FOXNews.com: Tax & Send: Will Emails Cost You?

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Tax & Send: Will Emails Cost You? Mar 27th 2013, 15:26 Your property is taxed. Your income is taxed. Your investments are taxed.  But ... your email? A California official is bringing new life to the argument that the Internet -- including emails -- is an untapped revenue resource that should be taxed to help local economies.  Berkeley City Councilman Gordon Wozniak brought up taxing emails during a recent council meeting. He suggested the money collected, which would be part of a wider-reaching Internet tax, could be used in Berkeley's case to save the local post office.  "There should be something like a bit tax," he said during the March 5 meeting. "I mean, a bit tax could be a cent per gigabit and they would make, probably, billions of dollars a year."  Plus, he said, there should be a "very tiny tax on email."  This idea goes beyond already-controversial proposals to tax e-commerce -- like buying used books on Amazon. This would be a tax on data.  Wozniak told FoxNews.com the response to the idea has been varied.  "Most people don't like the idea of taxing the Internet," he acknowledged. "There are a number of people who say it's a good idea, but some are saying it's impractical and there's no way to do it."  Chris Edwards, an economist with the libertarian-leaning Cato Institute, is one of those people.  "It's a terrible idea," Edwards told FoxNews.com.  "The government doesn't need any more tax money. That's not the problem. The American government is spending more than ever."  Plus, he said, a tax like this would hit "different types of industry in different ways."  Local governments can't legally impose a tax on the Internet -- but Wozniak's idea is not as new, or perhaps as far-fetched, as it sounds. Amid concerns that the government could one day turn to the Internet for a new-age funding stream, Congress in 1998 passed a law called the Internet Tax Freedom Act, which bans Internet taxation.  That law is set to expire next November. If that happens, Wozniak's proposal could someday turn into a reality -- but the likelihood is slim.  Republican Sens. Kelly Ayotte and Dean Heller have already introduced legislation this year that would indefinitely extend the law prohibiting federal, state and local governments from taxing Internet access.    The idea of a "bit tax" is the brainchild of Arthur Cordell, a former information technology adviser for the Canadian government. Cordell proposed the tax during a 1997 lecture at Harvard Law School.  "While there are few kudos for proposing a new tax, the time is ripe to suggest positive and constructive ways of dealing with serious fiscal realities," Cordell said at the time. "The move to a new economy should be matched by consideration of a new tax base. A tax base that is growing.  A tax base that is at the heart of a new economy. A tax base that can be easily identified, one where collection is in few hands. A tax that is difficult to avoid."  He, too, called it a "bit tax."  Cordell did not return a request for comment from FoxNews.com. But he did tell a Los Angeles Times columnist this month that he still supports the Internet tax, saying, "it's needed more than ever as we get rid of brick and mortar stuff. ... eventually it's going to happen."  The idea seemed to get an endorsement from the LA Times columnist, George Skelton, who suggested such a tax could even cut down on "spammers and scammers." Skelton suggested emails that run off the screen be taxed an additional amount, "just as a bulky letter costs more than a 46-cent stamp."  Under Cordell's framework, the bit tax would impose a levy on each digital bit of information flowing through global networks. That means people could have to pony up a fee for emails, file transfers, electronic check transactions and more.    And that could be just the beginning.  Cordell said in 1997 that the new revenue could be used for schools, parks and health care, among other services. Critics of this idea, he argued, are interested in trying to "wrestle the state to the ground." At the time, he quoted U.S. Supreme Court Justice Oliver Wendell Holmes, Jr., "who wrote in a decision in 1904 that 'Taxes are what we pay for civilized society.'"  Edwards disagrees.  "Holmes said that during a time when federal taxes were 4 percent of the GDP," Edwards said. "Yes, taxes might have paid for a civilized society then, but that's not where we are now." Related Stories Unions rally against Postal Service move to end Saturday delivery

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