Free Markets, Free People

FCC tries to fly an internet tax under the radar

Here we go again.  Unaccountable bureaucracy has decided it needs to tax you some more:

The Federal Communications Commission is eyeing a proposal to tax broadband Internet service.

The move would funnel money to the Connect America Fund, a subsidy the agency created last year to expand Internet access.

The FCC issued a request for comments on the proposal in April. Dozens of companies and trade associations have weighed in, but the issue has largely flown under the public’s radar.

Well, for the usual reasons, of course:

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

That’s right friends, they have first claim to your earnings out of "fairness".  Because, you know, not everyone has internet and well, it’s a "right" now, or something.

If you’ve ever looked at your phone bill, you know that you’re already paying a fee (tax) called the Universal Service Fund .  But that fund just isn’t making it:

Consumers already pay a fee on their landline and cellular phone bills to support the FCC’s Universal Service Fund. The fund was created to ensure that everyone in the country has access to telephone service, even if they live in remote areas.

So last year the FCC established the Connect America Fund to funnel subsidy money (taxes) into construction of an internet infrastructure, because, you know, private companies, the one’s who’ve made the internet what it is today, simply can’t be left to do that.


And in recent years, with more people sending emails instead of making long-distance phone calls, the money flowing into the program has begun to dry up. The Universal Service fee has had to grow to a larger and larger portion of phone bills to compensate.

As more and more homes go fully wireless that fund (taxes) they had is drying up.

Time to update the fee (tax) and fund.  How?  It’s only "fair" of course.

The FCC could run into legal problems with the Internet Tax Freedom Act, a 1998 law that bans the government from taxing Internet access. But the FCC has long argued that Universal Service is a fee that the providers choose to pass on to consumers and not a tax.

Ah, providers chose to pass that along to consumers so it’s not a tax.  Right.  I see how that works.

Numerous companies, including AT&T, Sprint and even Google have expressed support for the idea.

Gee, there's a surprise (*cough* cronyism *cough*).


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17 Responses to FCC tries to fly an internet tax under the radar

  • “Today we propose three goals for contribution reform…”

    A say-do-what…???  They mean a TAX.

  • Penalty, fee, tax.  They’re all the same thing.  Just pay up sucka.  /snark

  • And now I know why they always park the word “voluntary” in front of contribution.  Because Contribution in and of itself IS an imposed fee or tax.
    Just swell, I love it when I discover words that I thought I understood suddenly take on their true meanings.
    and I REALLY love that I have to provide internet access to others as part of their….rights.  I think I’ll cancel my broadband and demand that they reinstall my FREE internet connection in it’s place.
    More Clownward Pivot (yes, I know, but Pivoting towards a Clownish society is what’s going on here).

    • Playing the devil’s advocate…
      Why do you not think it is voluntary?

      • This one?  Because it will be bundled into my bill, and the day I don’t pay it will be followed in a couple weeks by the day I lose service.  I used to work telephone billing systems – if you call Barbados on a call back for some company that is scamming phone charges at $50.00 a minute, the phone company will regretfully tell you they agree that’s an outrageous rate, and it’s a shame, and it’s a scam, but the charge won’t vanish as a result of the fact they agree with you.
        this is the same.  You can try not paying this part of your bill, but you’ll lose your service, and in the end, you’ll be reported to credit agencies.
        So again, the ‘voluntary’ part of the tax system, or in this case, the alleged ‘voluntary’ nature of the contribution, won’t really be voluntary because they WILL hold your possessions hostage, even if they don’t throw you in jail.  I fail to see how coercing you to do things by interfering with your daily life using a monetary club isn’t just slightly south of being direct and waving a gun in your face and demanding money.

        • playing DA again…
          The voluntary part is you using the internet.  If you don’t like the fee then don’t use the internet.

          • That much is true – and the same could be said for the phone access taxes.   Good point.
            Ironic that they want to make sure people who can’t afford to pay for the internet would get it, and people who refuse to pay the tax for it by not using it won’t have it, no?
            Maybe this should be under McQ’s post on ‘not relying enough on the government’.

  • Gee, there’s a surprise (*cough* cronyism *cough*).

    Here, I have to disagree, McQ. It is a simple pass-thru, so not really any crony benefit.

    It is hardly a courageous consumer protection stance, but I don’t expect companies to protect me from government. I expect them to collude, when possible.

    • Don’t have to agree to the pass through, do you and then there’d be this little reason to raise prices – you know, new regulations requiring more work … or something.

    • Oh, I can think of cronyism here – the company agrees to provide the ‘free’ service to these poor unfortunates who have no access, and of course they ARE reimbursed by the government, so suddenly they have a cash cow for providing service that it’s very likely won’t actually BE servicing anyone.  Company makes out since they’re unlikely to take a loss on this (especially when, as Bruce points out, they’ll just jack up everyone elses rate and blame the government – and when they have drinks that night with ‘government’ everyone will raise their glasses and pat each other on the back for a job well done).

  • Realistically there will have to be some sort of tax because the old one is going to completely dry up. As a libertarian I don’t like government, and I don’t like cronyism, and I don’t like forced “equality”, but on the other hand, we need some government, and even some regulation. I am not one of those anything goes anarcho-libertarians, I think that would work about as well as socialism.
    What I would like to see is all taxes on the internet be sales taxes based upon where the purchaser lives. they should be low taxes, and would be almost unnoticeable on the effect of consumer habits.

    • “they should be low taxes, and would be almost unnoticeable on the effect of consumer habits.”
      This year-It’s only a penny and it will all go towards education for the children
      Next year-It’s only a penny and it will all go towards education for the children
      Next next year-It’s only a penny and it will all go towards education for the children

    • I understand why we have those who can pay for firemen and policemen and they don’t check to see if the person trying to call them has ‘paid their tax’ before deciding to appear.
      I fail to see how Internet access for all is anywhere in the same country as that, let alone the same ball park.
      We do NOT have a right to internet access, or even phone access, imho.
      People who can’t pay their electric bill get their electricity cut off – guess what people with no power won’t have by default.  If we’re not prepared to give them free power to drive their internet connection devices, there isn’t any point in having ‘free’ internet connections funding.

    • “they should be low taxes”  Yep, and the Spanish American war funding phone tax will be done away with just as soon as the war with Spain has ended.

  • I will say one thing about telecom taxes. The telecom companies make sure they print those suckers up for you to see and don’t hide them in the cost. Maybe that helps them market lower prices, but it also reminds people the tax they are paying, unlike gas taxes. I’m surprised the state hasn’t mandated those taxes disappearing into the base bill.

  • We already did that rural internet thingy.
    “The Obama Administration announced it would be increasing funding to provide broadband Internet access to homes, businesses, health facilities and schools in rural areas around the country. Part of last year’s American Recovery and Reinvestment Act, the upgrade is meant to revitalize rural communities, create jobs and give businesses the opportunity to expand their customer bases. About $518 million in total is being allocated to broadband infrastructure programs under the Recovery Act.”

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