Protecting Internet Privacy and reducing Oregon’s budget shortfall

Congress this week voted to eliminate  broadband privacy protections.

If Trump signs this bill  ISP’s will be allowed to save your searches, sell your data to anyone. (though maybe that will reduce our NSA budget if they can just buy the data they were secretely taking anyway)

This change has raised the ire from people of all political persuasions. Yesterday Oregon Catalyst’s Reagan Knopp wrote :

The Oregon Legislature should do something about this problem. While introducing a bill that bans the practice is a noble idea, it could be found in conflict with federal law and thus be struck down. Instead, the Legislature should consider taking away some or all tax benefits given to Internet providers in Oregon if they engage in the practice of selling private browsing data to third-parties.

Fiddling with the current tax treatments of the internet providers could run into problems as well. It seems punitive and unrelated to the unwanted actions.

But, there is a logical way to incentivize ISP providers to offer consumers an opt in choice, and fairly tax ISP providers for their data harvesting activities.

Tax this new economic activity

If ISP providers are gathering data from Oregon users, then they are having an economic profit from Oregon activities. Clearly a taxable event. If they are selling that data, they are likely not booking the sales in Oregon and o Oregon is losing the tax revenue for that economic activity.

Oregon should enact an internet data collection tax. Equal to some amount per internet connection payable by the ISP provider and not to be passed onto the customer. If the ISP provider decided to pass the cost onto the customer though higher rates, then other ISP providers who don’t sell their clients data would be able to offer cheaper rates.

The tax would be reduced for every ISP client that opted out of the data collection. If we want to incentivize behavior – as tax policy often is designed to do -the law could  provide that if an ISP provider provided for an opt in rather than an opt out of data collection the tax could be reduced, or waived entirely.

If an ISP provider can prove that their revenue/client for the clients data is less than the tax, they can contest the taxable rate, but must provide the State PUC with all relevant data.

How much could this raise?

I don’t know. But a quick google search reveals that 92% of Oregonians have broadband access. That doesn’t tell us now many unique ISP addresses or connections there are. But there are about 1.55 million households in Oregon. Add to that connections for business, schools, libraries, Starbucks (That’s a lot right there), lets estimate  there are at least 2 million connections. And the tax were imposed at just $3/connection and there is a 20% opt out rate, that could raise $115 million in one biennium. That is about 10% of the Budget shortage this biennium. Not too shabby.

Here’s what the internet data collection tax would do

  • Not cost the ISP providers a dime because the ISP could rebut the tax by showing it was higher than their new revenue from selling data
  • Not suppress any new economic activity in Oregon (as taxes often do)
  • Incentivize “good behavior” from providers to protect client privacy, or at least offer an informed opt in option rather than an opt out or no options at all
  • Not cost the consumer any more, but if the ISP did try to pass the cost on, then other privacy protecting ISP’s could compete for that client.
  • Help fill Oregon’s budget shortfall, using mostly “out of State” sales that owe their origin to in State economic activities and would otherwise escape assessment.

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