Coop's Corner: The tech tax blues

Summary:What happened when Joel Klein met Martians and other tales of woe from Washington.

Politicos of all stripes continue to traipse through Silicon Valley in search of votes and campaign contributions. But if you're wondering why the tech crowd prefers to keep official Washington at arm's length, consider the dud of a report submitted today on Internet taxation by the Advisory Commission on Electronic Commerce after more than a year of "fact finding."

The group's submission to Congress utterly failed to advance the debate in any meaningful way with anodyne policy prescriptions that contained fewer surprises than Geraldo's bust of a bust-in at Al Capone's vault. Then again, the decision to pass the buck shouldn't come as a complete shock. From the get-go it became quite evident this was a notoriously fragmented body. The vote, which came down with 11 yeas, one nay and seven abstentions, was not good enough to reach the two-thirds tally needed to make a formal recommendation.

The majority did come down in favor of extending the current moratorium on new Internet taxes for another five years, once the current freeze expires in 2001. It also recommended the formalization of rules governing collection of sales taxes on out-of-state firms as well as the repeal of a century-old telephone tax.

Interestingly enough, panel members AT&T, MCI Worldcom and America Online all stand to profit handsomely from that giveaway, should it make its way into law. I'm sure it's all coincidence.

Speaking of official Washington, trustbuster Joel Klein was up on Capitol Hill to update the House Judiciary Committee on the Justice Department's lawsuit against Microsoft. And what a time he had.

Klein must have wondered whether some of the hired help serving on this august panel were as dense as they appeared to be. Judging from the questioning, the antitrust chief and his inquisitors were living in distinctly parallel universes.

George Gekas (R-Penn.) took home honors as class dunce by pressing Klein for proof that Microsoft had broken the law. Since Gekas said he hadn't received any complaints from his constituents, I suppose the natural inference is that the DOJ must be engaged in a partisan witch hunt.

That point was later driven home by Joe Scarborough (R-Fla.), who added how polls show consumers disagreeing with the antitrust investigation and Judge Jackson's ruling. Speaking as someone who had the fortune -- or depending on your point of view, misfortune -- of covering nearly the entire Microsoft antitrust trial, the good congressman is stretching things.

My guess is that most consumers haven't read either of Jackson's rulings, let alone the transcripts from the trial. I was bombarded by opinion polls supposedly proving that one side or the other was in the right. For the record, they were equally useless -- and so are Scarborough's.

The Wall Street Journal captured the spirit of the day a couple weeks ago when it quoted a Silicon Valley exec bemoaning how the industry used to be about selling product. "Now we're all about selling stock," he said. Somewhat of an overstatement, but it's still a valid point. And now watching the continuing carnage in tech stocks -- today the Nasdaq was down about 286 points -- I hear that vulture capitalists are finally throttling down. Whether they will permanently stop throwing away money on Internet startups with questionable business plans is another issue. Lots of new dotcoms are hanging out shingles these days, no matter how goofy the business plan. Until now, VC money was there for the asking, with the big issue on their plate being the so-called "liquidity event" -- also known in English as the IPO. Irrational exuberance, to quote a phrase, seemed to be the leitmotif. But after the events of the last few weeks, folks just may be sobering up.

Topics: Microsoft, AT&T, Legal, Security, Start-Ups

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