Can e-mails be taxed?

Would your feelings about e-mail change if you had to pay a miniscule tax on it?

Free e-mail is too good to be true anyway, right? But can the government find a way to crash the party and slap taxes all over those puppy pictures you just zipped to grandma's AOL account? Someone has to pay for all of these traffic lights and cruise missiles, you know.

With headline after headline sounding the death knell for the cash-hemorrhaging U.S. Postal Service, it's almost easy to see the logic of an e-mail tax. Apply just the tiniest toll to a few of the 145 billion e-mails that zing through the Internet each day, and you could conceivably stave off the Postal Service's imminent demise -- with enough left over to add to the structure of the Internet itself to make it faster and more efficient [source: Mashable]. So steel yourselves. A tax on e-mail may be inevitable and coming sooner rather than later.


Only it's not, really. The panicked myth of an e-mail tax has been around almost as long as the Web. Its origins are a blend of partial truth mixed with the viral appeal of a digital chain letter.

In 1997, Arthur Cordell, a former information technology adviser for the Canadian government, proposed the idea of a bit tax. The concept basically taxed people on the amount of information they send and receive via the Internet. A couple of years later, the United Nations Development Programme released its Human Development Report, which included a mention of a so-called bit tax. For every 100 e-mails per day, there would be a tax of just one cent.

By the report's estimates in 1996, this tax would have raised an astounding $70 billion [source: UNDP]. Just think of all of the good things the governments of the world could do with that kind of cash. It's a whole lot of traffic lights.

That tax never came to be, of course, because it didn't gain the kind of support it would need to overcome the many political and logistical obstacles involved. Keep reading, though. We'll share more e-mail tax proposals -- some silly ... and some that are more serious.


The Post Office's Piggybank

The U.S. Postal Service’s financial troubles led to a decision to eliminate Saturday mail delivery.
© Kevork Djansezian/Getty Images

In the U.S., the Postal Service has been losing money at a head-spinning rate for a very long time. That's due partly to the popularity of e-mail, which has contributed to a more than 25 percent drop in mail volume since 2010. In just the last quarter of 2012, the agency lost $1.3 billion, and to stop the bleeding, it decided to nix Saturday mail delivery [source: Reuters]. Surely, if there's an organization worth saving through taxation, it must be the USPS. Right?

Enter Bill 602P, which would theoretically levy a 5-cent tax on every e-mail. That money, of course, would be funneled to the USPS. Never mind that the USPS has absolutely nothing to do with e-mail.


Only, there isn't any Bill 602P. It's an Internet urban legend spun off from a Canadian version that spouted the same kind of rhetoric. All of the details about 602P are fictional.

That didn't stop the media from reporting on it, though, or from bugging political power players about it. In a 2000 senate race, a television news reporter named Marcia Kramer asked both Hilary Clinton and Rick Lazio about the bill's details. Unsurprisingly, both candidates spoke out against the fabricated tariff.

Although this bill never existed, the storyline behind it has been a pervasive Internet hoax, and one that's difficult to completely quash.

It's not hard to see how this kind of rumor could start. The hoax plays right into the highly publicized struggles of an iconic (and increasingly irrelevant) institution. Also, since online shopping became so popular, there's been persistent confusion about how different states and countries apply sales taxes. Online sales tax and e-mail tax are two very different things, but when you add in a dash of fear and anger about taxation in general, you wind up a good recipe for a lot of uproar about nothing.

At present, there are actually laws in place protecting against these kinds of taxes. In 1998, President Bill Clinton signed the Internet Tax Freedom Act, which prohibits governments at every level from applying Internet-only taxes upon consumers. That includes, of course, those fictional bit taxes and e-mail taxes, as well as bandwidth taxes.

Laws can be repealed, of course. And some people say this one should be changed so that governments can finally tap into e-mail transfers for revenue. So don't put away your pitchfork just yet. There might still be some tea that needs to be tossed into the sea.


An Impossible Proposal?

Proponents of the idea of an e-mail tax assert that it would result in fewer spam e-mails in your inbox.
© Mareen Fischinger/Corbis

What if lawmakers suddenly decided to repeal the Internet Tax Freedom Act? Would an e-mail tax suddenly be inevitable? And if such a tax did exist, how would it work, exactly?

