Taxing broadband -- an idea whose time has not come

[Commentary] Don’t like the thought of sending even more of your hard-earned money to the government for corporate welfare? Then take notice: the Federal Communications Commission is considering a bipartisan proposal that would tax your Internet connections and fill the pockets of our nation’s phone companies, even the ones that earn billions in profits while getting their own tax rebate checks from Uncle Sam.

At issue is how to pay for the Universal Service Fund (USF). Our policymakers should think carefully before creating a new broadband tax. The big concern is that because consumer demand is more sensitive to price increases on emerging services like broadband than established ones like telephone service, a broadband tax could actually undermine adoption in low-income and senior populations, the very people most likely to be disconnected. Like the rural electrification efforts during the New Deal, the goals of the USF program are noble; we all benefit when more of our fellow citizens are connected. But the FCC needs to focus on making USF more efficient and accountable before it reaches further into our wallets. At the very least, policymakers need to first study the impact of a broadband tax before foisting it on consumers. Ultimately, if Congress wants to put USF on stable ground, it needs to change the law so the program is funded through general treasury revenues, not these regressive taxes.

[Turner is the research director of Free Press]