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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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By JPForums on 8/29/2012 9:22:44 AM , Rating: 3
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.

"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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