Internet Taxation and Principles of Good Tax Policy

Abstract Many of today's tax rules were designed for a pre‐Internet age, meaning that they are challenged by Internet‐based transactions and technologies. This article proposes a framework for analyzing current tax rules to identify issues of importance to the taxation of Internet transactions and e‐commerce. The framework also applies to the evaluation of tax proposals that address Internet transactions and technologies. The framework is based on principles of good tax policy, which have been used and tested for many years. Such a framework can be applied to identify necessary changes to existing tax rules as well as the strengths and weaknesses of tax proposals applicable to the Internet and e‐commerce.