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Alternatives considered are to tax text messages or have a higher flat fee on phone lines

So far an "internet tax" has remained a contentious issue.  Efforts to tax the physical service have flopped in Congress and are not scheduled for discussion until at least 2014.  Meanwhile, states have made headway in forcing online retailers to pay sales taxes, with some Congressional Democrats are calling for a nation policy enforcing sales tax on the internet.  Such efforts are generally tremendously unpopular among the general U.S. population who already feel overtaxed.

I. Taxing the Pipes

But President Barack Obama's iteration of the U.S. Federal Communications Commission (FCC) is nonetheless considering a tax on internet services, which would funnel money into the Connect America Fund -- the fund commonly referred to as the president's "national broadband" plan.

The Fund aims to connect rural regions and pump up service speeds in existing regions.

But to get there the FCC says it may need to levy a tax on existing services, a proposal it's currently accepting public feedback [PDF] on.

The Telecommunications Act of 1996, signed into law by President Bill Clinton (D), was the precursor to the current fund.  It created the Universal Services Fund (USF), a fund paid for by taxes on phone bills.  The program was a mild success; bring telephone service to many new regions.  At first it was well funded and the taxes remained small, thanks to people making more (expensive) long distance calls in the 1990s.

As IM, emails, and video chats replaced long distance calls over the last decade, the FCC has had to raise phone bill taxes to keep up with the USF funding requirements -- including increases under President George W. Bush (R).

Late last year President Obama installed a series of changes, overhauling the fund as the "Connect America Fund" and changing its objective from increasing landline telephone connections to increasing broadband internet connections.  But the new program is in jeopardy as many people are ditching the landline and trimming their phone plans.

FCC internet tax
The FCC wants a new internet tax to make up for a dwindling funding from phone line taxes.
[Image Source: Hang the Bankers]

The FCC's proposed alternatives to the internet service tax include a tax on cell phone text messages, or changing over to a flat tax fee on each phone line (currently phone taxes are collected in a more Constitutionally friendly manner, only taxing interstate phone calls).

II. Plan Has Some Big Supporters

Julius Genachowski, commissioner of the FCC comments, "Today we propose three goals for contribution reform: efficiency, fairness, and sustainability.  And we underscore that any reforms to the contribution system must safeguard core Commission objectives, including the promotion of broadband innovation, investment, and adoption."

Internet software service providers like Google Inc. (GOOG) are receptive of the plan, saying it makes sense than taxing internet software services like Gmail.  Writes Google in its response to the plan, "[Google] strongly supports expanding the [Universal Service Fund] contribution base to include broadband Internet access services."

"Saddling these offerings with new, direct USF contribution obligations [from internet software service providers] is likely to restrict innovative options for all communications consumers and cause immediate and lasting harm to the users, pioneers, and innovators of Internet-based services."

internet pipes
Google supports the proposal to "tax the pipes", but it won't likely be officially floated as this is an election year. [Image Source: Simon Norfolk]

Despite Google's enthusiasm for "taxing the pipes", others take quite the opposite perspective.  Derek Turner, research director for Free Press comments to The Hill, "If members of Congress understood that the FCC is contemplating a broadband tax, they'd sit up and take notice.  For folks who are thinking about adopting broadband, who have much lower incomes or don't value broadband as much—that extra dollar on the margins will cause millions of people... to not adopt.  I don't anticipate that the chairman would move to adopt a drastic overhaul ahead of the election."

Indeed, in an election year the Obama administration will likely be wary of levying a new tax on U.S. consumers.  Thus the decision of whether to pull the trigger on the new broadband tax will likely be made early next year by the next President -- be it Obama or Mitt Romney.

Sources: FCC [PDF], The Hill



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RE: Time to press the reset button on this presidency.
By tayb on 8/28/2012 3:55:07 PM , Rating: 0
What authority does the President have to not change an existing law that he didn't create? Hmm... interesting question.

Seriously, can you guys read?

quote:
You sound as if you believe it is perfectly OK for the president to act as a dictator.


Godwin's Law is strong in you. With time, I'm sure you will succeed.


By Ringold on 8/28/2012 5:38:34 PM , Rating: 3
Not wise to expect anything other then bleeding-heart passion from liberals, either. Where's the justification for a use tax? Why not take it from general revenue, instead of trying to tax internet connections that are already expensive and uncompetitive (due to failures to regulate properly)? Google only supports these ideas because they keep their own ass out of the fire.

