I am not persuaded.
People spend an inordinate amount of time bemoaning the slow-but-steady loss of the all-free all-the time Internet and of the ready access to copyright-protected content. What people fail to realize is that this period in high-tech history—actually, in the annals of human commerce—is an anomaly. . . .
Consumers came through the Nineties actually believing that they no longer had to pay for things. They believe that the economy is a self-sustaining engine that can now miraculously run on air, not money. Thus the overwhelming congressional support for a permanent moratorium on Internet taxation confounds me. . . .
[E]ven the smallest usage tax could be split in two very important ways. Half could be used to support revenue-starved municipalities (I'd earmark it for education) and the other half could be used to apply a national online security program to help rid the entire Internet of spam and virus-laden e-mail. When people are willing to pay $9 to $50 a month for Internet access, I can't imagine that $0.50 or even $1 more a month for any of these services would pose much of hardship. Corporations would probably end up paying a T1-line tax that would be some multiple of what individuals would pay, but, again, this would not be something that would adversely affect a company's bottom line.
Having disdain for consumers being spoiled because of all of the free online content, desiring to fund education (while perhaps noble), and wanting a Federal Spam Fighting Team are not reasons to implement an Internet tax.
Simply implementing an Internet tax would slow growth and innovation, widen the digital divide between the wealthy and the poor, and adversely affect the bottom line of all individuals and corporations paying the tax.
This does not mean that implementing an Internet tax should never happen. But we should be clear about what benefits will come from the tax, and ensure that those benefits outweigh the likely costs, something Ulanoff's article does not do.
Update: John C. Dvorak over at PC Magazine speaks out against Ulanoff's article in a much more thorough commentary than mine entitled: Tax the Internet, Nyet!.