Online Porn Bill Urges 25% Tax on Adult Sites

The bill seeks to “relieve the anxieties experienced by families due to the lack of controls they have over what their children view online,” according to Lincoln’s staff. Thierer said the bill “once again proves that most members of Congress have absolutely no appreciation for what sort of enforcement difficulties they are up against in terms of regulating the Net and online content.”

A bill draft obtained by Washington Internet Daily would impose a 25% tax on site operators starting Jan. 1, 2006. The levy would support an Internet Safety and Child Protection Trust Fund underwriting: (1) A fully staffed 24-hour Justice Dept. cybertip line. (2) State-based Internet Crimes Against Children Task Forces for areas with 5 million or more residents. Each state would get money to pay for 1-7 centers. (3) Competitive grants for tech-savvy organizations to devise new filtering methods to help parents control children’s access to content via wireless and other emerging technologies. (4) Funds for state-level training that boosts child Internet safety and reduces sex trafficking and sex crimes against children. States would get at least $1 million each, of which 25% would go to state education departments. Attorney gen.’s offices would get 30% of the state funds, for law enforcement training.

Banks, credit card companies, 3rd party merchants and ISPs would be required to process only age-verified credit card transactions. The FTC would be instructed to force porn sites to use appropriate age-screening software and periodically test to ensure webmasters using those tools correctly and consistently, according to the draft document. The bill doesn’t describe what enhancements need be made to existing age-verification systems.

“The tax evasion possibilities here are endless, especially considering how much activity originates overseas,” said Thierer. He questioned how the tax would be reported and what enforcement would be needed to collect the taxes. “In a world of anonymous electronic transactions, I just can’t see how enforcement would work,” he said. He also criticized the bill for making financial intermediaries “henchmen of the state” in enforcing morality. Thierer said the bill likely is unconstitutional, noting that the courts have struck down nearly every other effort to regulate online content. “Taxes on speech have been found to be every bit as unconstitutional as direct speech controls… This bill is doomed in my opinion,” he said.

Porn Report’s Alarming Statistics

Lincoln’s bill will be unveiled with a report from liberal think tank Third Way arguing that adult websites don’t do enough to keep children from pornographic content, and many adult webmasters’ pitches target children. Lincoln serves as an honorary co-chair for Third Way as do Democratic Sens. Bayh (Ind.) and Carper (Del.). Vice chairmen include Sens. Landrieu (La.), Pryor (Ark.), Salazar (Colo.), all scheduled to attend the press conference.

In its report, The Porn Standard, Third Way says “most of the online pornography industry operates on a flimsy honor system, with few or no requirements in place to keep children from viewing pornographic sites.” And “many of today’s tech-savvy children have little difficulty uninstalling blocking software intended to prevent them from accessing sexually explicit sites,” the study said. A prepublication version of the paper claims the online adult entertainment industry generates $12 billion yearly -- about the same as ABC, NBC and CBS. There are about 260 million adult Web pages, up from 14 million in 1998, the report said.

The largest group of Internet porn consumers are 12- 17 year olds, and 57% of 9-19 year olds with Web access have had contact with online porn, Third Way said. The group got its data from a Boston Globe article, a 1999 Family Research Council report and an April London School of Economics paper on U.K. youth Web-surfing habits. The report says new phone and wireless technology gives kids access to sex sites on the go, outside parents’ reach. A third of 11-17 year olds have cellphones; porn comprises 1/2 the multimedia traffic carried by U.S. wireless operators from outside their own portals, Third Way said. Revenue from porn delivered by mobile wireless devices will climb more than 50% in 2005 and perhaps triple by 2009, predicted a Juniper Research report cited by the group.

The online porn industry has evaded state and federal law and societal mores on children’s buying and viewing of pornography, the report said. “While real world adult entertainment vendors are required to verify the age of their customers through government issued ID, similar vendors on the Internet use the ‘honor system.'” Site operators have taken refuge behind the claim of anonymity afforded by the Web, but that argument no longer holds water due to availability of effective age verification software, the paper said; mainstream adult-oriented enterprises, like the tobacco and alcohol industries are using these controls to great effect.

The Free Speech Coalition (FSC), an adult entertainment trade group, had a bone to pick with Lincoln’s bill and the Third Way report. The group said it plans to counter the legislation with a publicity campaign; if Congress passes the bill, FSC said, it’s ready to challenge the measure in court, Communications Dir. Tom Hymes told us. The FSC wants to work with Capitol Hill to write a fair, effective bill, if lawmakers decide legislation is needed, officials said. But FSC finds the Third Way report deeply troubling. “They use a lot of conclusions based on business models that don’t exist in this industry any more,” Hymes said. The claim that porn webmasters consciously pitch to kids is inaccurate because “there’s no financial incentive for them to do it.” Most sites don’t get paid per click anymore -- they generate revenue only through memberships sold. That takes a credit card and age verification, Hymes said.

FSC is in a court fight with the Justice Dept. over a record-keeping rule. Under it, adult magazine and video producers already must archive video content and fill out extensive paperwork verifying performers’ ages and identities. Those strictures would apply to online porn sites under a DoJ interpretation of the 1988 Child Protection & Obscenity Enforcement Act. Announced in the Federal Register in May, the expansion takes effect in Sept. if an injunction isn’t granted (WID July 26 p1).

“It’s like pick-on-porn month,” Hymes said. The attacks aren’t partisan and aren’t coming from “the usual suspects” like the religious right, he noted: “Now we have left-leaning Democrats jumping on the bandwagon and we're getting it from all different directions.” Washington seems to have sought an issue in the culture war that everyone can rally around, Hymes said: “And I guess we're it.”