August 05, 2005
Taxing Internet Porn
Posted by Victor Fleischer

Paul Caron points me to S.1507, a Senate bill that would impose a 25% excise tax on Internet porn. 

Is it good policy?  I'm sure my libertarian friends will freak out, but the policy doesn't sound so bad to me.  The bill is premised on the notion that teenagers are heavy consumers of internet pornography, and teenagers and younger children are often victims of the industry.  These are unfortunate negative externalities of the product, and taxing a harmful product is one way to reach a socially optimal outcome without having to regulate the activity out of existence.  Funds generated by the tax will go to things like a cyber-tip line and a task force to investigate internet-related crimes against children.

Complicating matters is the bill's questionable constitutionality. The Supreme Court has not been friendly to Congressional attempts to regulate internet porn.  And the Supreme Court has, in the past, struck down taxes that differentially burdened constitutionally protected speech.  See Minneapolis Star v. Minnesota Commissioner of Revenue, 460 U.S. 575 (1983). Still, the tax here seems targeted at addressing the negative externalities caused by the activity, not at stifling the speech for the sake of stifling speech.  It probably helps that the funding is mostly earmarked for law enforcement activities, not general revenue.  What's not at all clear is how Congress came up with the number of 25% and whether this bears some reasonable relation to the externalities caused by the activity.  It is an excise tax based on revenue, and surely if the number were 100% the Court would strike down the bill as an unconstitutional restriction of protected speech.  I don't know enough First Amendment jurisprudence to know how hard the Court will scrutinize the reasonableness of the tax and how it is targeted, and my semi-educated guess is that the tax would survive scrutiny, but it seems likely that an Internet Porn tax will be subject to judicial scrutiny in a way that a fat tax would not be. 

Of course, this being Congress, there's some question whether dedicating funds to cyber-tip lines, etc. is mainly for show.  The wheels start to fall of the wagon as you move further down the bill. The tax will generate a lot of money, and perhaps the bill's drafters were struggling to figure out where to send remaining funds.  Section 212(a)(6)(A), after moving down the cascade of recipients past law enforcement, R&D (to develop better filtering software) and educational training, includes the following provision:

    (A) FEDERAL AGENCY SUPPORT- 50 percent of remaining amounts shall be used to provide funding to support child Internet safety activities, as well as activities combating sex trafficking and sex crimes against children, on the part of the following Federal agencies:

          (i) Department of Justice.
          (ii) Department of Commerce.
          (iii) Department of Defense.
          (iv) Department of Education.
          (v) Department of Health and Human Services.
          (vi) Department of State.
          (vii) Department of Homeland Security.
          (viii) Department of Treasury.
          (ix) Department of Agriculture. [(?) --ed.]
          (x) United States Postal Service.
          (xi) Federal Trade Commission.
          (xii) Federal Communications Commission.
          (xiii) National Aeronautics and Space Administration.

Yes, to protect children from sex crimes and sex trafficking, let's get NASA on the case.  We all know what happened when Cartman was abducted by space aliens, and your child could be next.

UPDATE:  Eugene makes a strong argument that it's unconstitutional.

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ยป Internet Porn Tax: from The Volokh Conspiracy ...

My friend and colleague (and fellow Kozinski clerk) Victor Fleischer (Conglom ..." [more] (Tracked on August 5, 2005 @ 11:28)

Comments (6)

1. Posted by Will Baude on August 5, 2005 @ 12:10 | Permalink

Volokh's reply is spot-on. That speech has "negative externalities" because of its content is generally not an admissible argument in the First Amendment arena.

2. Posted by Eric Goldman on August 5, 2005 @ 12:22 | Permalink

Vic, a few observations:

1) 18 USC 2257, which sets the proposed definition of a "regulated Internet pornography" website, is under constitutional attack.

2) Notice that the definition of "pornography" is screwed up (the cross-reference goes to a section where the term isn't defined). This definition, of course, is critical, because the term "pornography" includes constitutionally protected speech.

3) While I remain open-minded about the constitutionality of an Internet porn tax, I remain much more bearish that the first part of the statute can survive constitutional muster in light of the Ashcroft v. ACLU case. If the first part is struck down, then the tax obligation will drop accordingly.

4) Note, of course, that the tax does nothing to address "free" Internet porn--which is what drove Congress crazy enough to pass the Children's Online Protection Act (which the court struck down in the Ashcroft v. ACLU).

We all know what's going on here; Congress has been doing this dance for 10 years. I suspect the Supreme Court would necessarily consider that history in any analysis.


3. Posted by Christine on August 5, 2005 @ 13:28 | Permalink

I think we should change our name to "Post-Modern Public Morality Blog." Who would have thought that Gordon would get mixed up in the gambling, prostitution, and porn blog?

4. Posted by Josh on August 7, 2005 @ 7:18 | Permalink

"The bill is premised on the notion that teenagers are heavy consumers of internet pornography"

OK, every teenager I knew growing up was a heavy consumer. This has probably been the case since the beginning of porn. Is there any evidence that this has caused anyone any harm (execpt the angst felt by people whose values it offends)?

"teenagers and younger children are often victims of the industry."

This is wrong. The Porn industry wants nothing to do with abusing kids; the second it is credibly tied to it it goes down the tubes, with all its $ billions. Children are victims of sexual predators, who have sex with them and sometimes make videos, which they sell or swap. There is a huge and very sucessful effort underway to lock these predators up, forever. The porn industry has nothing to do with the probelm of "kiddie porn." The Porn Industry is located in a well known area in CA and its operations are fairly transparent. There is a law that requires that the producers of porn maintain records demonstrating that the actors in their movies are of legal age, and that law is enforced. If there were a scintilla of proof that the porn industry was exploiting children it would not exist.

Taxing porn at a higher rate than other products gives religious people the power to regulate our lives.

5. Posted by Christine on August 7, 2005 @ 21:38 | Permalink

I agree with Josh. After spending the summer reading diatribes against online gambling, I definitely see a parallel. Lawmakers want to end online gambling, so they say that it is targeting our "children." (They like to use the word "children," not "college freshmen.") But as Josh said, teenagers used to hide real porn, now they hide internet porn. Colelge freshmen play poker together, and now college freshmen play poker online.

6. Posted by catches on November 12, 2005 @ 15:01 | Permalink grudgepartsreligious

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