Internet Porn Tax:

My friend and colleague (and fellow Kozinski clerk) Victor Fleischer (Conglomerate) writes (see the post itself for links):

Paul Caron points me to S.1507, a Senate bill that would impose a 25% excise tax on Internet porn.

Is it good policy? I'm sure my libertarian friends will freak out, but the policy doesn't sound so bad to me. The bill is premised on the notion that teenagers are heavy consumers of internet pornography, and teenagers and younger children are often victims of the industry. These are unfortunate negative externalities of the product, and taxing a harmful product is one way to reach a socially optimal outcome without having to regulate the activity out of existence. Funds generated by the tax will go to things like a cyber-tip line and a task force to investigate internet-related crimes against children.

Complicating matters is the bill's questionable constitutionality. The Supreme Court has not been friendly to Congressional attempts to regulate internet porn. And the Supreme Court has, in the past, struck down taxes that differentially burdened constitutionally protected speech. See Minneapolis Star v. Minnesota Commissioner of Revenue, 460 U.S. 575 (1983). Still, the tax here seems targeted at addressing the negative externalities caused by the activity, not at stifling the speech for the sake of stifling speech. It probably helps that the funding is mostly earmarked for law enforcement activities, not general revenue. What's not at all clear is how Congress came up with the number of 25% and whether this bears some reasonable relation to the externalities caused by the activity. It is an excise tax based on revenue, and surely if the number were 100% the Court would strike down the bill as an unconstitutional restriction of protected speech. I don't know enough First Amendment jurisprudence to know how hard the Court will scrutinize the reasonableness of the tax and how it is targeted, and my semi-educated guess is that the tax would survive scrutiny, but it seems likely that an Internet Porn tax will be subject to judicial scrutiny in a way that a fat tax would not be.

Of course, this being Congress, there's some question whether dedicating funds to cyber-tip lines, etc. is mainly for show. The wheels start to fall of the wagon as you move further down the bill. The tax will generate a lot of money, and perhaps the bill's drafters were struggling to figure out where to send remaining funds. Section 212(a)(6)(A), after moving down the cascade of recipients past law enforcement, R&D (to develop better filtering software) and educational training, includes the following provision:

(A) FEDERAL AGENCY SUPPORT- 50 percent of remaining amounts shall be used to provide funding to support child Internet safety activities, as well as activities combating sex trafficking and sex crimes against children, on the part of the following Federal agencies:

(i) Department of Justice.
(ii) Department of Commerce.
(iii) Department of Defense.
. . . (xiii) National Aeronautics and Space Administration.

Yes, to protect children from sex crimes and sex trafficking, let's get NASA on the case. We all know what happened when Cartman was abducted by space aliens, and your child could be next.

I'll take up Victor's First Amendment invitation: The law seems probably, though not certainly unconstitutional. Content-based taxes on the sale of First-Amendment-protected materials (and recall that the law targets not just unprotected and illegal obscenity, but also constitutionally protected pornography) are generally forbidden, see Arkansas Writers' Project v. Ragland (1987).

Nor does it matter whether the government is trying to "address[] the negative externalities caused by the activity," as opposed to "stifling the speech for the sake of stifling speech." I don't think this sort of motivational distinction really works: Most times that the government seeks to "stifl[e] speech," it does so precisely because it sees speech as causing "negative externalities"; the two motivations aren't antonyms. And (perhaps because of this) the Court has specifically held that unconstitutional discrimination "can be established even where, as here, there is no evidence of an improper censorial motive. . . . Illicit legislative intent is not the sine qua non of a violation of the First Amendment."

Content-based taxes, like other content-based restriction, can generally be upheld only if the government can show that the law is necessary to serve a compelling government interest. But even if the interest in raising money to fight the allegedly harmful effects of Internet pornography (I take no position here on whether Internet porn is in fact substantially harmful) is compelling, it's pretty clear that content-based taxes aren't necessary to serve that interest; taxes that are unrelated to speech would do the job just as well.

The strongest defense of the tax would be that pornography, including constitutionally protected pornography, is different: Though it has some constitutional value, it's of lower value, and may therefore be more broadly restricted. The Court has seemingly adopted this view in some of its "erogenous zoning" cases and broadcast regulation cases.

