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Internet tax moratorium expires in November 2007 -- what will the Democrats decide to do?

Those who oppose state and local taxation of the Internet are happy that Sen. Lott (MS) won (25-24) the post of Senate Republican Minority Whip today. Â I blogged on Monday why this leadership race was an important precursor on Internet tax and net neutrality. Senator Lott's opponent in the whip race was Lamar Alexander of Tennessee, the Senate's biggest proponent of ending the Internet Tax Moratorium and allowing state and localities to tax the Internet.  

Why is the Internet tax moratorium still an important issue to focus on for those following the Internet and net neutrality?

The current Internet Tax Moratorium expires November 1, 2007.

The BIG QUESTION is what will Congressional Democrats decide to do? 

  • Will Congressional Democrats reverse Congress' decade-long, "don't-tax-Internet" policy and not support extension of the Internet moratorium?
    • Remember, not only did Democrats win a majority of the House and the Senate, they also won a majority of state Governorships -- the Democrats went from 22 to 28 Governorships.  
      • There will now be a lot more statehouse pressure to reverse current policy and declare that the Internet is not Interstate commerce so the states and localities can tax the Internet.
    • In addition, the Democrats are reported to be looking at new taxes they could impose in the future.
  • Will the Democratic leadership allow the Internet Tax Moratorium to become the vehicle for a messy showdown over net neutrality?
    • This is a real gut check issue for the new Democratic Congressional leadership.
      • As former Clinton Press Secretary Mike McCurry warned before the election -- do the Democrats really want to be the party that was first to tax and regulate the Internet?
      • In other words, do the Democrats want to be play with fire (the Internet and the economy) when they want to take back the White House in 2008?
        • Few policy missteps could have more negative political consequences for the Democrats than screwing up the Internet, the economy's main source of growth and productivity.
      • Hopefully, the Democratic leadership will have the wisdom: "if it ain't broke, don't fix it." The political unintended consequences of getting Internet policy wrong should chill even the most confident of the pro regulation types.
        • Surely there will be Democrats in the room remembering what happened during the bubble.
        • Surely there will be those that remember the disaster that ensued when the Hundt FCC thought that they knew and controlled all, that they could pick winners and losers and skew competition without any unintended consequences.
        • Many should remember that American pensioners and investors lost over a trillion dollars lost in fiber and CLEC stocks that were heavily favored by the Hundt FCC before the market bubble burst.