Congress takes a look at wireless industry, Internet taxes


By Josh Peterson |

WASHINGTON, D.C. — The modern Internet is a business enterprise, and its success attracts the envious.

NEW REVENUE: Cash-strapped states have been eying taxing Internet sales as a way to generate new revenue.

U.S. lawmakers explored the competitiveness of the nation’s wireless industry and how state taxes affect people’s ability to shop and conduct business online during a series of Capitol Hill hearings Wednesday.

Both members and witnesses alike gave customary praise to the Internet’s success during the morning’s Senate Judiciary Committee subcommittee hearing, but not everyone agreed on the state of the wireless industry.

Competition within the industry might seem robust or stagnated, depending on the testimony of the witness.

For example, Matt Wood, policy director for the progressive activist organization Free Press, leveled sharp criticism in front of lawmakers against AT&T and Verizon.

“Industrywide, AT&T and Verizon control more than 68 percent of the subscribers and bring in more than 82 percent of the profits,” said Wood in prepared testimony.

“Verizon alone enjoys nearly 50 percent of industry profits,” said Wood.

But Randall Milch, Verizon’s executive vice president and general counsel, told lawmakers a different story — the hundreds of billions of dollars invested in industry advertising and network deployment since 2001 were a sign of a vibrant marketplace.

“By just about every metric, the U.S. wireless industry has exhibited consistent and ongoing dynamism, innovation and competition,” said Milch.

T-Mobile USA and CSpire were also represented at the hearing.

In addition to the quarrel over the health of the wireless industry, cash-strapped states have been eying taxing Internet sales as a way to generate new revenue.

David Quam, director of federal relations for the National Governors Association, told lawmakers during a House Judiciary subcommittee hearing later that afternoon that, because of a Supreme Court decision in 1992, states have been unable to collect taxes on sales conducted across state lines.

Several bills aiming to either impose a moratorium on the state taxation of wireless services, Internet access, or online sales, however, are pending before Congress.

The Wireless Tax Fairness Act, for example, would put a five-year freeze on new state and local wireless taxes.

The Senate‘s Internet Tax Freedom Forever Act of 2013 — and its companion bill in the House, the Permanent Internet Tax Freedom Act of 2013 — would prevent state and local governments from taxing Internet access or imposing multiple taxes on an online purchase.

The Digital Goods and Services Tax Fairness Act of 2013, another bill pending before Congress, also aims to prevent consumers from being taxed by multiple states for a purchase made online.

Contact Josh Peterson at Follow Josh on Twitter at @jdpeterson

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