And how many people REALLY have zero access to any sort of high speed internet? What's the cost to connect them? And how about a discussion of if its worth it for people in the suburbs, exurbs, and city to subsidize people that choose to continue to live out in the sticks?

Nope, none of that from the left.


By OCedHrt on 8/29/2012 6:34:36 AM , Rating: 2
http://news.cnet.com/8301-1035_3-10454133-94.html

How about 40% don't have broadband, and 30% don't have internet. And btw, it is typically the Republican leaning districts that do not have broadband or internet. This is basically converting from a tax on all (phone lines) to a tax on the more liberal (those in city centers, densely populated states, etc) to for the benefit of the rural conservatives.

And then you guys in the middle of nowhere want to cry not fair?


By Reclaimer77 on 8/29/2012 7:09:20 AM , Rating: 2
quote:
How about 40% don't have broadband, and 30% don't have internet.


That's bull. Satellite broadband is available nation wide. To say 40% of this country doesn't have broadband, a clearly bogus number, doesn't mean they don't have the option. It's obviously by choice.

quote:
This is basically converting from a tax on all (phone lines) to a tax on the more liberal (those in city centers, densely populated states, etc) to for the benefit of the rural conservatives. And then you guys in the middle of nowhere want to cry not fair?


I don't think you understand Conservatism very much if you think we would support a tax just because it's hitting the "other guy". That's an inherently Liberal point of view. Conservatives don't like using taxation to punish others or put one class of people against another.


By conquistadorst on 8/29/2012 9:01:03 AM , Rating: 2
The same article you linked also points out that of the supposed 40% that don't have broadband in rural areas, only *11%* report it was because it's not available (let's just ignore satellite for sake of argument). In other words this would be a tax to on 96% of people for the 4% that don't have it. I think valid questions are:

Does that 4% really need it?
Will they benefit from obtaining it?
Will everyone benefit when that 4% obtain it?
Do we never need to draw a line where we're not required to provide all services for all people?

What worries me is if someone actually says "yes" to all 4 questions for a small 4% sliver, they'd also likely want to justify the costs it would take to upgrade, subsidize, and train the 41% in categories of those who don't have computers, too expensive, or unskilled.

It's no wonder we're racking up so many charges on our Chinese credit cards...


By sorry dog on 8/29/2012 4:36:07 PM , Rating: 2
I used to sell broadband in a somewhat rural area.

Lemme tell you guys, it's hard to sell internet to somebody who doesn't own a computer, or doesn't know how to turn it on. That demographic is not present here for obvious reasons, but that fact is that some people are perfectly happy not having internet access.

As for the increasing speed part...I see a large percentage opt for internet that is 1/10 the speed and pay $20 instead of $30...and they are happy with that decision because they don't use much bandwidth.

I really think this decision is just to further life into another government project that has a bad history of cost to societal benefits just keep because it makes feel good headlines but happens to benefit some of the poor and a few campaign donors at the same time.


By The Saxophonist on 8/31/2012 7:50:09 PM , Rating: 2
Yes, we do. The less taxes, the better, no matter if they are on Liberals or Conservatives. Why don't we stop spending money on crap we don't need like Obamacare? Then we can LOWER taxes. Bish bash bosh. we're done.


By KCjoker on 8/28/2012 6:27:39 PM , Rating: 2
Listen if someone wants to live away from a big city fine....but don't expect me to fund the conviences of living in the big city then.


By room200 on 8/28/2012 10:44:10 PM , Rating: 1
Really?

So if you have a desire to live by the beach, don't expect me to pay when a hurricane blows your house off the foundation.
If you decide to live in a flood plain, don't expect me to pay when your house floods.
If you decide to live in tornado alley, don't expect me to pay when a disaster hits you.
If you live in a mountainous region, don't expect me to pay when a lanslide pushes your house off the side of said mountain.
If you decide to live in the city, don't expect me to pay for your blah, blah, blah...

Where does it end?


By FITCamaro on 8/28/2012 11:09:38 PM , Rating: 2
No the actual question is where does it begin. Meaning where did the the power to do any of those things come from? Answer. No where. It just sounded good so it was passed and people accepted it because they're not educated on the Constitution.

There's no federal authority to rescue people from the tragedies of life. Now if a state wants to do it, fine. They have the authority to create law to do that. The federal government does not.


