Heads In The Clouds

(An interesting discussion.  I created a “fold” in the original text so that it would fit a little better on our front page. – promoted by Sue Prent)

Every tax, however, is, to the person who pays it, a badge, not of slavery, but of liberty. 

 – Adam Smith

There is a new menace to liberty: The Cloud Tax.  And by 'new', I mean it's a few years old, but this week it's gotten some press and a new Facebook page.

At the heart of this manufactured issue is a technical bulletin from the VT Dept of Slavery, er…Theft, uh…that is…Taxes.  These things “contain general information on a subject. They are not intended as advice with respect to a specific fact situation, but rather are intended to provide general guidance to the public on a topic. They often will be industry specific and provide information derived from several statutes.”

Note TB#54 was originally published in September of 2010, under Republican Gov Jim Douglas before the election.  Further note it refers to VT statutes, including an amendment to digital products definition that was passed by a special legislative session in June 2009, to wit:

Transferred electronically: means obtained by the purchaser bymeans other than tangible storage media.

 

Our sales & use tax law already included this: 

Tangible personal property: means personal property which may be seen, weighed, measured, felt, touched or in any other manner perceived by the senses. “Tangible personal property” includes electricity, water, gas, steam, and prewritten computer software.

So there is not some new tyrannical law or regulation created by the socialist Shumlin administration that they're now shoving down our throats.  This has been on the books for a few years, and the Tax Dept issued an informational document to clarify how it was being implemented.

The only new thing is businesses who have failed to collect the tax properly are complaining and rallying support for their cause.  Because, of course, if cloud services are taxed, nobody will buy them, and surely no innovator will ever try to develop new ones since they offer no other technical advantages in terms of efficiency, simplicity, etc.

Now on their Facebook page, having provided scant details to the people they've worked into a froth, there are all sorts of commenters asking how this could even possibly be legal and crying out: NO TAXATION WITHOUT REPRESENTATION!

Oy. 

Remember our state constitution:

Previous to any law being made to raise a tax, the purpose for which it is to be raised ought to appear evident to the Legislature to be of more service to community than the money would be if not collected.

Our duly-elected citizen legislators have debated and passed our tax code per their constitutional responsibilities.  We have, in fact, been represented through the entire process and it was decided years ago that the state would tax software services provided in a cloud environment so we might be able to pay for services that benefit the people as a whole.  They are certainly measurable, through usage of bandwidth and/or storage, for example, and are no more ephemeral or less useful than electricity or other such kinds of TPP.

The government has a general taxation power.  It is arguably unlimited, though obviously there are political and electoral constraints that keep it in check.

“Taxation without representation” (which is merely a paraphrase, BTW, of James Otis in 1765) does not mean that we must be directly consulted every time a tax is imposed.  We weigh in during elections, and we should be informing ourselves as good citizens of the republic before we cast our ballots.  I have very little sympathy for cries of tyranny about something that's been around for almost 3 years with an interceding election having been held.

There's plenty of good argument to be had about the wisdom of this tax.  Democrats and Republicans in Montpelier support a change, though I'm still not convinced this is a bad source of revenue.  Just lay off the ignorant “this is illegal” and “we're not represented” crap.

ntodd

PS–I still support the Federal moratorium on taxing Internet access, which is a different kettle of fish. 

Update: Freep calls it a “stealth tax.”  Makes me think they don't understand stealth or public info any more than Ron Paul does

Further update: I've emailed Sen Illuzzi and cc'd the article's author, asking where in statute the Tax Dept is required to run bulletins through the Leg.