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(AUDIO) Speaking of Taxpayers: “Wired to Waste”
Posted By: Douglas Kellogg - 04/13/12

Hot off the presses! "Speaking of Taxpayers" is now "almost live" - recorded and released on the same day so you can catch up on the week's taxpayer news and notes (and Outrages!). Let us know what you think of the new equipment, format, and submit questions at studios@ntu.org.

This week NTU Vice President of Government Affairs Andrew Moylan joins Pete & Doug to discuss a new policy paper on Wireless Broadband projects funded by taxpayers.

Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes.


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FTC’s Probe of Online Search Market: The Latest Threat to Internet Freedom
Posted By: Douglas Kellogg - 03/12/12

The Federal Trade Commission’s current investigation of search engine practices threatens to become the next crisis for Internet freedom and e-commerce; and it is a threat that has remained under the radar.

Many are wholly unaware of the current FTC effort (along with other probes from some state-level district attorneys around the U.S. and the European Commission) to pursue “fairness” in the online search marketplace. Of course, readers of this blog were clued into the emerging danger sooner than others, when last year NTU raised concerns over the FTC’s actions.

Since then the concerns have intensified. Now, an NTU/IBOPE Zogby poll has revealed that the American people have no interest in such government interference in the search engine realm and they are quite happy with an already competitive batch of search options. The poll found 79 percent of respondents were against government regulation of search engines, and 76 percent thought more government involvement online would make the Internet worse for consumers.

So why is this even happening? As we saw with the uproar over the Stop Online Piracy Act (SOPA), when aggrieved interests with power and waning competitive strength join hands with a government eager to grow in power, the results can be damaging to the market and freedom - evoking intense public opposition. Right now the search engine investigation is in a more nascent stage, but the potential impacts of government search engine regulation are numerous.

Imagine an Internet search where the results were alphabetized. Imagine a search that pushed politician-approved results toward the top. Imagine asking Siri to find you the nearest McDonald’s and being given the locations of 10 other chain restaurants as well. The useless (and disturbing) possibilities go on … Think of the security problems posed by removing a search engine’s ability to prioritize your results? It’s tough enough keeping children in the proper corners of the Internet; government-enforced “fairness” could potentially make that task even tougher, or end up giving the government vast search engine censorship powers in the name of security.

Ever since the online marketplace has been changing consumers’ and taxpayers’ lives for the better, governments have been proposing taxation and regulation schemes that would make matters worse. Besides the threats of the Streamlined Sales and Use Tax Agreement and so-called “Net Neutrality” that NTU identified – not to mention the flap that many others raised over SOPA – government-backed investigations like FTC’s should be on the watch list too.

If you are reading about this for the first time, there is a lot to take in, but this situation looks to be the next battleground in the fight over online freedom. Stay tuned to NTU.org and Government Bytes for more.

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(VIDEO) NTU Panels on Internet Policy from 2012 Students for Liberty Conference Increased Internet Regulation Not in Taxpayers Best Interest
Posted By:  - 02/24/12

This past weekend, NTU’s Pete Sepp and Andrew Moylan hosted two separate panels at the 5th Annual International Students for Liberty Conference to discuss Internet taxation and regulation. Experts from multiple organizations were featured.

The first video you will find below, dealt with the heated debate over internet sales taxes and why proposals based on the Streamlined Sales and Use Tax Agreement, like the Main Street Fairness Act, are not the right solution. The second focused on concerns over Internet regulation, and anti-trust motions being used against tech companies.

The bottom line for everyday Americans is new online tax schemes, and invasive internet regulation, must be stopped. Otherwise, our most vibrant facilitator of economic activity is in danger.

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Curbing the Muni-Broadband folly
Posted By: Brent Mead - 02/06/12

Cable companies don’t exactly poll well with the public. Unfortunately, politicians take low public approval of private enterprise to mean government can perform the service better. The explosion of local government units standing up publically owned cable and broadband networks has led to a corresponding explosion of public debt. As we have seen over the past couple years in cases ranging from Burlington, Vermont to Memphis, Tennessee, this trend has left taxpayers holding the bag for millions in bad deals and malinvestment.

Fortunately, some states are starting to take the lead to combat the issue. Senator Chip Rogers in Georgia introduced SB 313 to level the playing field between municipal broadband networks and incumbent providers.

Georgia’s experience with municipal broadband networks is not overly unique. Cities such as Acworth and Marietta wasted millions of taxpayer funds pursuing such projects.

Marietta provides a great example of the general malfeasance and consequences for taxpayers. In the late 1990’s, Marietta created FiberNet to compete directly against existing cable and internet providers at a cost of $35 million. Over the next five years, the city managed to lure a whopping 180 customers away from those existing providers. In 2004, Marietta decided to cut its losses on the project and sold the network for a mere $11 million.  

