Subj: Privacy and Tax: Perspectives of Americans For Tax Reform 
From: Grover Norquist Americans For Tax Reform (ATR) 
To: Internet Caucus Advisory Committee

NET TAX SCHEMES THREATEN PRIVACY

Another critical issue raised during the Commission’s deliberations was that 
of protecting Americans’ privacy from nosy government bureaucrats and tax 
 collectors.

The proposal put forth by the National Governors Association, which would 
 enlist “trusted third parties” to serve as interstate tax collectors, provided 
a prime  example of how state and local politicians will sacrifice taxpayers’ 
privacy in their quest for  higher taxes.

Under the system envisioned by the NGA, all remote vendors would ultimately 
 be required to collect personal consumer information and transmit such 
 information to a “trusted third party” (which could be anything from the 
federal government to  the United Nations), which would then calculate the 
applicable sales tax and separately  charge the tax to the consumer’s credit 
card. Privacy advocates quickly ripped the NGA’s proposal to shreds.

In order to guarantee the integrity of the trusted third party system, 
regular auditing would be required, which could not be accomplished unless the 
third party kept electronic records of an individual consumer’s transactions. 
The notion of a  government-controlled database keeping track of everything you 
ever bought, where you were when you bought it, what you paid for it, and where 
it was shipped is an idea that offends  every principle of limited government 
and the privacy to which Americans are entitled. The Internet is an incredible 
phenomenon in the development of Western civilization. But it must not be used 
as a means for government to track the behavior of its citizens.

The idea of a national sales tax collection scheme for the Internet is not a 
 popular one. Congress opposes it, as do a majority of Americans. The advocates 
of  higher taxes indeed have a steep hill to climb if they are to realize their 
vision of the tax man  being only a mouse-click away from every American’s 
desktop. As a result, they have  enlisted the support of numerous taxpayer-
funded organizations to wage an intense  lobbying and public relations campaign 
designed to make their tax scheme appear more  palatable.

The National Governors Association, the Council of State Governments, 
the National Conference of State Legislatures, the National League of Cities, 
the International City/County Management Association and the U.S. Conference of 
 Mayors all receive some form of direct or indirect funding from taxpayers. Yet, 
each of  these groups is engaged in a campaign to impose new tax collection 
schemes on the  American people. In other words, taxpayers are being forced to 
fund a  campaign which, if successful, would result in higher taxes on those 
same taxpayers.

This report supports the position of the Republican Congressional leadership 
 for a tax free Internet that is accessible to all Americans. Regulating 
interstate  commerce is a power the Constitution reserves exclusively to 
Congress. Congress must now  use that power to protect taxpayers and consumers 
from would-be cyber tax collectors.

Sincerely,

Grover Norquist Commissioner, Consumer/Taxpayer Representative; President, 
Americans for Tax Reform (www.atr.org)