In The Digital Realm (1st Ed.), I argued that “Digital Taxation” is one of the emerging signs of a Digital Economy, regardless of whether we are talking about the National Intranet or the World Wide Web (WWW). The Digital Economy, like the National Economy, is subject to the taxation policies of the Council Democracy or the Parliamentary Democracy that governs. However, in Production for Dasein as opposed to Production for Profit and Production for Utility, taxation policies implemented under the Work-Standard will be more attuned to the State of Total Mobilization. Rather than taxing the production processes, transactional sales, or incomes of Economic Organizations, taxation policies are secondary to the contributions of Arbeit and Geld to the Life-Energy Reserve.
The issue with the implementation of Digital Taxation, when it does not pertain to what should be taxed, is how to enforce the taxation policies. This is a problem that pertains to the digital infrastructure of the WWW and how it is a borderless, formless, and shapeless entity separate from National Economies. As much as I would like to discuss about Digital Taxation on the National Intranet, that is a topic which deserves its own post. For now, I intend to address my observations of Digital Taxation in Production for Profit and Production for Utility. New research has come to my attention that offers additional insight into the topic.
Here in America, the “Internet Tax Freedom Act (PITFA)” is designed to curtail two forms of Digital Taxation:
- A Digital Tax on Access to the WWW.
- “Multiple or discriminatory Digital Taxes” on the WWW.
The first Digital Tax is self-explanatory. It involves setting a taxation rate on top of the monthly payments residents give to ISPs for accessing the WWW.
The other Digital Tax is where we find Production for Profit and Production for Utility implemented as taxation policies in the forms of a “Sales Tax” or a “Use Tax” respectively. The Sales Tax is paid by the seller of a transactional sale, whereas the Use Tax is paid by the buyer of the transactional sale. Exactly who gets to pay depends on the “Nexus,” which is to say where and when the transactional sale of an Economic Organization falls within the jurisdictions of a US State. If the Nexus cannot be determined, a US State is forbidden from applying a Digital Tax. This arrangement prevents US States from compensating for the loss of tax revenues in the Retail Industry by taxing the eCommerce platforms that cause those losses.
A constitutional precedent was set by the US Supreme Court in South Dakota v. Wayfair, which negated the “physical presence rule” associated with the Nexus concept. The ruling in that case expanded the interpretation of the law to allow US States to impose and enforce Sales and Use Taxes on the transactional sales of eCommerce platforms. This means that any US State could employ those taxation policies regardless of where the eCommerce platform in question happens to be located.
Could one argue that the imposition of Digital Taxes on eCommerce platforms would level the playing field between them and the brick and mortar Retail Industry? That is the question which has yet to be answered, even from the standpoint of Production for Profit and Production for Utility. What can be argued is that the ITFA is unfit for the Digital Economy because so much of its legislation is outdated insofar as it is a product of the WWW’s early years. In a world order where Digital Economies and National Intranets are increasingly becoming a real possibility in the Digital Realm, ITFA is becoming more akin to a constraint on those endeavors. Regardless of whether we are talking about the Work-Standard or not, it stands to reason that ITFA should either be amended or repealed.
The legal rationale in favor of amending or repealing ITFA argues that the current law no longer applies to the current state of Digital Economies in the Digital Realm. Entire Digital Economies have grown up in the twenty-five years since the passing of that law. In today’s America as opposed to the America of the 1990s, almost all Americans have some level of access to the Digital Realm and some are involved in some form or another in the US Digital Economy alone. Entire economic activities continue to go untaxed, much to the chagrin of the US States.
As one could probably surmise, the question of governing the Digital Economy is one where technological and constitutional policymaking intersect. The old belief that the Digital Economy and the broader Digital Realm are ungovernable, if not completely independent of the Real World, has been exposed as Utopian thinking. That sort of thinking may have been fashionable in the 1990s, but it is becoming ridiculous in the 21st century.
Let us not forget that the real issue at stake here are longstanding issues of Sovereignty and Privacy in the Digital Realm. In the WWW, the distinctions between Sovereignty and Privacy are blurred to the extent that all notions of governing the Digital Realm is simply untenable. Here, “Information” has been elevated to that of a natural resource with the potential of becoming a Commodity or a Equipmentality. We know that “Information” is capable of becoming the sort of Digital Arbeit and Digital Geld. As a Commodity, however, “Information” raises questions about whether people are supposed to be owning their personal information and keeping it from being sold off to the highest bidder. It likewise raises similar questions about whether any government is supposed to be taxing the collection of that information.
What I would like to do in the next half of this post is outline some constitutional arguments against amending or repealing ITFA in these United States. If Amendment X could serve as the basis of constitutional arguments for amending or repealing ITFA, should anyone be surprised that the counterargument features deferring to Amendment I? After all, “Information” is technically covered under the Freedom of Speech and the Freedom of the Press, and one could accuse the very concept of Digital Taxation as being a soft form of Censorship. But of course, I personally doubt the State governments of this country are going to agree with that claim as they continue to come up with newer ways of implementing Digital Taxation in defiance of ITFA.
Categories: Politics
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