Hey, Wired President. You Wouldn't Tax the Internet, the Cell Phone or the Tweet. Would You?

April 29th, 2009

Maybe it’s just me (and my wife).

We still put spare change into a piggy bank (a red pig, actually), as we go. Pays for a nice dinner, every now and then.

So it floors me, still, when I see the dimensions of the federal budget and how we pay (or don’t) for what we do.

Check this, but the federal budget is now $3.5 trillion. Okay. But the deficit is … $1.7 trillion?

This means our federal government only pays for half of what it spends by taxing you and me for it. The rest has to be borrowed.

That’s not going to keep up. China is already making noises about not buying more Treasury notes. And, why do I not believe that President Obama is going to be able to bring down the deficit as fast as he hopes and/or projects?

Doesn’t matter. The real worry is what happens when the crunch comes and our Wired President decides he’s got to find new sources of revenue to make ends meet.

Yeah, it’s cool to communicate with contributors, constituents and colleagues via the Internet and email. So, by extension, he’ll also be the first president to recognize the value of … taxing Internet and other electronic communications.

Let’s see.

• E-Commerce. There’s really no reason that an online store should have a sales tax advantage over an offline store. Stiff the States. Let’s levy a federal sales tax on Web shopping carts. Charge 4 percent on each buck. If online sales manage to hit $200 billion in 2010, that $8 billion more in the federal treasury.

• E-Mail. Hey, this is the Blackberry addict. Why are there no stamps on e-mail? States have tried to tax e-mail. But this guy – and his CIO and CTO – could figure out how to make it stick. If Americans account for even one-fourth of the 2 million emails sent a second in the world, that’s 1 million messages every four seconds and 8 trillion a year. A 4-cent stamp – one-tenth of what’s on a paper piece of mail – would generate … $320 billion a year. Now, you’re talking some real money.

And then there’s … the tweet.

Who knows how many 140-character messages are being sent every second, by Americans. But Americans love to send short text messages. And it’s easy to see another 8 trillion or so emerging here every year.

Pretty soon, communications winds up solving a lot of the revenue shortfall in this country. Heck, taxing authorities figured this out long ago. In New York, for instance, local, state and federal taxes add about 20 percent to the cost of a cell phone bill.

Now, if you were President Obama, you’ll avoid the use of communications taxes as long as you can. Would kind of undercut you with your Internet supporters that gave so many small contributions that you wound up in the White House in the first place.

But, if push comes to shove, and the budget refuses to balance, Barack Obama is a realist.

And he understands that cell phones, e-mail, text messages and tweets are eminently taxable.

If a federal cash crunch comes (hey, Bank of America, need another hundred billion?), don’t be totally surprised if he redefines what it means to be an Internet president.

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