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An Open Letter to the House: Now More than Ever, Your Constituents Need the Protection of the State Video Tax Fairness Act!

February 2, 2010
By Pete Sepp


Dear Representative:

On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write to strongly endorse the State Video Tax Fairness Act (H.R. 1019). We commend the distinguished, bipartisan sponsorship of this bill, consisting of Reps. Conyers, Boucher, Fleming, Franks, Peterson, and Sensenbrenner, and hope that other Members will join them. H.R. 1019 would prohibit inequitable net taxes that are dependent on the mode of programming delivery, thereby helping to ensure that consumers – not the states – pick marketplace winners and losers.

Seven states (Florida, Kentucky, Massachusetts, North Carolina, Ohio, Tennessee, and Utah) levy video service taxes on satellite television that are significantly higher than those levied on cable television. Unfortunately, current budget shortfalls have encouraged other states to examine such misguided policies. In fact, over the past 12 months, 11 states have entertained unfair tax schemes.

Clearly, if consumers are to be defended against widespread, predatory taxation, it will be necessary for the federal government to assert its perfectly legitimate prerogative in H.R. 1019. Established law has long recognized, mostly for the good of taxpayers, that telecom services can often defy state boundaries as well as the jurisdiction of their taxing authorities.

Much of the debate over video tax policy has improperly focused on a form of “fairness” that only fills government’s coffers further – that is, making sure providers of similar services suffer the misery of equally harsh taxes. In NTU’s opinion, however, there is an obvious need to reduce overall telecommunication tax burdens, promote consumer choice, and provide a neutral playing field among similar products. At the federal level, we have endorsed efforts to prevent discriminatory taxation of Internet and wireless services and we support the application of this principle to video services.

Lobbyists for cable TV interests insist that new satellite taxes are warranted because their industry has paid “franchise fees” in exchange for rights of way to lay cable. But this is a “cost of doing business,” one mirrored by satellite providers’ need to bid for the use of federally owned spectrum and in preparing, launching, and maintaining their spacecraft. In any case, if cable providers believe they are paying too much to local governments the answer is to seek lower taxes on their own operations, not to plead for higher taxes on their competitors under a twisted definition of “fairness.”

Congress needs to send a clear message against discriminatory video taxes now, before the next state budget cycles begin and officials start eying new, unfair revenue-raising schemes. That is why your support for the State Video Tax Fairness Act is so vital. Any roll call votes on H.R. 1019 will be significantly weighted as pro-taxpayer votes in NTU’s annual Rating of Congress.


Pete Sepp
Vice President for Policy and Communications