>What lawmakers fail to understand is that taxation specific to the internet, ostensibly to boost revenues into government coffers, in practice will probably diminish them as US businesses lose competitiveness against foreign companies.

And what you fail to understand is that if everything is sacrificed in the name of "competitiveness", then every country will be in a race for the bottom.

It already happens, with outsourcing, cheap foreign labour, tax heavens etc. A successful US company used to benefit American society at large (beyond merely paying some wages) -- and this is what made the US rich with a large middle class etc.

Now (with outsourcing, factories in China, money kept in foreign accounts that never make it back to the US, tax havens enabling the company to pay almost nothing in taxes etc) a company can be American in name, but of no more benefit to the US as a country than Toyota or Samsung.

And no, places that are strongholds of industry and innovation don't help much either. A 100 billion new innovative product out of Silicon Valley can be as lost a boon to the country as any innovation coming from Tokyo or Europe.

Hence, shrinking middle class, hence budget and trade deficits, hence trouble.

Of course, for those owing or running companies and benefiting from the whole thing, business hasn't been better. But those benefiting are increasingly fewer (and the few tend to benefit all the more, hence huge imbalances in inequality).

I'm not saying that amazingly successful companies cannot come out of this situation. I'm saying that this success trickles down to the overall country/society, far less than what it did in the past. Coming to a point where it will be possible to be the host of the worlds greatest companies AND having a population living like in a third world country.

The only reason everything has not collapsed already is because there are other advantages beyond "cheap" that keep companies throwing a bone to the US. The infrastructure, the engineering savvy, and of course the inherited middle class and large market, from better times. But those things are rooted in the past and are transient.

>To our American friends, easyDNS is a foreign company, so don't let us stop you.

And how about you aren't let to serve customers in the US unless you pay taxes too?

How would you feel about losing the rich US market then?

And how about people in Europe and other affluent societies conspired so that you cannot sell your crap without paying proper taxes to someone?

(I'm not even arguing in favor of the internet tax. Just against the arguments easyDNS used here against it. Heck, I'm not even American. I just know that those same issues affect my country too).