NetChoice Finds State And Federal Initiatives Add Cost And Complexity To The Internet

Updated iAWFUL Ranks Top Threats to Online Commerce

WASHINGTON, Sept. 15, 2011 /PRNewswire-USNewswire/ -- NetChoice's Fall 2011 iAWFUL list identifies a massive new Internet tax regime, overreaching social network restrictions and federal data retention requirements as potentially devastating for the Internet's continued success.

Since 2009, the Internet Advocates' Watchlist for Ugly Laws (iAWFUL) has identified state and federal legislation that poses the greatest threat to the Internet and e-commerce. In its second update for 2011, iAWFUL once again puts an early and urgent spotlight on legislative efforts that threaten the Internet's entrepreneurial growth.

"With the national focus on job growth you'd think politicians would try to encourage Internet commerce, not stamp it out," said Steve DelBianco, executive director of NetChoice. "Yet once again, the iAWFUL list chronicles legislation that has the potential to grind online innovation to a halt."  

Topping the iAWFUL list is the Durbin-Conyers " Main Street Fairness Act (PDF)," federal mandate that all online retailers collect and remit sales taxes to multiple states – even where the retailer had no physical presence.  

The stated purpose of the Main Street Fairness Act is to "level the playing field" between online and traditional brick-and-mortar retailers by requiring online sellers to collect sales taxes on all purchases, not just those to home-state customers.  In practice, the bill would impose disproportionate collection burdens on exactly the sort of small businesses that lawmakers say are vital to the economic recovery.

According to the proponent's own  study (PDF), small businesses spend 17 cents of their own money to collect and file every dollar of sales tax they send to their home states.  The Durbin-Conyers bill will greatly expand that burden by forcing small online retailers to collect for dozens of states, requiring expensive software updates, inviting exposure to an army of auditors, and cutting into resources they'd rather spend on building businesses and creating jobs.

At the state level, Puerto Rico leads the charge for meddling in social networks with proposed legislation that requires parental consent before users under the age of 18 can share their interests and activities with friends.  The legislation is severely shortsighted in a world where social networks provide a wealth of information on education, health, and social issues.

Not limited to email addresses or sensitive information, HB 3526 applies to any information about users under 18 that identifies an individual and requires social networks to remove upon request any user information within 72 hours or face fines of $10,000 for each violation.  

In addition, social networks are precluded from posting any information about the user other than name or town without parental consent.  So if a 17 year-old wanted to share their favorite websites or photos with their friends, they would need parental consent.