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taxation

Misinformation in the Internet Tax Freedom Act Debate

In 1998, Congress recognized that taxation could slow the growth of the Internet adoption and suppress the enormous potential of the digital economy and so it passed the Internet Tax Freedom Act (ITFA) to prohibit states from imposing new taxes on Internet access. After being renewed in 2001, 2004, and 2007, ITFA is once again set to expire and there is a lively debate over whether it should reauthorized and made permanent.

Unfortunately, not all participants in the debate are presenting the facts accurately. Michael Mazerov, a Senior Fellow with the Center on Budget and Policy Priorities’ State Fiscal Project, recently wrote a blog post opposing the extension, and one of his key assertions was that there are no differences in broadband subscription rates between states with and without taxes placed on Internet access. To back this dubious claim, Mazerov cites a 2006 report from the Government Accountability Office (GAO).

But there’s only one problem: the GAO didn’t say this.  In fact, when presenting its finding, the GAO states very clearly that their ability to properly analyze the problem was compromised by a lack of broadband pricing data. The only

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