RE: Time to press the reset button on this presidency.
By Paj on 8/29/2012 9:48:13 AM , Rating: 2
quote:
There's no federal authority to rescue people from the tragedies of life.


You mean like FEMA? I thought that's exactly what its supposed to do - to step in when the states are overwhelmed?

http://www.fema.gov/


By Cerin218 on 8/29/2012 6:34:20 PM , Rating: 2
To the House of Representatives:

I return without my approval House bill number 10203, entitled "An Act to enable the Commissioner of Agriculture to make a special distribution of seeds in drought-stricken counties of Texas, and making an appropriation therefor."

It is represented that a long-continued and extensive drought has existed in certain portions of the State of Texas, resulting in a failure of crops and consequent distress and destitution.

Though there has been some difference in statements concerning the extent of the people's needs in the localities thus affected, there seems to be no doubt that there has existed a condition calling for relief; and I am willing to believe that, notwithstanding the aid already furnished, a donation of seed grain to the farmers located in this region, to enable them to put in new crops, would serve to avert a continuance or return of an unfortunate blight.

And yet I feel obliged to withhold my approval of the plan as proposed by this bill, to indulge a benevolent and charitable sentiment through the appropriation of public funds for that purpose.

I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that, though the people support the government, the government should not support the people.

The friendliness and charity of our countrymen can always be relied upon to relieve their fellow citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.
-Grover Cleveland, Texas Seed Veto


By room200 on 9/1/2012 2:31:46 PM , Rating: 2
One person's opinion. So what?


By room200 on 9/1/2012 2:34:18 PM , Rating: 2
So, I assume you are as passionate about using US military vehicles to protect oil tankers transporting oil for private companies?


By conquistadorst on 8/29/2012 9:11:25 AM , Rating: 3
Maybe you're just being sarcastic, but every point you made makes complete sense, actually. Which is why...

quote:
So if you have a desire to live by the beach, don't expect me to pay when a hurricane blows your house off the foundation.
Your homeowner's insurance will be very expensive in high-risk areas, and cheaper in low-risk areas.

quote:
If you decide to live in a flood plain, don't expect me to pay when your house floods.
Yes, high-risk flood plains means your NFP policy will be very expensive.

quote:
If you decide to live in tornado alley, don't expect me to pay when a disaster hits you.
Insurance, again.

quote:
If you live in a mountainous region, don't expect me to pay when a lanslide pushes your house off the side of said mountain.
Insurance, insurance! If you live in a high risk area you'll pay high premiums! This is just proper underwriting! Seriously?

quote:
If you decide to live in the city, don't expect me to pay for your blah, blah, blah...
Maybe you're being sarcastic, but that's why there are local city/town taxes. Because people from other cities/towns aren't expected to pay for your services. Makes sense, no?

So, no. There are things that have their proper place when being "taxed" at the appropriate corporate, federal, state, or municipality levels. The flip side to your argument is where do we *not* stop? How about we both be rational and sit down and we compromise where it starts and stops and you stop making it sound like it's impossible to shake hands across the aisle? Deal?


By JPForums on 8/29/2012 9:22:44 AM , Rating: 3
quote:
So if you have a desire to live by the beach, don't expect me to pay when a hurricane blows your house off the foundation.
If you decide to live in a flood plain, don't expect me to pay when your house floods.
If you decide to live in tornado alley, don't expect me to pay when a disaster hits you.
If you live in a mountainous region, don't expect me to pay when a lanslide pushes your house off the side of said mountain.


It is interesting that when KCjoker says he doesn't want to pay for anothers conveniences, your rail on him for not wanting to pay for natural disasters. Now he may not, but your willingness to make such a big assumption, misrepresent him, and demonize him for it is irrational at best. However, since you seem to be all for funding others conveniences, I think you should buy me a steak dinner. Can you now see the distinction between convenient and life changing?

Interestingly, even your disaster premise can be considered flawed. People used to buy insurance to cover such disasters. They took responsibility for their own well being rather than push the responsibility off to others. They even had the charity to help those around them that didn't have the means to help themselves. Unfortunately, the current U.S. government has decided to promote the latter thought process. It is easy to gain good will when spending others money. Further, you get to demonize anyone who would suggest that they face the consequences of their own choices. After all, that would be heartless. Charitable people/organizations have declined because it is redundant to help with something the government is already handling. It is a great example of bribing people with their own money.

