This guy (Steven Pearlstein) is completely off his rocker. This is typical leftist (aka socialist) rhetoric - I'll address some of his points below (my comments in bold), but you might want to read the whole article for yourself.

It's Time Uncle Sam Taxed Techies (washingtonpost.com)

One of the many things I used to admire about the high-tech industry was its disinterest in seeking special favors from Washington, other than to be left alone to turn out truly amazing stuff.

That was what I loved about high tech as well. Nowadays, the politicization of my industry (yes, I work in high tech), has become a reason for my considering a major career change.

Now that's changed. Tech execs and lobbyists are lined up out the door these days, whining and pleading and warning of the demise of the American economy if government doesn't grant a special waiver of the immigration law, hand over large chunks of the radio spectrum, lower estate and capital gains taxes, contort accounting rules on stock options, make permanent the R&D tax credit, exempt them completely from either state or federal regulation (which one depends on the issue), and trample the Constitution to expand and protect their patent rights. Oh, and did I mention giving them new tax breaks for shipping jobs off to Asia?

If the government did not control these facets of the economy (as I think they shouldn't), then lobbyists wouldn't be necessary, would they? Not in the high tech or any other industry. His and my arguments are not specific to high tech, but apply equally to biotech, automotive, eneregy, and other industries. It's a mesasure of how intrusive government regulations have become, as well as the maturing of the industry. High tech industry has long been populated by libertarian minded folk, who are now realizing the world they want to change won't let them.

Topping the list is the long-running industry campaign to exempt the Internet from taxation. There is, first, the proposal to renew the federal ban on any state taxes on Internet access. The industry would have you believe this involves merely the monthly fee you pay to America Online or Comcast or Verizon to access the Web. But read the fine print, and you discover it appears to extend the tax ban to other services that might be 'bundled' with Internet access -- you know, little things like cable service, movies on demand and all your telephone calls.

I don't believe in taxation to begin with, but I'll address his more specific points below.

The justification for this extraordinary intrusion into state prerogatives is that any tax will stifle development of a miraculous and transforming new technology while widening the gap between the technology haves and have-nots. Somehow lost in all the lobbying hyperbole is the fact that Internet use is exploding (more than 60 percent of households already have it, along with virtually every library and school), while access fees are falling like a stone (AOL unveils its new $9.95-a-month Internet access service this week).

Does he realize he's just made the argument for the abolition of taxation across the board? No taxation on Internet access has allowed service to improve and costs to drop through pure capitalism, not through government intervention. Argument #1 for taxation shot to hell...

Nor is it clear why the federal government, in the name of cloclosing the "digital divide," should deny states a couple of billion dollars each year that might be used to close the much more troubling "divides" between those who have quality medical care and public schools and those who don't.

As I mentioned above, he just said that the lack of taxation and government intervention was closing the digital divide on it's own - why should added taxes close the other divides he quotes? Answer: They won't. Period.

Then there is the proposal extending the ban on states imposing sales tax on Internet transactions. The high-tech types say this is a matter of simple justice -- after all, the Supreme Court has ruled that states cannot require catalogue and 800-number merchants to collect taxes on out-of-state sales, so why should the tax law discriminate against Internet sales? But their dedication to a fair and "technology neutral" tax code rings rather hollow when you remember that traditional bricks-and-mortar retailers are at a significant competitive disadvantage, because they still have to collect state sales taxes. Ask the techies about this injustice, and you generally get a lecture about how sales taxes are outdated anyway.

Welcome to a capitalist society, Steven. The person with the best value items (lowest price for the most service) wins. Even bricks-and-mortar businesses fight to keep overhead down to help keep prices down, while maintaining a high level of service. If a new supermall offers lower store-front rents, shops move there, and the Internet has very low rents for store fronts. He's arguing that we should impose taxes to defeat the laws of supply and demand, which is a typical socialist argument - level playing fields for all, so no one goes without. Unfortunately, this only means that everyone goes without.

Perhaps we should increase taxes on people who use busses, because busses compete unfairly with auto makers and petroleum producers, keeping people from buying and using these products? We already tax autos and gas highly to help protect the environment from harmful emissions - turnabout is fair-play, after all. How about increased taxes on people who write letters rather than use the phone, because it's cheaper to write than to call? Or should it be the other way around, to help maintain the U.S. Postal Service? I guess it all depends on which industry or cause you want to artificially prop up to parade in front of the masses, eh?

Finally, there's the issue of how to regulate and tax telephone calls carried over the Internet. Federal Communications Commission Chairman Michael K. Powell has already parroted the industry line that government should keep its hands off so this revolutionary, cost-saving technology can develop on its own. But if the Internet telephone is the wave of the future, as everyone seems to believe, then someone (that would be Powell) ought to be giving some serious thought to how to replace a set of telecom taxes that raise big money for state and federal coffers while subsidizing universal phone access.

Subsidize is a fancy word for entitling people to services they can't afford on their own. Why can't they afford them? Because their taxed so much on everything else, basic subsistance becomes the priority. I don't remember reading the Declaration of Independence and seeing everyone guaranteed "life, liberty, the pursuit of happiness, cheap health care, housing, and universal communication access". Even the First Amendment can't be twisted to guarantee that (although the current Supreme Court may think it does), although the Socialist Party certainly does think universal health care and housing should be guaranteed..

To be fair, the tech industry has one valid argument in this debate: It simply no longer makes sense to have 50 states, along with countless cities and counties, empowered to regulate and tax services that are clearly national, if not global, in character. This is why God created a federal government.

Excuse the fuck our of me? Who created a federal government? God? Think again, Steven - the federal government was created by man, specifically a group of men meeting to fix the Articles of Confederation who then ran rough-shod over their less totalitarian brothers to institute our Constitution. God (in any of its many forms) had absolutely nothing to do with it.

As much as you may want to deify our government, it is a man made institution - and what man has created, man can destroy and recreate as necessary. Bringing God into the equation is not only an offense to non-Christians (shame on you - you may lose your Democratic Party membership if you're not careful), it prominently highlights your position that the government is something that shouldn't be questioned, merely accepted, obeyed, and glorified. And that's more offensive than any religious overtones you may have made.

And rather than retreating into mindless deregulation or buying into the silly notion that to tax the Internet is to destroy it, Washington ought to come up with a reasonable federal tax regime that is truly technology-neutral and shares revenue with the states.

Why is deregulation mindless, or abolishing taxation silly? You made the point above that the lack of taxation and regulation has benefitted the users and proponents of high tech, yet now you call it silly. Personally, I think you're a socialist, but that doesn't mean anything, does it? Perhaps if I called you a traitor, it would be more to the point, but still no less an ad hominem than using mindless and silly in a summation you haven't yet supported.

In short, the federal government has no place regulating or taxing any business just as a means of raising revenue. Providing services and entitlements for my neighbors with my money is not my idea of a capitalist society - it's nothing more than Robin Hood in modern America, and he was nothing more than a common thief. The only difference between taxation and theft is when the gun is drawn on you - at least muggers have the decency to show their weapons before they ask you for your wallet, while the government waits until after you don't cough up the dough to draw the guns and jail you.

(Editorial)I think this guy is a complete moron, a traitorous socialist who can't wait to get his hands on other people's money to do what he feels needs to be done in this country. He's no better than Fagan from Dickens' "Oliver", a man who convinces others to steal for him to promote some form of common good. The problem here is that the common good, like the Moral Majority, is neither common nor good. How someone as patently illogical as Steven Pearlstein can hold a job as a columnist for a major American newspaper is beyond me - must be a conspiracy...