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Internet Taxation

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The economic arguments against taxing electronic commerce are strong. First, such taxation is
inefficient. Imposing multiple, overlapping or discriminatory access or sales taxes on the Internet or electronic
commerce in general would be extremely difficult and inefficient in practice. Having 30,000 or even just 50 tax
jurisdictions and policies would create a confusing and counter-productive domestic tax regime. Imposing such
a tax regime on the Internet or electronic commerce would also have an extremely deleterious effect on the
Internet sector just as it is beginning to grow and expand. Industry output and entrepreneurship would likely be
greatly curtailed as a result.

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