As an example, after the Mississippi flood in 1993, many river towns were devastated. Those that were responsible and paid into insurance for years to cover such a disaster paid their deductible, got their settlement, and went on with their lives. Those that didn't have insurance paid nothing and got the same benefits courtesy of the rest of the country (government). Now, given the same situation, would you want to pay insurance companies for year or even decades and then pay a deductible to get your benefits? Or would you rather get the benefits (seemingly) for free?

The end result is that the U.S. spends more money overall on natural disasters (inefficiencies of government), responds less quickly (Amateur radio operators took action before the hurricane in New Orleans hit, and established communications well before any national agency could respond), and has more reliance on the government (charitable organizations tend to decline in areas where the government decided to handle things). It is not a bad thing to help those who have been hit by such a disaster, even if they were blatantly irresponsible before hand. Charitable organizations exist for just such circumstances. If the government decides to help, the help shouldn't come in such a way as to promote irresponsibility (see flood example). Further, lower levels of government are more suited to the role as they have a better understanding of the need and can respond more quickly.


By room200 on 9/1/2012 2:28:31 PM , Rating: 1
You missed the point all in an effort to use words like "misrepresent" and "demonize'; neither of which I did. My point to him is that the people who move to those areas don't move there because it's crucial. many of them move there for the "beautiful views", and they are the ones who can afford to do so, yet these are the same assholes who get pissed when the government doesn't move in "fast enough". You sound like one of those two-faced assholes.


By Ringold on 8/30/2012 3:41:38 AM , Rating: 2
What a tool. Like someone else pointed out, and like you would be aware of if you move out of your moms basement, there's a free-market tool available for mitigating risk, and it's got a simple name: INSURANCE.

If you live in an area where insurance companies are unwilling to cover you at any cost, based on their extensive risk analysis, then maybe that should be a hint to GTFO.

And what about personality responsibility? There's currently homes in LA under 14' of water for the second time in a decade because they're too dumb to figure out living at or slightly below sea level NEXT TO THE SEA is a bad idea. And that, from a category 1 storm, or what Florida calls a rainy afternoon. I guess you think we should shower billions from helicopters though, help those poor souls out, maybe even rebuild their homes right where the old ones were.


By room200 on 9/1/2012 2:24:31 PM , Rating: 2
Please. jack-asses like you always talk about "personal responsibility" until a disaster directly affects YOU then you start wondering where the government is. You're not fooling anyone.


By Cerin218 on 8/28/2012 9:39:12 PM , Rating: 1
Well, I don't think I could come up with an intelligent or accurate idea like "From each according to ability, to each according to need", like you people have. Look how sustainable an idea that is. With that kind of thinking we could erase the 6 TRILLION dollars in debt you racked up the last four years with your ideas. We should get some of that 8% of the country that's been unemployed the last four years right on that. Talk about "Shovel Ready"!! Heck maybe we could simply MANDATE that some of those people work without pay. That would solve the problem AND save money. The whole "everyone works for the government thing" worked out GREAT for Russia. Look at them today, wait, whoops, never mind...
Tax the city people so that the country people can have high speed internet. That makes sense. Well, like Spock said, "Let the needs of the few outweigh the needs of the many". I love the fact that you actually ADVOCATE that business "spend money on broadband networks in otherwise unprofitable areas." With this statement we are able to see that the Collectivist mind truly DOESN'T understand business. It's not Obama's fault, he's a victim of his ideology (funny on several levels). Business only operates at a loss in one area if it gains them in another. Like Microsoft loses money on Xbox to make money on software. Which judging by the amount of stuff that I purchase when I play drunk on the weekends, is a fantastic idea. But I suppose it was the same liberal math that believed that employers were going to go on a hiring spree because they got a 2K tax break to hire a 40K employee.
In conclusion because people like you bore me, we have gotten to see first hand the liberal ideas and how they've worked. Maybe you should try and clean out your own swamp before trying to drag me down in it.


By wookie1 on 8/28/2012 9:39:43 PM , Rating: 1
"The only other way to provide that service in non-urban/suburban areas is straight socialism and have the government build and operate those networks."

Really, is that the only way you can think of? I can think of another one, how about the users of the services pay for them? Why do I need to pay extra so that someone in a rural area can be provided with internet and they may not even want it or care about it?! Isn't satellite available most anywhere?


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