

The news comes following a year-long investigation by the FTC that has looked into anti-competitive practices by the Menlo Park-based company. This past July, the United States House of Representatives held hearings in which they grilled the CEOs of Amazon, Apple, Google, and Facebook regarding their business practices. In August, Facebook CEO Mark Zuckerberg also testified in front of the FTC as part of the department’s antitrust probe into the organization.

The FTC seems to be especially interested in Facebook’s past acquisitions of WhatsApp and Instagram, which they believe may have been done to stifle competition. In internal emails sent between Zuckerberg and Facebook’s former CFO David Ebersman back in 2012, the 36-year-old seemed worried that the apps could eventually pose a threat to the social media conglomerate.

“These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us,” Zuckerberg wrote to Ebersman, “Given that we think our own valuation is fairly aggressive and that we’re vulnerable in mobile, I’m curious if we should consider going after one or two of them.”

When Ebersman asked him to clarify the benefits of the acquisitions, Zuckerberg stated the purchases would neutralize a competitor while improving Facebook.

“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc. now will give us a year or more to integrate their dynamics before anyone can get close to their scale again.” Zuckerberg said.

This isn’t the first time the FTC has investigated Facebook either. Last year the agency fined the company $5 billion for the mishandling of user’s personal information, the biggest penalty imposed by the federal government against a technology company. As a part of the settlement with the FTC in that case, Facebook also promised more comprehensive oversight of user data.

If the FTC does pursue an antitrust suit against Facebook, it could end up forcing the social media giant to spin off some of the companies it has acquired or place restrictions on how it does business. Considering how long it will take to file the litigation and prove the case in a courtroom, however, it seems that Zuckerberg will once again be “buying time.”

Continue Reading

Business News

What you need to know about the historic TikTok deal (for now)

(BUSINESS NEWS) No one really knows what’s happening, but the TikTok deal’s impact on business, US-China relations, and the open internet could be huge.

Published

on

Male black hands holding app opening TikTok app.

So, maybe you’ve heard that Oracle and Walmart are buying TikTok for national security!

Um, not exactly.

Also, Trump banned TikTok!

Sort of? Maybe?

But then he said he approved the Oracle-Walmart-TikTok deal!

We guess?

The terms of the proposal seem to shift daily, if not hourly. The sheer number of contradictory statements from every player suggests no one really knows what’s going on.

Just one example: Trump said the deal included a $5 billion donation to a fund for education for American youth. TikTok parent ByteDance, said, “Say what now?”

Here’s what we think we know (as of this writing):

Oracle and Walmart would get a combined 20 percent stake in a new U.S.-based company called TikTok Global. Combine that with current US investors in China’s ByteDance, TikTok’s parent, that would give American interests 53 percent. European and other investors would have 11 percent. China would retain 36 percent. (On Saturday Trump said China would have no interests at all. But that does not jibe with the reporting on the deal.)

Oracle would host all user data on its cloud, where it is promising “security will be 100 percent” to keep data safe from China’s prying eyes. But reporting has differed on whether Oracle will get full access to TikTok’s code and AI algorithms. Without full control, skeptics say, Oracle could be little more than a hosting service, and potential security issues would remain unaddressed.

Walmart says they’re excited about their “potential investment and commercial agreements,” suggesting they may be exploring e-commerce opportunities in the app.

The US Committee on Foreign Investment in the United States, which is overseen by Treasury Secretary Steven Mnuchin, still has to approve any deal.

As for the TikTok “ban” – which isn’t really a ban because current users can keep it – the Commerce Department postponed the deadline for kicking TikTok off U.S. app stores to September 27, to give time for the deal to be hammered out. Never mind that it’s still not clear whether the U.S. government has authority to do that. Unsurprisingly, ByteDance says it doesn’t in a lawsuit filed September 18.

Whatever happens with the whiplash of the deal’s particulars, there are bigger issues in play.

According to business news site Quartz, moving data storage to Oracle mirrors what companies like Apple have done in China: Appease the Chinese government by allowing all data hosting to be inside China. A similar move could “mark the US, too, shifting from a more laissez-faire approach to user data, to a more sovereign one,” says China tech reporter Jane Li.

More obvious: Corporate sales and mergers are now part of the parrying between the U.S. and China, which adds a whole new playing field for negotiations among businesses.

In the meantime, TikTokkers keep TikTokking. White suburban moms continue to lip sync to rap songs in their kitchens. Gen Z continues to make fun of the president – and pretty much everything else.

And downloads of the app have skyrocketed.

Continue Reading

Business News

Hobby Lobby increases minimum wage, but how much is just to save face?

(BUSINESS NEWS) Are their efforts to raise their minimum wage to $17/hour sincere, or more about saving face after bungling pandemic concerns?

Published

on

Hobby Lobby storefront

The arts-and-crafts chain Hobby Lobby announced this week that they will be raising their minimum full-time wage to $17/hour starting October 1st. This decision makes them the latest big retailer to raise wages during the pandemic (Target raised their minimum wage to $15/hour about three months ago, and Walmart and Amazon have temporarily raised wages). The current minimum wage for Hobby Lobby employees is $15/hour, which was implemented in 2014.

While a $17 minimum wage is a big statement for the company (even a $15 minimum wage cannot be agreed upon on the federal level) – and it is no doubt a coveted wage for the majority of the working class – it’s difficult to not see this move as an attempt to regain public support of the company.

When the pandemic first began, Hobby Lobby – with more than 900 stores and 43,000 employees nationwide – refused to close their stores despite being deemed a nonessential business (subsequently, a Dallas judge accused the company of endangering public health).

In April, Hobby Lobby furloughed almost all store employees and the majority of corporate and distribution employees without notice. They also ended emergency leave pay and suspended the use of company-provided paid time off benefits for employees during the furloughs – a decision that was widely criticized by the public, although the company claims the reason for this was so that employees would be able to take full advantage of government handouts during their furlough.

However, the furloughs are not Hobby Lobby’s first moment under fire. The Oklahoma-based Christian company won a 2014 Supreme Court case – the same year they initially raised their minimum wage – that granted them the right to deny their female employees insurance coverage for contraceptives.

Also, Hobby Lobby settled a federal complaint in 2017 that accused them of purchasing upwards of 5,000 looted ancient Iraqi artifacts, smuggled through the United Arab Emirates and Israel – which is simultaneously strange, exploitative, and highly controversial.

Why does this all matter? While raising their minimum wage to $17 should be regarded as a step in the right direction regarding the overall treatment of employees (and, hopefully, $17 becomes the new standard), Hobby Lobby is not without reason to seek favorable public opinion, especially during a pandemic. Yes, we should be quick to condone the action of increasing minimum wage, but perhaps be a little skeptical when deeming a company “good” or “bad”.

Continue Reading

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!