A tax bill disguised in children’s clothing

OPINION:

Way back in 2005, when Michael Jackson was on trial for child molestation charges and YouTube was founded, the political class was very concerned about “the children.” In July of that year, 12 Democratic senators introduced SB1507 — the Internet Safety and Child Protection Act.

Strangely, after it was read on the floor, the bill was referred to the Senate Finance Committee. An error perhaps? Its title implies it is about child safety and protection so why wasn’t it sent to the subcommittee on children and families? It rightfully died in committee, but where it met its fate was no mistake. For, you see, the proposed legislation had little new (even then) to do with Internet safety, and everything to do with finance.

Yes, the bill contained a bunch of rhetoric about websites with adult content verifying that users were at least 18 years old, and it also mandated that credit card processors verify the websites charging for adult content only let folks over 18 have a peek. But digging through all the blah, blah, blah, there was one critical sentence: “Amends the Internal Revenue Code to impose upon the operator of a regulated pornographic website for any Internet pornography display or distribution a tax equal to 25 percent of the amounts charged.”

You read that right: The Internet Safety and Child Protection Act was really a tax bill disguised in children’s clothing, thus its referral to the Finance Committee. Yes, it died there, and deservedly so.

But, if at first you don’t succeed try, try again — especially if it’s a bad idea. Now, like a hydra with multiple heads, 14 years later it’s back — only this time in the Arizona Legislature. Enter Gail Griffin, an 84-year-old Republican member of Arizona’s lower house and guardian of old, failed ideas.

Now reincarnated as HB2444, the bill proposes adding an entire chapter to the Arizona statutes. Like in its previous life, this bill is heavy on regulations requiring adult websites to use blocking software and tools to prevent children from accessing online pornography. As an added bonus it now also requires the websites to collect the personal information of users, including, among other things, their name, Social Security number, address and a photograph — the state wants to know who is watching pornography.

But the “best” is yet to come.

Buried in the pages of the bill is a sentence that requires all persons that access adult websites in Arizona to pay a tax of $20 per website. It also establishes the John McCain Human Trafficking and Child Exploitation Prevention Fund, and directs that the tax revenues collected be deposited into that fund and used to “build a border wall between Mexico and this state.” Seriously.

Aside from the obvious problems with enforceability and constitutionality, there are some other big issues here. How did protecting children from pornographic websites get linked to building a border wall? Regardless of one’s stance on illegal immigration and wall construction, are the migrants running the adult websites or watching them? Yes, it is confusing.

Taxing media delivered on the Internet isn’t a new idea. In fact, applying sales tax to online purchases is rather common. Buy a product from Amazon and you pay sales tax — not unlike purchasing it by walking into your local Walmart. Get a song from iTunes or even stream a movie on Netflix and in many states you will pay sales tax. But there is a big difference with these taxes.

The states charging sales tax on movie streaming collect it on all movies — not just Westerns, or dramas, or chickflicks, or porn. There is no distinction between different forms of content. Obviously, there should be some protections in place to prevent underage viewers from accessing adult content, but exclusively assessing a tax on only pornography is just a poorly veiled attempt at social engineering — like other “sin” taxes on things like cigarettes and alcohol.

Also, let’s do the math here. How much would this tax actually raise? Current Census data puts the adult population of Arizona at roughly 5.5 million people. In a Pew research study, it is estimated that 12 percent of the population view Internet porn at least once per month. In Arizona, that works out to about 660,000 folks. But most of those views are probably on free sites — yes, Internet porn is mostly free these days.

However, for the sake of the children, let’s assume every one of those folks viewed adult material on a paid site and they all paid the $20 tax. That amounts to about $13 million in tax revenue. It’s not pocket change, but it is a far cry from what’s needed to build a wall. The Office of Management and Budget (OMB) just recently put the border wall cost at $24.4 million per mile.

So really, all of this fuss will build about half of a mile of wall in the name of pornography.

Reportedly, Gail Griffin has recently withdrawn the bill, but just wait — the third time is often a charm.

• Kevin Cochrane teaches business and economics at Colorado Mesa University, and is a visiting professor of economics at The University of International Relations in Beijing.