Obama’s FCC plans to tax your broadband internet

| August 27 2012
Christopher Cook

In a world where the middle class is struggling—and getting taxed at a nearly 50% rate in total—are more taxes really what we need?

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.

“If members of Congress understood that the FCC is contemplating a broadband tax, they’d sit up and take notice,” said Derek Turner, research director for Free Press, a consumer advocacy group that opposes the tax.

In case you were unaware, you’re already paying a tax like this on your cell phone bill:

Whether you knew it or not, if you have a cell phone, you’ve been footing the bill for a mobile device for a low-income family. The “Federal Universal Service Charge” is often lumped in with other carrier fees at the bottom of your monthly cell phone bill, usually amounting to a couple of bucks a month.

That money is pooled into a fund disbursed by the FCC to cell phone carriers who provide free or low-cost cellphones for families who qualify for other federal benefits, such as food stamps or welfare.

The Lifeline program was created to allow low-income families to call 911 in case of an emergency but has since expanded to include cellphones and, soon, mobile broadband.

The program cost $772 million to operate in 2008, but by 2011 the cost more than doubled to $1.6 billion, according to the Universal Service Administration Company which manages the disbursement of funds.

“It started out with, ‘Every household should have a dialtone, so you should call in an emergency,'” says Larry Downes of the technology think tank Tech Freedom. “Well, then it became, ‘They should have basic phone service. They should have a basic cellphone service.’ They say it’s become a basic staple of life. You can’t argue with that, but your electric bill doesn’t charge you a tax to make sure poor people have electricity.”

The program is—surprise surprise!—subject to fraud, inefficiency, and cheating.

Because the program has no cap, the fees passed on to consumers are simply raised each year if more people enroll, which has been the case over the last couple of years. In Louisiana, the number of Lifeline customers grew from 38,000 in 2008 to 626,000 in 2011, an increase of 1,565 percent.

Downes charges that the system has been “fraught with fraud.”

“People have been ripping this thing off left and right,” he says. And the FCC knows it, too.

Is there any end to the taxes they will place upon us? Whatever the (compassionate) aims of this (or any other) tax, it still requires force and coercion. This is still one man being forced into economic servitude to another man. That the government places the mandate on the phone companies, forcing them to do their dirty work, does not make it any less so. In fact, putting a buffer between themselves and the political consequences associated with taxation makes it even more sleazy.

Coercive, sneaky, and rife with fraud—all at the expense of hardworking people trying to make ends meet. So naturally, the FCC wants to repeat the cell phone tax’s wild success with a shiny new internet tax!

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