Obama's FCC Looks to Tax the Internet
August 28, 2012 2:04 PM
comment(s) - last by
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
in forcing online retailers to
pay sales taxes
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
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.
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. (
) 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."
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
, "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.
This article is over a month old, voting and posting comments is disabled
RE: Time to press the reset button on this presidency.
8/29/2012 12:08:20 PM
You're the coolest hippie ever :) +6 post
"This is about the Internet. Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis
Amazon to Collect Online Sales Taxes in Texas Starting July 1, 2012
April 30, 2012, 10:34 AM
FCC Approves Obama Administration's Government-Run Rural Broadband Plan
October 28, 2011, 3:12 PM
Amazon CEO Calls State Tax Demands Unconstitutional
May 18, 2011, 10:27 AM
Top Senate Democrat Looks to Drop Tax Bomb on the Internet
April 13, 2011, 9:54 AM
FCC Airs Plan to Cover 100M American Homes With 100 Mbps Broadband
March 15, 2010, 9:55 PM
Google plans ultra-fast wireless Internet for Research Triangle Park, N.C.
August 12, 2016, 6:30 AM
Twitter Senior VP: "Diversity is Important, But We Can’t Lower the Bar"
November 9, 2015, 9:59 AM
CNN Resorts to Internet Censorship to Promote Clinton Over Senator Sanders
October 15, 2015, 2:47 PM
Breaking Bad: How to Crash Google's Chrome Browser With Just 8 Characters
September 23, 2015, 11:08 AM
Quick Note: Amazon UK Offers £10 Back on Any Order £50 or Over
August 3, 2015, 12:05 PM
Editorial: Reddit Allows Itself to be Hijacked as a Hate Platform For Racist Bigots
July 21, 2015, 6:32 PM
Most Popular Articles
5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
No More Turtlenecks - Try Snakables
September 19, 2016, 7:44 AM
ADHD Diagnosis and Treatment in Children: Problem or Paranoia?
September 19, 2016, 5:30 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM
Automaker Porsche may expand range of Panamera Coupe design.
September 18, 2016, 11:00 AM
Latest Blog Posts
Who is in Risk of Getting Oral Cancer?
Sep 23, 2016, 6:02 AM
France Bans Plastic Eating Utensils in Restaurants
Sep 18, 2016, 10:49 AM
Progress Against Acute Myeloid Leukemia
Sep 17, 2016, 5:30 AM
Apple Watch Series 2 - Number 1 in the Customer Satisfaction.
Sep 7, 2016, 6:19 PM
First Self-Driving Car debut on the streets of Singapore
Aug 28, 2016, 4:10 PM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information