Taxing the Internet – Legislation That May Result in a New Tax Structure in Every State of the Union

Historically, when software was first being written in the period circa 1960’s – 1980’s, it was thought of as intellectual property. It was classified as such because it was a creation of the human mind, committed to something called source code. During this period there were very few computer languages available to write source code in and among the favorite were FORTRAN, Assembler, Basic and C. Of course, there was the nearly impossible language called machine language that really preceded all the rest. These languages were the tools one used to create a computer program.

As things were developing in software, meaning complete programs written that could do one or more tasks on the computer (actually a microprocessor), there was a major move initiated by a governor in the State of Illinois that would tax such intellectual property. Although the matter was fought in court, the State of Illinois won. It is because of this event that all software you purchase is taxed.

The Quill Corporation fought all the way to the Supreme Court, their being forced to charge a State of Illinois tax on products they sold out of state. They won and technically, if you pay a tax on something from an out of state store, as one would find on the internet, that store must have an agent in the state you reside before the local state tax can be added.

This new classification of what was intellectual property, as described in copyright laws, started in one state and then quickly was expanded to all 50 states. It was a new cash-cow for government.

We are now at the brink of another tax that if passed, could be quickly applied throughout all other states. The legislation is introduced by the 14th District State Representative, Nancy Skinner. In it, she wants to tax sales over the internet. It does not seem to matter what kind of sales, just sales in the State of California purchased over the internet.

This is a dangerous piece of legislation for everyone who uses the internet because just like the taxation of intellectual property that expanded throughout the entire 50 states, so too will Skinner’s legislation be adapted by other states as well.

You can read Skinner’s legislative proposal by clicking on this link.

Recommend course of action: Write to Skinner even if you do not live in her Representative District and make her aware of how her bill could potentially adversely affect all sales over the internet.