Nonetheless, the Court has at other times disapproved of this "low-value speech" position; and more recently it has generally judged content-based regulations of nonobscene pornography pretty much as it has judged content-based regulations of fully protected speech. My guess, then, is that if the law is eancted, both lower courts and (if it comes to this) the Supreme Court will ultimately strike this tax down just as they would other content-based taxes.

Joel B. (mail):
As I was reading this post, I too was for some reason thinking of the secondary effects doctrine. But that has to do with zoning much as you mentioned, but maybe that kind of idea could be imported to the internet, that's it's the secondary effect of the pornography is what the Congress is trying to restrict, not the speech per se.
8.5.2005 2:42pm
One important fact is that this law would not tax all Internet pornography; the vast majority of Internet porn is free and would not be taxed. I'm not sure in which direction this fact impacts the analysis.
8.5.2005 3:21pm
the vast majority of Internet porn is free

I don't know if there's any way to measure that, but certainly the vast majority of porn consumed by under-21s is free.
8.5.2005 3:38pm
Heck, if its free, then we'll have to tax it a a much higher percentage to reduce demand. 100%, 200% ???

Also, although I don't want to get into line drawing, I'm sure that there is a substantial negative externality to any exposure of Paris Hilton to children. Since she is easy to identify and is quite wealthy, shouldn't we just tax her and give the money to law enforcement?
8.5.2005 3:43pm
Daniel Palmer (mail):
Professor Volokh,

I might have agreed with your perspective on the consitutionality of such a tax before Kelo.

But if the Court can turn a fairly clearly written limitation of Eminent Domain from taking private property for public USE into a broad right to take private property for any use deemed to have public BENEFIT, then they can clearly find the 'complelling government interest' in taxing pornography.
8.5.2005 4:02pm
Trenchard Gordon:
These are unfortunate negative externalities of the product, and taxing a harmful product is one way to reach a socially optimal outcome without having to regulate the activity out of existence.

These externality arguments really only work where (a)the victims of the externality can be identified, at least roughly; (b) the amount of damage can be measured by some more or less objective standard; (c) the amount of the tax accurately reflects this measurement; and (d) the revenue is in fact used to compensate the victims. Prof. Volokh has accurately pointed out this proposal's problem with (d); but (a), (b), and (c) remain threshhold problems.

In reality, pornographers are few in number and unpopular -- a rent-seeker's dream. Draft a bill that not only targets this industry, but also builds in some well-connected beneficiaries (NASA, etc.) and you have a textbook example of Public Choice in action.
8.5.2005 4:29pm
Trenchard Gordon:
Won't taxing commercial porn simply drive the industry underground, encouraging them to reconfigure to offshore operations or proxy servers that are harder to trace?

If so, this could reduce or eliminate the current incentives an above-ground porn sellers face to try and screen out minors from their websites. Think of alcohol. Commercial liquor stores don't sell to minors; but illicit moonshiners do. One perverse effect of the bill might therefore be an increase in minors'access to porn.
8.5.2005 4:51pm
James Ellis (mail):
I don't think that the argument in favor of the bill, and all the talk of "negative externalities" and "socially optimal outcomes," holds water. As far as the victimization of younger children goes, I for one certainly prefer "regulating the activity out of existence" to content-based taxation which at first blush appears to be patently unconstitutional. These are serious criminal offenses and should continue to be treated as such.
8.5.2005 5:44pm
Split Lip Rayfield (mail):
Trenchard, I don't think it's possible to "drive the industry underground" because they're already there. Readily accessible to everyone with access to computers is the hardest core pornography imaginable. And a lot of it is totally free, as someone else mentioned.

I'm not some anti porn zealot. I'm just amazed at the accessibility to porn that is out there today. Liberals and libertarians just shrug their shoulders and I guess they don't care about it, nor are they curious about the externalities associated with our current porn deluge, like Volokh's post about the constitutionality of even the most benign attempts to regulate internet porn.

Right now it's very different than when I was a kid, and I'm under 30. It used to be one of your friends finds his dad's playboys and it was some major score. Now the kids have free and limitless hard core porn right at their fingertips online ... repeating myself I guess.

Really, is there nothing at all that can be done to regulate the amount of porn in our society? Saying things like "moniter your kids internet use" is, while true, not really a solution. People are naturally drawn to vices.
8.5.2005 5:48pm
SimonD (mail):
How about a challenge resting on something other than the first amendment? From the bill:
`(a) Imposition of Tax- There is imposed on amounts charged by a regulated pornographic Web site for individuals to receive the display or distribution of pornography through the Internet a tax equal to 25 percent of the amounts so charged.
`(b) Payment of Tax- The tax imposed by this section shall be paid by the operator of the regulated pornographic Web site receiving payment for the display or distribution taxed under subsection (a).
So, per §4285(b) it is the operator of the website who will be assessed to pay this tax. Since a web server has to be physically located somewhere, and since this law will only reach sites hosted in one of the states, is there any really good, concrete reason why a server operator could not claim that this tax constitutes a "Tax or Duty...laid on Articles exported from any State" (U.S. Const., Art. I, §9 Cl.5)?

I mean, certainly, pornography is not an "article" in a physical sense, but it is certainly a product that is manufactured; it is offered for sale, and it is...uh..."consumed" by paying...uh..."consumers". So is that sufficient to constitutute an "article"? I can't think of any thing which could be manufactured in 1791 which would lack a physical presence, so it seems unlikely that the framers would mean to distinguish between corporeal goods and non-corporeal goods, such as those represented by internet services. Just as the first amendment does not protect only one-to-one spoken or printed "speech", but communication more generally, and just as the fourth amendment does not protect only against physically intrution (see, e.g., Kyllo), perhaps the the original meaning of the "export taxation clause" (to coin a phrase) is expansive enough that any manufactured product or service constitutes an untaxable export, and would thus permit a challenge to this law?
8.5.2005 6:14pm
Really, is there nothing at all that can be done to regulate the amount of porn in our society? Saying things like "moniter your kids internet use" is, while true, not really a solution. People are naturally drawn to vices.

"Won't somebody think of the children?"

Sorry to be flip. Seriously, there are many things out there that are not appropriate for children. It is the parent's responsibility to police this. Limiting access to [category of items X] from everyone in order to reduce the burden on parents has been tried repeatedly, and fails. Worse, even with it did work, it should not be my responsibility to share the burden of raising your children. (Note: I said should.)
8.5.2005 7:04pm
I might have agreed with your perspective on the consitutionality of such a tax before Kelo.

But if the Court can turn a fairly clearly written limitation of Eminent Domain from taking private property for public USE into a broad right to take private property for any use deemed to have public BENEFIT, then they can clearly find the 'complelling government interest' in taxing pornography.

Some people hate Kelo so much they can bring it up in connection with ANYTHING.

The facts are simple. Any concept that there is a bright-line distinction between "public use" and public benefit" was rejected no later than the Court's decision in Berman v. Parker, over 50 years ago.

People need to stop pretending that Kelo represented some tremendous sea change in the law. At most, it was an incremental creeping in favor of states' rights to define public benefit. In reality, the facts were virtually indistinguishable from Berman. Sadly, the contributors to this blog have not done much to dispel the many myths surrounding the decision.
8.5.2005 7:30pm
Having read Randy Barnett's papers on the distastrous effects on Constitutional rights of enforcement of victimless crimes (drug laws etc), I see a number of parallels here. Taxation will require enforcement. Enforcement will require surveillance. Surveillance will lead to avoidance activities (encryption etc). Avoidance will lead to ever more intrusive and complete surveillance. Since we are dealing with a general communications technology, surveillance of one type of content is readily transferable to the others. I cannot help but be reminded of the comments of Senator Frank Church, chairman of the 1975 Senate Intelligence committee investigating the FBI's Cointelpro abuses, referring to the NSA's SIGINT (signals intelligence) technology:

"At the same time, that capability at any time could be turned around on the American people and no American would have any privacy left, such is the capability to monitor everything: telephone conversations, telegrams, it doesn't matter. There would be no place to hide. If the government ever became a tyranny, if a dictator ever took charge in this country, the technological capacity that the intelligence community has given the government could enable it to impose total tyranny, and there would be no way to fight back, because the most careful effort to combine together in resistance to the government, no matter how privately it was done, is within the reach of the government to know. Such is the capability of this technology...

I don't want to see this country ever go across the bridge. I know the capacity that is there to make tyranny total in America, and we must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision, so that we never cross over that abyss. That is the abyss from which there is no return."

Now, what is the greater danger: that kids get to see pictures of what many of them can see for real anyway, or that all future governments no matter how much you disagree with them, get a mechanism to track everything that you and everybody does on the web? It seems the solution that preserves both liberty and delicate sensibilities is an improvement in image recognition software such that those seeking to prevent porn reaching their or their childrens' monitors may install such, while freedom might be preserved for the rest of us.
8.5.2005 10:10pm
Kevin Murphy (mail) (www):
But is it speech or is it commerce? Yes, I understand that you could say that about movies or any number of types of speech. But didn't the camel's nose come in at McConnell?

If you can regulate political speech on the basis of "money is not speech", why for godssake can't you do that with porn, which is all about money and very little about speech? I'm pretty sure Thomas made that point in his dissent.

Unless McConnell is overturned, this ship has pretty much sailed.
8.6.2005 12:01am
arbitraryaardvark (mail) (www):
Not having read the legislation, i'm wondering how it defines porn.
The bill's sponsors in the senate include Carper, Delaware, Almond, and Landrieau (sp)(LA.) Carper lives somewhere in Wilmington.
If I were to post his home address, and encourage people to peacefully picket, and some moron went and threw a rock through his window, would I have engaged in prohibitable crime-facilitating speech?
slashdot article
email carper
8.6.2005 12:43am
Marc D'Angelis (mail):
>The Supreme Court has not been friendly to Congressional attempts to regulate internet porn.

Seems to me that the legislation that has been struck down tried to ban internet porn.
8.6.2005 5:04pm
frank cross (mail):
What exactly is the evidence for externalities? And I think you have to be careful with the externalities argument. What would you think if someone argued:

"Republican policies lead to child poverty, a huge societal externality, therefore we should tax Republican speech."
8.6.2005 6:40pm
M. Simon (mail) (www):
In order to regulate porn sites, all sites will have to register.

The first tax will be to protect the children.

The second tax will be to raise revenue.

Then consider McCain-Feingold. If Congress passes a law the presumption is towards constitutionality. Would a Congressman violate his oath of office?


So let me see: porn is freely available on the net. More so than ever before. What is the observable social effect?

None that I can see.

Except that for no other discernable reason Paris Hilton is famous. A negative effect to be sure. And such stuff pisses off the Islamic Nazis and American religious nutters. I'd say that was a positive effect.

So all in all mixed results in peoples minds. Which after all where real pornography resides. Because, I have yet to see a definition which isn't ideosyncratic. i.e. pictures of male feet on female breasts may be arousing to some and not so to others. Provided it meets all the other tests of pornography - no redeeming social value etc. - is it porn? I suppose if the judge is turned on by such images - yes.

About the only universal is that no children should be involved. And what age can children consent? Varies by country.

Out of wedlock births are down. Pornography at work?
8.7.2005 5:22pm
Hugh59 (mail):
TS is on the right track. Enforcement would be impossible. How do you tax a party that is using a server in Asia? Or Europe? Or who uses proxy servers? These guys are too quick for our current enforcement methods to track down and catch.
8.7.2005 10:01pm
Congress can certainly pass a law prohibiting or taxing anything they want on the internet. As a previous commenter mentioned, only those adult businesses that are currently in the public eye will pay. The rest, and by far the vast majority, are simply untouchable for a variety of technology-based reasons.

The government would be forced to design and enforce a method for national internet filtering (censoring out-of-country content). China might be willing to license their censorship technology. I recommend reading on how China does this via technology, law, and police enforcement for some insight into where Congress might end up on this.

There can be only two reasons why a knowledgable politian would do something like this: 1) to drive mainstream pornographers out of US borders. 2) to pander to anti-porn voters who do not understand the technology.
8.8.2005 5:11pm