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Wednesday, August 25, 2010

Is it Taxation, Censorship, or Both?

Philadelphia goes after the bloggers.

It seems that the news each day brings a fresh set of government outrages, from police beating up bystanders to prosecutorial misconduct to regulation of some peaceful conduct. Not surprisingly, governments fight back when angry citizens publicize the abuses.

In Maryland and elsewhere, people who record police officers making arrests are charged with felonies and threatened with decades in prison.

In Mississippi prosecutors gain a conviction employing “expert” witnesses whose testimonies go beyond the bounds of legitimate science, and the courts swallow the nonsense.

And now Philadelphia is going after a popular method for citizens to express their discontent with government: blogs. The rulers of the City of Brotherly Love have not outlawed blogs; rather they are using what the nation’s fourth chief justice, John Marshall, called the “power to destroy”: taxation.

The city government is demanding that some bloggers pay $300 for a licensing fee and then pay taxes on all profits. Of course, most bloggers don’t make any money; their posting is informal and irregular. That, however, does not matter to Philadelphia officials. The Philadelphia City Paper reports:

Even though small-time bloggers aren’t exactly raking in the dough, the city requires privilege licenses for any business engaged in any “activity for profit,” says tax attorney Michael Mandale…. This applies “whether or not they earned a profit during the preceding year,” he adds.

So even if your blog collects a handful of hits a day, as long as there’s the potential for it to be lucrative — and, as Mandale points out, most hosting sites set aside space for bloggers to sell advertising — the city thinks you should cut it a check. According to Andrea Mannino of the Philadelphia Department of Revenue, in fact, simply choosing the option to make money from ads — regardless of how much or little money is actually generated — qualifies a blog as a business. The same rules apply to freelance writers. As former City Paper news editor Doron Taussig once lamented, the city considers freelancers … “businesses,” and requires them to pay for a license and pay taxes on their profits, on top of their state and federal taxes.

For all of the revenue talk, however, I suspect there is a more important reason for this new government outrage: intimidation of anyone who would use a blog to criticize government officials. The connection is easy to make. Bloggers in Philadelphia who might utter words of dissent against the city’s ruling class would make themselves visible, especially if the comments took hold with a larger audience. Thus city officials would be able to access the records to see if the blogger had paid for a business license. If not, the rogue would be brought to justice.

This past year I used one of my blogs to write on the trial of Tonya Craft and its aftermath in northwest Georgia, and I admittedly took no prisoners. I reported on obvious instances of alleged perjury from prosecution witnesses and pointed out huge inconsistencies in the prosecutorial evidence.

Obviously, I did not earn friends on the prosecution side, and I am sure the prosecutors and judge would have loved to have shut down my blog, especially since the jury acquitted Craft. (Three days after the verdict the district attorney declared that the blogosphere “created an environment hostile to the State’s ability to receive a fair trial.”)

In this day of governments grasping for revenues, it is not surprising to see Philadelphia trying to milk the bloggers. I suspect other cities will follow suit. However, I believe that the larger issue is that governments once again are looking for any means to silence their detractors. Entities with the power to tax their critics also have the weapons to destroy them.

  • Dr. William Anderson is Professor of Economics at Frostburg State University. He holds a Ph.D in Economics from Auburn University. He is a member of the FEE Faculty Network.