So if Marietta is the problem, what is the solution?

SB 313 prohibits a set of procedures used by municipal broadbands in order to maintain an illusion of competitiveness.

Raising of Rates or Taxes: Often, muni-broadbands are financed by bonds issued from an existing entity, such as a public utility. In order to pay for the new debt, utilities will raise rates on their captive consumer base, without public approval or meaningful oversight. SB 313 would end this practice.

Tax Treatment Equity: SB 313 would force muni-broadband companies to pay taxes equal to what a private incumbent provide would pay.

Force a Public Vote: Most importantly, SB 313 stipulates that before a city can move forward on a municipal broadband project they must receive support from the public. This is simply good common sense. Taxpayers are being asked to back millions in new debt, it is only fair they have a voice in the matter.

Ultimately, the solution is that government needs to get out of private enterprise. In my home state of Montana, the federal government spent $7 million per household on expanding broadband access. We simply cannot afford these expensive, failing distractions any longer. Providing cable TV is not a core function of government. While SB 313 does not go that far it does offer protections for taxpayers and should lessen the chances of another Marietta.  

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A Fix for a Growing TV Debacle
Posted By: Andrew Moylan - 01/25/12

Recently, I wrote about a brewing disaster in the world of television called retransmission consent in a post called "Government screws up your TV." Basically, disputes between television content providers (e.g. ABC) and television service providers (e.g. DirecTV) that play out on a heavily-tilted playing field threaten to cause blackouts for consumers that are entirely avoidable if only we had a policy structure that made sense. Well, the issue is rearing its ugly head again as a dispute between DirecTV and Sunbeam Television has drawn the interest of Senator John Kerry (D-MA), a legislator who has long had his eye on a legislative "fix" to the problem that would empower bureaucrats and do little to solve the underlying problem. (I'm sure this has nothing to do with the fact that a prolonged blackout threatens to keep many Boston-area viewers from being able to watch their Patriots play in the upcoming Super Bowl)

In a phrase that I utter approximately once a month, Senator Jim DeMint (R-SC) to the rescue! In conjunction with Representative Steve Scalise (R-LA), he has introduced a great bill called the "Next Generation Television Marketplace Act." This bill takes exactly the kind of approach that I counseled in my post:

"Congress drafted rules that protected content providers from what was essentially a cable monopoly back in 1992, a monopoly that no longer exists. The result is that content providers are exploiting that protection to the fullest, leading to episodes of brinksmanship like the Fox-Cablevision fight [2012 note: the Fox-Cablevision fight was the Sunbeam-DirecTV battle of its day].  The time has come for a free-market rewrite of telecom law generally and retransmission consent specifically, and forgive me if I think our would-be Windsurfer in Chief is the wrong guy to lead it."

Since I'm sure Jim DeMint reads everything I write and immediately drafts legislation based on my wisdom, the bill he drafted looks pretty great at first glance. It would do a few major things: repeal "must carry" provisions that force service providers to carry content whether they want to or not, repeal retransmission consent and compulsory license provisions in order to truly level the playing field between the two negotiators, and repeal ownership limitations that serve little purpose for consumers. By contrast, the approach Kerry had been floating would have inserted the FCC into the middle of these negotiations, with all of the politics and delays that come with them.

Though I'm still perusing some of the details, this looks to be a very promising bill and I hope that members from all parts of the political spectrum can come together to support it.

 

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What Wasn't in the State of the Union?
Posted By: Andrew Moylan - 01/25/12

So President Obama's 2012 State of the Union is over now and everybody's analyzing the details of what he said (including our NTU Foundation, where researchers are working on figuring out exactly how much his proposals would cost for taxpayers). For someone who claims to be laser-focused on economic growth and job creation, we couldn't help but notice that he left a few things out that SHOULD have been in the speech. For example...

The Keystone XL pipeline

The President conveniently neglected to mention that his Administration just last week denied a permit to build the Keystone XL pipeline, a project to safely deliver Canadian energy resources to the American market. Construction of Keystone XL could have generated as many as 20,000 jobs while bringing much-needed energy to a hungry domestic market that has faced obstacle after obstacle from this Administration. We've been calling for its approval since last summer, but unfortunately for taxpayers and consumers, the President ignored those calls and put the kibosh on the project.

