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Press Release


Nation’s Oldest Taxpayer Group Backs Bipartisan Bill to Protect Consumers from Predatory “Download Taxes”

For Immediate Release May 13, 2011
Pete Sepp, (703) 683-5700

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(Alexandria, VA) – For the sake of consumers, businesses, and the future of America’s high-tech economy, Congress must clarify the limits on state and local taxation of digital goods and services now  -- by passing newly-introduced bipartisan legislation from Senators Ron Wyden (D-OR), John Thune (R-SD), Lamar Smith (R-TX) and Steve Cohen (D-TN). That’s the urgent message the 362,000-member National Taxpayers Union (NTU) conveyed today to federal lawmakers.

The Digital Goods and Services Tax Fairness Act of 2011 (S. 971 and H.R. 1860) would provide important protections for consumers who download products and services using mobile devices. Specifically, the legislation would prevent multiple taxes by clarifying which state or local government has tax jurisdiction over such transactions, prohibit discriminatory tax rates (e.g., higher than those on other sales) from being applied to downloads, and require governments to affirm download tax policies by statutory law rather than administrative rulings or retroactive “interpretations” of existing policies.

“Americans deserve an insurance policy against predatory taxes on items they purchase through downloads, and the Digital Goods and Services Tax Fairness Act is the ideal tool for the task,” said NTU Executive Vice President Pete Sepp. “In a mobile world where the buyer, seller, and entities facilitating the transaction can be in many places, it’s unwise, unfair, and unproductive to weigh down this important sector of our economy with numerous, burdensome layers of arbitrary and excessive taxation. This is especially true at a time when deficit-ridden state and local governments are often grasping at aggressive but ultimately destructive revenue collection strategies to fill their coffers. ”

Sepp noted that the Digital Goods and Services Tax Fairness Act will be an integral part of NTU’s ongoing agenda to enact sensible tax policies toward economic activity that occurs through information age technologies. In 1998, NTU was one of the first organizations to actively advocate for federal legislation placing a moratorium upon discriminatory state and local taxes on Internet access. Since that time NTU has sought similar protections for wireless service.

“Although NTU believes that lower, simpler taxes must be an integral part of the interconnected digital world in which we live, all Members of Congress, regardless of their goals, should support the Digital Goods and Services Tax Fairness Act,” Sepp concluded.  “Clear and equitable tax policies are in everyone’s interest, and this legislation can bring both to a market whose contribution to our nation’s future prosperity will be critical.”

NTU is a nonprofit, nonpartisan citizen group founded in 1969 to work for lower taxes, smaller government, and economic freedom at all levels.  For further information on NTU’s technology and telecommunications tax policy work, visit www.ntu.org.