New Internet Tax Scheme Presents Another Method

A group that provides guidance on how to expand the Internet has come up with a proposed solution to the taxing of goods and services over the Internet, and will present the solution on Friday, Oct. 13. This time, the solution is very simple.

A committee of the National Academy of Science's National Research Council is recommending that everyone pay the same tax rate regardless of where they reside or the state in which the vendor is based. Called a 'flat tax,' the tax would be collected by the vendor.

Sounds good in theory, but a flat tax-based system probably won't work, according to Karl Frieden, a partner with Arthur Andersen, author of Cyber Taxation: The Taxation of E-commerce.

Frieden says the flatter a tax is, the more uniform the program, and as a result, the more objection there is to it by states because it speaks against the ability for each state to run its own government as it pleases.

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