Four Issues Facing Technology

Now that the new Congress and President are getting settled in office, just what are the policy implications of GOP control of the executive and legislative branch, particularly for the world of technology?

Interestingly, the next couple of years may find the largest influence on the technology industry coming from the individual states, rather than Capitol Hill or the White House. Of the four issues expected to be key in the next few years, at least two and likely three will play themselves out in the states.

What are these four issues that will effect technology?

• an Internet tax--specifically, taxation on remote sales;

• privacy, and possibly security;

• intellectual property protection; and

• broadband deployment.

None of these issues is new to the technology industry.

Internet Tax. Regardless of what happens on Capitol Hill, the issue of Internet taxes--more specifically, the remote taxation of commerce--will remain a topic of much discussion. Several state-level initiatives are underway in an attempt to tax those who do not have a physical presence in the state at the time of purchase.

The National Governors Association is attempting to form a compact of states, posing a Constitutional challenge to the ban to remote taxation. Also expected to be prominent in 2001 is the Streamlined Sales Tax Project, which seeks common definitions of a tax base in an attempt to radically simplify state tax structures.

At the federal level, the debate will continue as to whether the current moratorium on discriminatory and multiple taxes on the Internet from the federal and state level should remain.

Privacy. Already receiving a great deal of state-level attention--in studies, commissions, and in legislation--is the question of privacy protection in an electronic age. The issue splits the technology industry between those who want a legislative fix, and those who oppose government intervention where industry self-regulation has yet to be tested.

The greatest challenge with respect to privacy is that decision makers must take the time to understand the many issues that are often conflated into privacy, including security and "anonymity" versus "privacy."

In Washington, policymakers will be asking if privacy issues are best resolved at the federal or state level. Will the individual states be permitted to move ahead with their own agendas, or should the federal government pass national legislation aimed at preempting action by the states?

Intellectual property protection. A matter of such great importance that the Founding Fathers addressed it in the Constitution, intellectual property has become the very basis of the U.S. economy. Very little will happen in the states on this issue because of its Constitutional protection.

Nevertheless, state elected officials should stay abreast of current developments. Related controversies, such as those surrounding the regulation of Internet access providers, will be raised, if not ultimately addressed, at the state level.

Congress is expected to re-examine the Digital Millennium Copyright Act to determine the proper balance between content protection and responsibility of an Internet service provider.

Broadband deployment. The future of broadband technologies--cable, satellite, traditional dial-up, and digital subscriber lines (DSL)--will affect everything from the digital divide, to education, to entertainment. Virtually every Internet-age method of communication is ultimately affected by broadband.

Most of the activity on this question will take place at the federal level, as various agencies and Congress grapple with myriad deregulation and competition issues. But many states and localities already have passed ordinances, rules, or laws that have serious implications for the speed, cost, and freedom of technology.

Of course, other issues of great importance to the technology industry will emerge. Some are already known: at the federal level, making the research and development tax credit permanent will be an important issue; and at the state level, elimination of access taxes currently in place will be key. Nevertheless, the four issues identified here will be most prominent.

The tremendous complexity of technology issues will place a great weight on the shoulders of all elected officials. If they are to make wise decisions supportive of America's growing technology economy, they must understand that their decisions will affect not only the narrow subject of interest, but also the much broader scope of technology's future.

Bartlett Cleland is director of the Center for Technology Freedom at the Institute for Policy Innovation.

For more information ...

Access to the Internet: Regulation or Markets? This executive summary of a popular Heartland Policy Study provides a good overview of the issues involved in the question of "open" or "forced" broadband access. (The Heartland Institute, September 1999, 4pp.)

Request PolicyBot document #7213302