User Fees for the eRich

By Sam Uretsky

Perhaps the most eloquent words on the subject of interdependence were those of Elizabeth Warren: “There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for ...”

Paul Krugman is willing to cut some slack for Steve Jobs and Mark Zuckerberg, but this time The Great Man is wrong. Jobs – maybe. Steve Jobs and his partner Steve Wozniak were the most successful of the many pioneers of the personal computer, and so he deserves credit for that, but Mr. Jobs’ later successes and Mr. Zuckerberg’s billion dollar creation depend on the Internet, which began as a project of the Defense Advanced Research Projects Agency (DARPA) – funded by taxes.

Even when the Internet had been opened up to commercial use, its growth was supported by Congressional exemptions from collecting state sales taxes. The Wildblue high-speed satellite Internet service, intended to bring high-speed internet to rural areas, received $7.2 billion through the American Recovery and Reinvestment Act. As many as 11 million more people will have improved access to the Internet. This means improved access to news and information, it also means access to Facebook, Twitter, and Nigerian bankers. It will be financed in part by 120,000 postal workers losing their jobs as online banking replaces paper bills and written checks.

The so-called “Internet Bubble” of 2000 didn’t do much damage to business or tax receipts, but it did show ideas for future commerce. The bubble was the result of investors’ enthusiasm running ahead of technology. Still, among the failures of the first Internet craze are the seeds of companies that succeeded as soon as technology caught up with creativity. Theglobe.com, one of the first social media sites, and a model for Facebook, incorporated in 1995 and had an IPO in 1998. Boo.com was going to sell high fashion clothing, but their Web site was too ambitious for the low tech connections. GlobalTekSolutions and Rxemedy.com were going to manage medical records and billing. They good ideas, and the people who had the same idea but faster connections have done well.

While the government has been good about funding technology and helping people make new fortunes, it hasn’t been equally generous about helping those hurt by technology. Internet billionaires haven’t been anxious to offer thanks. Amazon.com has been fighting California’s efforts to collect sales taxes, and broke its ties with 10,000 small businesses who were funneling shoppers to Amazon in return for a tiny share of the profits. Also in California, Meg Whitman, formerly of eBay and now CEO of HP, ran for governor with a program that included eliminating the state’s capital gains tax. CEO and corporate executive compensation is commonly in the form of stock options leading to high capital gains.

The rich have their uses. While they fight taxes, they give generously to causes that would probably be pushed aside on a government budget. Ruth Lilly left her $100 million fortune to Poetry magazine. Poetry is part of our lives and our cultural heritage, but it would be hard to defend government funding when we need the money for education and child nutrition. A city councilman would get tarred and feathered for supporting grand opera while there are potholes, so maybe we should thank the 1% for protecting our arts and music. But now that they’ve been thanked, they still owe us a bundle. When Congress passed laws to encourage Internet commerce, it neglected to compensate local brick and mortar stores, the ones that pay school taxes. The America COMPETES Act, an act, “To invest in innovation through research and development, and to improve the competitiveness of the United States,” did a good job of supporting education and innovation, but a bad job of patching the transition to the world of tomorrow.

One of these days we’ll have a long talk about taxes and how to fund schools in an era of e-commerce, but we can’t wait. What we can do now is ask those people who have made obscene fortunes from programs we’ve all paid for to give something back. It’s not class warfare, it’s a user’s fee.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email sdu01@mail.com.

From The Progressive Populist, July 1-15, 2012