James Pethokoukis

Politics and policy from inside Washington

Will Washington bail out the MSM with an iPad tax?

June 3, 2010

This is actually quite astonishing. A “staff discussion draft” from the Federal Trade Commission recommends ways the government can save journalism.  First, it lists a number of ways Washington can subsidize the media (to the tune of $35 billion a year):

– Establish a “journalism” division of AmeriCorps.

– Increase funding for the Corporation for Public Broadcasting.

– Establish a National Fund for Local News.

– Provide a tax credit to news organizations for every journalist they employ.

– Establish Citizenship News Vouchers (lets you direct money from tax return).

And here is where the money would come from, which I will quote directly:

Tax on broadcast spectrum. They argue “commercial radio and television broadcasters are given monopoly rights to extremely lucrative spectrum at no charge,” and this is a massive public subsidy. They therefore suggest the revenues generated by that spectrum be taxed at a rate of 7 percent, which should result in a fund of between $3 and $6 billion. In exchange, commercial broadcasters would be relieved of any obligations to engage in “public-interest programming,” which the broadcasters claim costs them $10 billion annually.

Tax on consumer electronics. A 5 percent tax on consumer electronics would generate approximately $4 billion annually.

Spectrum auction tax. They suggest there be a tax on the auction sales prices for commercial communication spectrum, with the proceeds going to the public-media fund.

Advertising taxes. They note a considerable amount of our broadcast spectrum has been turned over to disseminating commercial advertisements, and a 2 percent sales tax on advertising would generate approximately $5 to $6 billion annually. In addition, they suggest that changing the tax write-off of all advertising as a business expense in a single year to a write-off over a 5-year period would generate an additional $2 billion per year.

ISP-cell phone tax. They suggest consumers could pay a small tax on their monthly ISP-cell phone bills to fund content they access on their digital services. A tax of 3 percent on the monthly fees would generate $6 billion annually. They note, however, this is the least desirable approach because demand for these services is “elastic” and even a slight rise in price could result in people dropping the service.

Me: In this must-read  NYPost article, Jeff Jarvis calls the electronics tax an “iPad tax.” Besides of all the issues this raises concerning government influencing the media, I find it hard to believe voters would be willing to subsidize a broken business model.

Comments

Interesting article, keep the klieg lights on this.
You wrote “…I find it hard to believe voters would be willing to subsidize a broken business model.” The American people by a 60/40 margin did not want Obamacare… but we got it. Better hope this does not come up for a vote before November.

Posted by TommyK | Report as abusive
 

This is a joke … right??

Posted by OldBob | Report as abusive
 

An iPad tax. LOL. Well, ATT is doing that by restructuring their wireless data usage fees (starting Monday). Their selling it as a way to reduce costs for most customers. Yeah, right. Until the new gizmos with iChat and cloud music storage require more and more wireless data.

We can see that coming, right?

No doubt about it, this government wants our money. They have lots of big plans. They seem to think that a big, strong government is the key to economic success. (The last bunch of Republicans weren’t so hot, either).

So as we enter this new age of mass-usage of portable web electronics, the government wants to get a piece of the pie.

And hey, it’s another way to increase taxes on the middle class without modifying the marginal tax brackets, and thus not being an official tax hike.

Posted by muckdog | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •