I really enjoyed attending the Collective Intelligence FOO Camp, sponsored by Google and O’Reilly Media, last weekend. I’d been expecting a sort of geek slumber party, and had looked forward to rolling out my awesome Darth Vader impersonation. I was all set to cut loose with a growling, “I’m your father, Luke.” It didn’t quite come to that, but I still had a blast, meeting lots of smart, informed, articulate, creative, and successful people. Friendly people, too.
I described how to establish the legality of real money, open-access prediction markets under U.S. law. I called my presentation, Getting from Collective Intelligence to Collective Action [PPT file]. In very brief, I proposed this algorithm:
- Set up an enterprise prediction market, make playing it a condition of continued employment, and offer valuable prizes to the best predictors.
- Set up a limited access prediction market, hire a number of independent contractors researchers to play it, pay them a relatively low salary for doing so, and offer valuable prizes to the best predictors.
- Set up an open-access prediction market but require anyone playing it to go through a click-wrap license that creates the sort of independent researcher relationship described at step 2, above.
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I’d like to chime in in agreement with Adam on the ‘net sales tax issue. I also think there’s another problem with Magid’s argument that Adam didn’t mention:
By exempting out-of-state Internet retailers from collecting tax, the state is essentially discriminating in their favor, over businesses with a local presence which not only collect local and state taxes, but also pay local and state taxes themselves, hire local people who pay all sorts of taxes and also pay rent to local landlords who, in turn, pay property and income taxes that help support our schools and other services.
I love buying things online but I also love how local merchants add to the fabric of our communities. The business climate for independently owned local stores is tough enough. Why should they be forced to charge customers 8 percent more as a punishment for doing business in our communities and contributing to our local economy and job market?
Well, because these businesses use state services. Customers get to brick-and-mortar businesses on state and local roads. These stores use local police and fire services. Their owners and employees go to government schools and use government-subsidized health care. And so, naturally, they’re taxed to help pay for these government services.
Amazon uses state and local services in Washington state, and so they’re taxed to help pay for services there. They don’t use Missouri public services, and so it’s reasonable that they’re not subject to Missouri taxes.
I hate to disagree with my friend Larry Magid, a technology analyst for CBS News, who writes this week in favor of a uniform online sales tax regime. Magid says he “can’t think of any good reason why customers of online retailers should shop tax-free while people who spend their money locally have to pay sales tax.” Well, I’ve got a couple of good reasons, Larry.
Back in 2003, Veronique de Rugy [now of the Mercatus Center] and I penned a lengthy Cato Institute white paper on this issue entitled, “The Internet Tax Solution: Tax Competition, Not Tax Collusion.” In that study, we addressed the arguments in favor of the so-called Streamlined Sales Tax Project (SSTP) and noted that a move toward more simplified tax regimes was certain laudable. In reality, however, the effort by states to build a “uniform” sales tax regime for online sales was less about achieving simplicity and more about raising taxes and imposing tax collection burdens on interstate commerce. Veronique and I pointed out that this created both economic and constitutional concerns since the SSTP was tantamount to a state-run sales tax cartel:
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I have an editorial appearing on CNet News today about “New Mexico’s video game nanny tax.” Quick background: The New Mexico legislature has introduced a new tax measure that would force consumers to pay a 1 percent excise tax on purchases of video games, gaming consoles, and TVs. The revenue generated from the game and TV tax would be used to fund a new state educational effort aimed at getting kids out of the house more. True to the aim of the measure, they have even given the bill the creative title, “The Leave No Child Inside Act.” In my editorial, I argue that:
legislators shouldn’t be using the tax code to play the role of nanny for our kids. It is the responsibility and right of parents to determine how their kids are raised. Many of us would agree that more outdoor time is a laudable goal. But should the government be using the tax code to accomplish that objective?
I point out that the proposal raises serious fairness questions that makes a constitutional challenge likely since older court cases dealing with other media have also made it clear that public-policy makers are forbidden from using the power to tax in an effort to discriminate against speech or expression that they disfavor. Moreover, on the fairness point:
Why just blame video games for kids not getting enough time outdoors? How about a tax on social-networking Web sites or instant messaging? Many kids are spending almost as much time online right now as they do playing video games. And what about other types of non-digital games that might keep kids indoors? My daughter spends a lot of time playing Sudoku puzzles, for example. Perhaps we should tax Sudoku books, chess boards, and even arts and crafts! After all, the goal here is to do whatever it takes to get kids outside, right? Or is it really just to get kids to stop playing video games?
Read the entire piece here if you are interested.
My poorly updated privacy Web site Privacilla is controlled by a non-profit corporation called Privacilla.org, Inc. The corporation has been more hassle than it’s worth to maintain, so I may just dissolve it at some point here. But in the meantime, I recently received this letter from the IRS instructing little Privacilla to file a new information return.
It’s an electronic return for non-profits with gross receipts of $25,000 or less, and it’s called Form 990-N. Failing to file for three years would result in the corporation’s non-profit status being revoked. Apparently, some 650,000 small non-profits are subject to this new requirement.
Many years’ accretions of regulations, filing requirements, and fees (both federal and state) are part of why it is too much hassle to maintain Privacilla as a non-profit. But this one is special. As far as I can tell, there is no Form 990-N. Everything I can find on the IRS Web site talks about it in the future tense.
This is mostly bemusing to me. I have until May 15th to file this form. But it will be less funny if May 15th rolls around and the form still doesn’t exist. It’s also less funny for people who aren’t technically competent attorneys, and who approach the world of law and government with less confidence. To them, this can be scary, and it’s idiocy. Typical IRS idiocy – to require submission of a form that doesn’t exist.
Bleg: Do correct me if I’m wrong! For my claims to sophistication, I may be some kind of rube for looking on the IRS Web site for an IRS electronic filing system.
It’s been called a “virtual privacy time bomb” by a prominent Congressman, something that an FTC commissioner believes should “really trouble all of us” and to which one policy group believes we should have a legal right to examine, correct, and/or delete. What is it?
Answer: Online behavioral marketing data.
And it will continue to be a hot topic for 2008, as the Google – DoubleClick merger progresses, the FTC collects public comment on self-regulatory principles, and New York State bill A09275 (introduced in response to the Facebook controversy) is further considered.
I have a kind of love/hate relationship with online behavioral marketing. Advertising that is better targeted to consumers helps support a lot of Internet web sites that otherwise might charge for their services. And I receive ads targeted to my tastes and preferences (yippee!). But there’s something about it that makes me feel uneasy, something that still doesn’t quite sit so well.
And thanks to my prior sentence, there may be Pepto-Bismol ads popping up on the web site hosting this blog. Indeed, behavioral advertising is the tracking of a consumer’s activities online – including the searches the consumer has conducted, the Web pages visited, and the content viewed – in order to deliver advertising targeted to the individual consumer’s interests. Google is the 1,000 pound gorilla in this space, as it sells its AdSense service to display targeted ads for content and for search results.
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Hannah Montana performed in Providence last month, but her wake continues to reverberate in the halls of the Rhode Island General Assembly. Companion bills in the House and Senate would single out online ticket transactions for greater regulation in a state that already has one of the most restrictive ticket scalping laws in the country.
Yesterday I traveled to Providence to testify before the House Corporations Committee on H 7090 and H7091. These bills would add new rules that mostly apply to the online buying and selling of tickets. Essentially I was there to ask: why pick on e-commerce?
Hannah Montana is the Disney Channel sitcom on which Miley Cyrus plays Miley Stewart, an ordinary teenager with secret pop superstar identity. Her father is country singer Billy Ray Cyrus, of “Achy Breaky Heart” fame. And due to the popularity of the live shows, tickets have been hard to come by, producing achy breaky hearts in children across the country and irate parents that call their state legislator and demand action. Upon hearing about $60 tickets selling for $600 on the secondary market, legislators want to blame websites like eBay and StubHub.
But the tickets market is not so simple. Ticket resellers are not to blame for the limited supply of tickets and large demand from consumers. Hannah Montana is really about how tickets are issued, allocated, distributed and sold in the primary market, not how tickets are thereafter resold. And as in all markets, if demand exceeds supply and prices are initially fixed at a relatively low level, a secondary market will develop.
At yesterday’s hearing, some legislators thought that it was StubHub itself that was purchasing large blocks of tickets and then reselling for large sums on its site. The reality of course is that sites like eBay and StubHub are mere exchanges that serve as platform for buyers and sellers to meet and transact.
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For someone who’s portrayed as an economic reformer that understands, for example, why a 35-hour workweek is a disastrous idea, French President Nicolas Sarkozy’s newly announce plan to tax Internet connections to subsidize television is quite shocking. From the IHT:
But France, like other countries around the world, is struggling to find ways to keep cultural industries, like video and music, afloat at a time when their traditional audiences are waning.
Sarkozy, proposing “a real cultural revolution” and stressing twice that his proposal was “unprecedented,” said: “I want us to profoundly review the requirements of public television and to consider a complete elimination of advertising on public channels.”
Instead, he said, those channels “could be financed by a tax on advertising revenues of private broadcasters and an infinitesimal tax on the revenues of new means of communication like Internet access or mobile telephony.”
Do I really have to spell out how this not only props up an antiquated technology that people seem not to want, but simultaneously stifles innovation of the technology that people do want? You know, maybe we should tax digital cameras to subsidize Kodak’s film technology.
Here’s your assignment: you’re a state governor who’s up for re-election, and your state is still reeling in the wake of a high-publicity suicide by a teenage girl brought upon by inflammatory statements communicated through a popular social networking website.
What do you do? Panic and quickly push through a reactive new law, (maybe even sock it to the social networking industry), or do you study the issue to come up with a sound approach? If you’re the Governor of Missouri, you create a multi-disciplinary task force to review current law and enforcement related to Internet harassment and recommend changes to better protect the citizens of your state.
Yesterday I was in Jefferson City to participate in this task force, which included representatives from the law enforcement, nonprofit, academic, mental health, and business communities. The task force met to specifically create the new crime of cyber-harassment in response to Megan Meier’s suicide almost a year ago, but still newsworthy and on the minds of many people as this New York Times article from last week shows.
Cyber-harassment can be devastating and dangerous to victims. Due to the ease of sending electronic communications, harassment that occurs online can be instant, frequent, anonymous, and permanently public. Cyber-harassers can easily impersonate their victims and even encourage third parties to unwittingly "flame" and harass a victim.
Tina Meier, Megan’s mom, opened up our task force meeting by recounting the tragic story of her daughter’s death. Megan was a 13 year old girl that had befriended what she thought was a boy on MySpace but turned out to be an adult neighbor that lived next-door.
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The outcome of yesterday’s hearing on an online dating bill
is succinctly captured by this AP news article headline: New Jersey concedes Internet dating plan,
yet pushes it anyway.
What? Legislators pass a bill through committee that they know is flawed?
Yes, if they think the sponsor will work to amend it. And The Internet Dating Safety Act (A-4304), the bill I testified against in Trenton yesterday, definitely needs to be fixed.
It’s not that anybody is against online dating safety. We just think that this bill, in its present form, will not create a safer environment for dating site users.
Here’s why. The bill has one particular serious flaw: it has the effect
(if not the intention) of promoting a flawed, unreliable, and incomplete
criminal screening method as a way to increase online dating safety.
Legislators should run away from any bill that promotes criminal screenings.
Intuitively, a criminal screening would sound like a good
idea. Who can be against more information about a potential date, especially
when it’s their criminal record? But if the information is no good, we have a
garbage-in, garbage-out situation that has the unintended consequence of
providing users of online dating sites with a false sense of security. Indeed,
criminal screenings are:
- Incomplete – criminal screenings can create false
negatives when criminal records don’t appear or may not include felony arrests
that were plead down to misdemeanors; and
- Not Inclusive – many counties don’t even report their
criminal records to a publicly accessible central database. For instance, in Illinois only 4 out of
102 counties report to a centralized database accessible to companies that
perform background screenings. Do we know what the database reporting situation
is in New Jersey?
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