Unlocking valuable spectrum

Cost-free to taxpayers, beneficial in reducing our staggering deficit, and absolutely vital to the continued growth and innovation of technology and the internet. What no-brainer policy am I talking about? Competitive spectrum auctions. Did the President talk about it last night? Of course not! There have been rumblings from both sides of Capitol Hill and both sides of the aisle about spectrum for some time, but some Presidential leadership could work wonders in ushering a win-win policy to completion.

Allowing businesses to...you know, conduct their business

This one's sort of a personal pet-peeve, but of course the President failed to mention the meddling in which his Administration has engaged/will engage in private business operations. Things like the AT&T - T-Mobile merger (which NTU supported) that his Justice Department and FCC squashed last month. Or the ongoing FTC antitrust investigation into Google, a company which charges its users exactly $0 to access its search engine and other services. Or the ongoing process of the Express Scripts - Medco Health Solutions merger. Keeping the federal government out of the way, by and large, is the best way to foster economic growth, but this Administration has time and again shown a tendency towards populist intervention that is unhelpful to say the least.

An energy strategy not centered on subsidies

The President did talk about energy last night, and some of it was commendable. He talked about opening up some more areas under federal control to energy exploration, though I'll await further details before judging. But most of what he said focues on how we should be showering even MORE subsidies on energy technologies that are to the liking of Barack Obama (namely: solar, wind, anything vaguely "green" or "renewable"). And of course he did it while taking swipes at the "Big Evil Oil Companies" he so frequently derides. Funny side note: the biggest of the oil companies that are the focus on Obama's vitriol was just passed as the most valuable company in the U.S. by Apple. The wife of the late Steve Jobs sat beside the First Lady during the speech and got a specific shout-out (a positive one!). I guess he doesn't mind that they're "the 1%" of companies and that they're sitting on tens of billions in largely idle cash reserves, another practice he has criticized elsewhere.

Any serious discussion of bipartisan spending reductions

The President made some vague remarks about "working together" in a bipartisan fashion, along with some passing comments about reducing waste in the federal budget. But he didn't come anywhere close to making it a serious and substantive part of his speech. Too bad. We already worked with the liberal U.S. Public Interest Research Group to give him a $1 trillion head start on spending cuts that left and right could agree upon and stand ready to assist him. Let's just say I'm not eagerly awaiting his call.

What else should the President have covered if he were serious about economic growth and job creation?

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Help Fight Unfair Taxes Online
Posted By: Andrew Moylan - 11/15/11

The Wall Street Journal has an interesting poll up on its site today regarding taxation of retail sales on the internet. The question seems relatively simple: Should states require online retailers to collect sales tax? The thought process for most people probably goes a little something like this..."If it's a sale, it should be subject to sales tax." That probably explains why a huge number of people voted for the (misleadingly-worded) answer "State sales taxes should apply always." Problem is, the "right" answer (from NTU's perspective) is "State sales tax only with physical presence." So please, for the love of all that is holy in proper tax policy (hah!), head over to the WSJ and cast a vote for taxes only with physical presence.

As intuitively appealing as the answer that state sales tax should always apply is, it ignores years of Supreme Court jurisprudence and small-business protections that only require businesses with a legitimate physical presence in a state to collect and remit that state's sales tax. In other words, Andrew Moylan Incorporated would be required to collect Virginia state sales tax because Andrew Moylan Incorporated is physically located in Virginia, but should AM Inc. also be required to collect sales tax for California, New York, Michigan, or any of the other states where it is NOT located? The Supreme Court says no, and rightly so, because that would impose enormous burdens on businesses to navigate more than 7,400 different sales tax jurisdictions across the country.

Keep in mind that, technically, every single sale that is made online is ALREADY subject to taxation. If the seller has a physical presence in the buyer's state, they'll collect and remit sales tax just like your local Target or Wal-Mart. If the seller does NOT have a physical presence, then the buyer is supposed to report the purchase and pay a "use tax" on it directly with the state government. Unfortunately, this use tax regime is a disaster. Most buyers have no clue they owe these taxes and very few actually pay them, so it's not as if there's no problem here at all.

But if proponents of burdensome tax-collection plans were serious about "fairness," they'd advocate a revenue-neutral system that respects our Constitution and preserves tax competition. As NTU noted in a recent news release, one step to explore would be requiring all firms to collect sales taxes only for the jurisdiction where they're based, rather than for multitudes of governments around the country. Another would be supporting Senate Resolution 309 from Senators Wyden (D-OR) and Ayotte (R-NH), which affirms Congress' intent not to give states "the authority to impose any new burdensome or unfair tax collecting requirements on small internet businesses."

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Net Neutrality: A Solution in Search of a Problem
Posted By:  - 11/10/11

A solution in search of a problem. That’s the best way to describe the Net Neutrality regulations that the Senate is currently debating in anticipation of a vote later today.