There are some people who'd like to find out the answers to those questions. In early 2013, Gordon Wozniak, a city councilperson in Berkeley, Calif., reintroduced the idea of a bit tax to the American consciousness. He proposed a bit tax on the order of one penny per gigabit transferred through the Internet, as well as a "very tiny" tax on e-mail [source: Bradford]. His math is a bit on the fuzzy side, though, when he says such taxes would "probably" rake in billions of dollars per year.


That revenue could be diverted in part to the USPS to keep it afloat. Wozniak also said that such a tax would be a deterrent to e-mail spammers, who rely on the cheap ubiquity of e-mail to annoy and scam people all across the globe. In one swoop, the Postal Service is saved and spam could be virtually eliminated.

From a logical standpoint, it seems more than a little strange to divert revenue from e-mail taxes to the USPS. After all, the two services are entirely different.

But let's assume that lawmakers decided to try and impose this new tax. Logistically, it would be pretty challenging to tax people on the number of e-mails they sent. Because there are so many alternatives to e-mail, such as text messaging and social media sites, people could easily dodge taxes simply by choosing a different form of communication.

So to make a bit tax workable, proponents advocate for a simple blanket tax that could be tacked on to your monthly Internet service subscription. Whether you send one e-mail or 100,000 e-mails, the rate would be the same. That's certainly doable. But thanks to the Internet Tax Freedom Act, it's also currently illegal.

If the reaction to Wozniak's plan is any indication, the idea of overturning the act is pretty far-fetched. His ideas were met with almost universal scorn and derision. Lawmakers would be fighting against their own constituencies just to make such a tax legal, and by the time made any headway, they'd most likely be run out of office.

So if you're alarmed by headlines about e-mail taxes, you can ratchet down from red alert. Those taxes aren't going to happen anytime soon. And with new forms of online communication constantly in development, by the time any such taxes do become a reality, you may not care.


Lots More Information

Author's Note: Can e-mails be taxed?

Let's face it -- if our Internet service providers added a 10-cent tax to our monthly bills in the form of a bit tax, how many of us would even notice? Not many, probably. But many people still see the Internet as a free, wild place where information is shared and proliferated at a wonderfully low cost to the end user. That's probably why so many people have a violent reaction to the idea of an e-mail tax. Well, that and the fact that people just hate taxes. Long live free e-mail!

Related Articles

  • Bradford, Harry. "Berkeley Councilman Proposes E-mail Tax to Save Post Office." Huffington Post. March 8, 2013. (April 2, 2013)
  • Chakraborty, Barnini. "Should the Government Tax Your E-mail? One California Official Thinks So." Fox News. Mar. 27, 2013. (April 2, 2013)
  • CNN. "Tax on E-mail? Long-Running Hoax Endures." April 1, 2002. (April 2, 2013)
  • Geigner, Timothy. "Wrong Legislative Thought of the Day: An E-mail Tax to Save the Post Office." Techdirt. Mar. 11, 2013. (April 3, 2013)
  • Grant, Rebecca. "Why an E-mail Tax is Truly a 'Terrible Idea.'" Venturebeat. Mar. 7, 2013. (April 2, 2013)
  • Mullin, Joe. "Is the Government Going to Tax Your E-mail? Only on Fox." Arstechnica. Mar. 27, 2013. (April 3, 2013)
  • Oates, John. "Opposition to AOL's 'E-mail Tax' Grows." The Register. Mar. 1,2006. (April 2, 2013)
  • Raguso, Emilie. "Wozniak's E-mail Tax: Good Sense or Nonsense?" Berkeleyside. Mar. 7, 2013. (April 3, 2013)
  • Skelton, George. "E-mail Tax May Slice Spam and Scams out of Inboxes." Los Angeles Times. Mar. 24, 2013. (April 2, 2013)
  • Snopes. "Bill 602P." May 27, 2011. (April 2, 2013)
  • United Nations Development Programme. "Human Development Report 1999." 1999. (April 2, 2013)
  • United States Senate. "Is it True That...There is a Bill in Congress to Impose a 5-cent Tax on E-mails?" (April 2, 2013)
  • Welch, Matt. "What 'Courage' Looks like to a Big-Time Newspaper Columnist: Taxing E-mail." Reason. Mar. 26, 2013.
  • Worstall, Tim. "The Ridiculous Idea of Taxing Email to Save the USPO." Forbes. Mar. 12, 2013. (April 3, 2013)