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EDITORIAL: Obama’s Internet tax
FCC should not impose multibillion-dollar tax on World Wide Web
Question of the Day
The government doesn’t handle technology well. When Uncle Sam comes into contact with something new, his first instinct is to impose familiar regulations and taxes regardless of whether doing so makes any sense. So it’s no surprise the Federal Communications Commission (FCC) plans to apply telephone-era rules to the Internet, making it more expensive than ever to log in to keep in touch with friends and family.
In late July, the FCC — a relic from the New Deal — moved to replace the Universal Service Fund with the cheerily titled “Connect America Fund.” The idea is to impose big taxes on everyone so a pot of cash can be handed over to well-connected companies that provide gold-plated Internet service to people who choose to live in remote locations.
Though most Americans aren’t familiar with the Universal Service Fund, it’s the reason their phone bills are filled with inscrutable federal charges that jack up rates to the tune of $8 billion every year. The system lacks so much transparency that bureaucrats get away with raising this tax every chance they get. In 1998, the contribution factor for the fund was 5.5 percent. Now it’s 15.3 percent. Cronyism and corruption are the inevitable result. The current Universal Service Fund has bankrolled boondoggles such as paying $16,834 for each of one phone company’s customers in Beaver Creek, Wash.
Whether the federal government should ever have been in the business of ensuring universal access to phone service is a largely irrelevant question now. Advances in cellular technology solved the problem four years ago by putting 99.8 percent of the country within range of at least one provider. Today, there are 146 million wired and 290 million wireless phone lines. Instead of declaring victory and rolling back the regressive tax on phone bills, FCC Chairman Julius Genachowski wants to charge ahead, expanding his agency’s reach to Internet access.
Mr. Genachowski claims he must act because 18 million are without “fixed broadband” that meets speed targets set by agency bureaucrats. Never mind that there are many for whom a slower connection that allows for reading emails and checking a few websites is sufficient. Never mind that there’s nothing in the Constitution suggesting the government has any authority to be involved in guaranteeing a right to fast download speeds. Never mind that Congress in 2007 extended a moratorium on Internet-access taxes that won’t expire until 2014.
Federal bureaucrats only care about centralizing power in Washington. The same instinct drove lower-level operatives at the Federal Trade Commission two years ago to float the idea of imposing a Drudge Tax, which would charge news aggregators like the Drudge Report for offering links to other websites. Congress needs to reassert itself and get these agencies to stay as far away from taxing and regulating the Internet as possible. The Internet’s relative freedom is the reason it has done so well. It’s time for lawmakers to pull the plug on both the Universal Service Fund and the far more dangerous Connect America Fund.
The Washington Times
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