The Internet is not broken. Given the present state of our economy, it is one of the few sectors that could be described as such. In just the past decade the number of Internet users has soared from 513 million to more than 2.1 billion. It has not only fundamentally changed how individuals learn, communicate, and work, but has spawned an entire economic ecosystem, without which Google, Apple, Facebook, and thousands of other companies (and the jobs they created) would not exist.

Moreover, all of this growth and innovation has occurred in large part without government regulation. Indeed, it is not a stretch to say that the Internet is the definitive free-market success story of our generation. Sadly, that hasn’t stopped Washington from wanting to gets its hands on it. And unlike Midas (or Steve Jobs, if we’re sticking to the theme), everything the government touches does not turn to gold.

By way of background, Net Neutrality is the principle that Internet service providers should not block or slow-down consumer’s access to networks. The fear, as Sen. John Kerry (R-MA), explained on the Senate floor yesterday, is that “the people who control those access points [to the Internet] can start discriminating about who gets access at what speed . . . and begin to charge mo"re for [faster access].”

Except there is little evidence that would ever happen. What supporters of Net Neutrality seem to forget is that consumers tend to not like getting shoddy, slow, or overpriced service.

That’s one of the reasons  internet service providers have been falling all over themselves to invest in the needed infrastructure. Consider the recent battle between Verizon Wireless and AT&T – each of which have spent millions of dollars in an ad war about the relative strength of their mobile “3G” networks. Consumers are increasingly savvy about these sorts of things and the free market has worked to keep them not only honest, but pushing for improvement. That’s one of the reasons that 93 percent of broadband subscribers are happy with their service – more than 10 times higher than the 9 percent approval rating Americans give Congress.

But while Net Neutrality proponents rest their claims on unfounded predictions of some future harm, the threat of the FCC’s proposed regulations are very real.

Implementing Net Neutrality regulations would require the FCC to have deep access to the business practices of the regulated internet service providers. This would include the ability to constantly monitor and draw data from network structures, content types, delivery modes and speed, applications, user preferences, and usage activity. This is not merely a privacy concern. It would equip the FCC with a vast body of information that could enable the implementation of a long-sought Internet taxation scheme. And with Democrats constantly on the search for more revenues to fund their spending habits, the temptation for Internet tax schemes grows.

In searching for a solution to a phantom problem, the federal government threatens to create a very real one – stifling investment in our most promising source of economic growth. There is no market failure here that requires the government to regulate. Rather, the Internet is a free market success story that, if Net Neutrality regulations proceed, could end up with a very sad ending.

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Durbin to Introduce Internet Sales Tax Bill
Posted By:  - 04/12/11

This just in:  According to CNet News.com, Illinois Senator Dick Dubrin plans to introduce a bill that would require busineses to collect and remit sales tax on remote sales.  Wyoming Senator Mike Enzi is expected to co-sponsor the legislation. 

 

In case you were wondering, NTU has a history of opposing such legislation at the federal and state levels.

 

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Fairness Doctrine Prohibition Bill Highlighted in Latest Taxpayer’s Tab
Posted By: Dan Barrett - 03/10/11

Tab Insert

As budget battles loom and entitlement liabilities grow, NTU Foundation is hot on the heels of federal spending proposals. This week’s Taxpayer’s Tab brings you four newly scored bills for your consideration.

One bill making ripples in the political waters is the Cut Federal Spending Act of 2011, sponsored by Senator Rand Paul. To address the projected $1.5 trillion deficit for 2011, Paul proposes cuts across many government departments and agencies -- even defunding the Department of Housing and Urban Development, nine agencies, and seven independent agencies. How much will it save taxpayers? Check out the article in its entirety here.

The latest Taxpayer’s Tab includes the following bills:

  • HR 555, Universal Prekindergarten Act
  • S 162, Cut Federal Spending Act of 2011
  • HR 642, Broadcaster Freedom Act of 2011
  • HR 576, Healthy Children Through School Nutrition Education Act

Do you or anyone you know live in Congressmen Joe Baca (CA-43), Dennis Kucinich (OH-10), or Mike Pence’s (IN-6) district or Senator Rand Paul’s (KY) state? Each of these legislators was mentioned in this week’s Tab. Read up on their proposals and keep a tab on them!

As a bonus, we also highlight a recently posted article by NTUF’s Senior Policy Analyst Demian Brady. The War on Federal Redundancy, featured in The Ripon Forum, addresses why Congress should target duplicative government programs first but quickly and assertively move onto the three 500 pound gorillas, also known as Social Security, Medicare, and Medicaid. Check out the whole article here.

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