Quiet. Too quiet.

April 30, 2003

Sales tax and the internet

Apple recently announced their iTunes Music Store, which allows for the purchase of albums or individual tracks over the internet via the familiar iTunes software package. It sounds really cool, but I’m going to refrain from further comment until I’ve had a chance to try it out. I bring it up because, according to some early commentary, when you make a purchase iTunes first asks what location (i.e., state) you are buying from and then charges you state sales tax.

This is probably the correct thing to do. At my job, I occasionally ship purchases out of state for customers, and there are some complex rules for determining which state’s tax gets charged, but it usually works out to charging the sales tax for the destination state if we have a location there. Shipping to a state where we have no location involves no tax. Apple now has a retail presence in many states, so I’m guessing they are required to charge sales tax if you are purchasing music from a state where they have a retail store.

(In New Jersey, you’re supposed to pay the sales tax even if the catalog or internet store has no in-state location. There’s a “use tax” line on the income tax form where you’re supposed to declare those purchases and pay up.)

What this really illustrates is the difficulty of applying real-world jurisdictional rules to the internet (and other long-distance transactions). It’s reasonable enough for me to pay New Jersey sales tax if I’m buying music at home, but let’s say I take my laptop out of state. I doubt iTunes can figure out I’ve crossed a border on its own, but I don’t think Apple expects everyone to change their location information whenever they travel. (I’m assuming iTunes doesn’t ask you what state you’re in every time you purchase music, as that would be rather obnoxious.)

The real question is, if you and I perform some sort of transaction over the internet or another telecommunications medium, what rules apply to whom? If I buy a song from Apple, Apple has to pay my state’s sales tax. (But only if they have a store in my state; otherwise, any internet retailer would need to be familiar with every commercial situation in the world.) Similarly, when someone tried to sell Nazi memorabilia through a Yahoo auction, France charged Yahoo with trafficking in Nazi memorabilia, which is illegal in France. If my web site offended someone in England, they might sue me for libel in England, rather than the U.S. which has a narrower definition of “libel”.

I’m not convinced that these rules scale well. In particular, the France and hypothetical England cases worry me.

Imagine two neighboring countries. In Country A, it is illegal to disparage cheese. Let’s say someone in Country B posts a sign, visible in Country A, which states “Cheese sucks!” Country A then charges that person with disparaging cheese, because people in Country A can see the sign. If that seems ridiculous, then so should France’s case against Yahoo.

Imagine the web as a hollow sphere with writing on the inside. It is divided into regions representing the various jurisdictions on Earth where web servers are located. If I write something in the U.S. portion of the sphere, it can be read from anywhere, but I didn’t write it everywhere. (The flaw in this analogy is that writing on walls is a “push” medium—the photons get sent in your direction whether you wanted them or not—whereas the web is a “pull” medium—you have to request the page in order to read it. But that strengthens my side of the argument.)

It gets even more complicated. I live in New Jersey, but ZedneWeb currently lives on a server in California. Fortunately, they’re both part of the U.S., so questions don’t arise over free speech issues, but consider a German who posts something illegal in Germany to a web site hosted in the U.S. Has that person broken a law? What, exactly, has that person done, and where did it happen?

When the internet started getting big, a lot of people said that it transcended locality; local and even national laws could not be applied to it. Since then, a great many people have been tried for things done over the internet, leading some to say that this talk of transcendence was naïve. But that misses the point: it isn’t that the internet makes it impossible to apply local law, it’s that it makes it really hard to determine what laws should apply.

As I see it, we would be wise to resist calls to codify the rules until we have a better understanding of what we’re talking about. #

Ugly politics

You’ve probably heard about Senator Santorum’s comments comparing homosexuality to incest and child molestation, but if you haven’t read the interview transcript, you should. The Senator’s comments are actually worse in context. Not only does he apparently see homosexual relationships as being on the same level as child molestation and bestiality (!), he also feels that the right to privacy itself is a bad idea.

I would put it back to where it is, the democratic process. If New York doesn’t want sodomy laws, if the people of New York want abortion, fine. I mean, I wouldn’t agree with it, but that’s their right. But I don’t agree with the Supreme Court coming in.

This has horrified not only liberals, but also limited-government conservatives, who feel that the government has no business getting involved in the affairs of consenting adults.

This of course follows Senator Trent Lott’s comments about how we would all be better off if ardent segregationist Strom Thurmond had won the presidency all those years ago, and Representative Barbara Cubin’s conflation of “black person” and “drug addict” (Washington Post via Josh Marshall). Of the three, it seems that only Senator Lott is suffering any repercussions. The House voted 227 to 195 not to strike Representative Cubin’s comments, and the White House has declared Senator Santorum an “inclusive man”.

Now, I’m all for free speech, but one really has to wonder what these people were thinking. These statements seem like ones that would drive people away from the Republican party. Or perhaps I’m out of touch. Certainly, the media doesn’t seem to think it’s a big deal.

In other political (or vaguely politics-related) news: