What on earth do the Spanish-American War and the Internet have in common, beyond historic search results? If the Joint Congressional Committee on Taxation has its way, a tax created to pay for that 19th-century war could be extended to all Internet and other data connections some time this year.
The 3 percent telecommunications tax, the committee reportedly said in a January 27 report, could extend to data communications including broadband, dialup, fiberoptic, cable modem, cellular, and digital subscriber line links. The tax currently applies only to traditional telephony.
"[B]ecause of technological convergence and the dropping popularity of landlines, the Joint Committee on Taxation noted in its review of tax law reforms that it might make sense to extend the 100-year old levy to new technologies," influential Internet journalist Declan McCullagh wrote for News.com. "The committee did not take a position on whether Congress should approve such an extension and simply listed it as an 'option.'"
"The present communications excise tax provisions were enacted before the development of most modern technology – the growth of computers and new electronic means of communication," said the Joint Committee – addressing the subject toward the very end of the report.
"The proliferation of wireless communications technology and the Internet, and in particular broadband access, has blurred the lines between 'data' and 'voice' and between the functions of transmission and application," the report continued."Consequently, service providers have found it increasingly difficult to determine which services are taxable communications services and which are nontaxable information services."
The Joint Committee includes powerful members including U.S. Senators Orrin Hatch (R-Utah), Charles Grassley (R-Iowa), Max Baucus (D-Montana) and John Rockefeller (D-West Virginia), and Representatives William Thomas (R-California) and Charles Rangel (D-New York). Their report also said voice-over Internet protocol's advent and rising presence means "there may be no way to distinguish 'packets' of voice and 'packets' of data."
