Letter from Rep. Chris Cox (R-CA) to President Bush. Date: July 7, 2004. Re: Internal Revenue Service's (IRS) notice in the Federal Register regarding expanding the excise tax on telephones to also include new technologies, such as VOIP. Source. Office of Rep. Cox.

Dear Mr. President:

Thank you for your outstanding leadership in defending Internet consumers against destructive taxation and regulation. Your advocacy of a permanent ban on Internet access taxes and your determination to remove regulatory obstacles to broadband deployment are critical ingredients in America’s continued economic success.

Yet as clear as your clarion call for freedom and innovation has been, it appears that some in the administration still aren’t getting the message. The attached story from News.com describes an IRS decision to consider putting new taxes on the Internet -- specifically, by extending to the Internet the Spanish-American War Tax on telephone service enacted more than one hundred years ago.

Ironically, Republicans in Congress have been working hard to abolish this tax completely. When it comes to consumer excise taxes, only alcohol and tobacco are taxed more heavily at the federal level than phone service. Telephone customers are then hit with state and local tax rates that can run up to three times the rates paid on other goods. That is why the House has voted to liberate consumers from this regressive tax.

I can think of few initiatives that would do more to impede the Bush broadband agenda than extending the Spanish-American War Tax to Internet telephony. I urge you to direct the IRS immediately to affirm that this 100-year-old tax does not apply to the Internet, but only to traditional analog voice services. If IRS analysis suggests that this will prevent Washington from raising new revenue from this tax, that would be very good news for American consumers -- and more than 100 years overdue.

Thank you for your leadership in protecting American consumers from destructive taxation. Please let me know if I may be of assistance in keeping the Spanish-American War Tax off of Internet telephony.

Sincerely,

 /s/

Christopher Cox
U.S. Representative