Net Taxes: Gephardt Jumps on the Do-Nothing Bandwagon

Today’s Wall Street Journal reports Richard Gephardt’s belated arrival in the debate over taxing electronic commerce, endorsing another three-year moratorium. This is essentially an endorsement of no particular action, since the committee of business and government interests that met in Dallas recently to hash out a new Internet tax policy ended up gridlocked. Still, Gephardt has his reasons for weighing in. The Journal quotes from a Gephardt speech draft: “The best and quickest way to kill the golden goose of the Internet is to tax it to death.”

Now, really, what would it take to “kill” the Internet as a business proposition at this point? The armed occupation of Silicon Valley? A rain of toads? President Nader? You would think that someone was proposing some new and massive tax on all dot-com ventures, or on business plans, or maybe even on cocktail-napkin jottings. Instead, Gephardt is merely joining a chorus of people calling for what amounts to tax breaks for the Internet economy.

Usually tax breaks for businesses are meant to be some sort of incentive–to stay in a given geographic locality, to pollute less, to take certain risks for the greater good of society, etc. Does anyone believe that we need incentives to lure companies and entrepreneurs to participate in what John Doerr has famously called the greatest legal creation of wealth in history–maybe by offering up the greatest legal tax dodge in history?

There’s no reason that Internet companies should not push for tax breaks–they should push for the best terms they can get from the government, just as they push for the best terms they can get from anyone else they deal with. But in this instance the companies seem to be negotiating with patsies.