DearRepresentative:
On behalf of the 362,000 members ofthe National Taxpayers Union (NTU), I write to offer our support for the StateVideo Tax Fairness Act of 2011 (H.R. 1804). We commend RepresentativesSensenbrenner, Conyers, and Jordan for their strong bipartisan leadership onthis issue. H.R. 1804 would begin to address the persistent problem ofdiscriminatory state video services tax policy by prohibiting inequitable nettaxes that are dependent on the mode of programming delivery. This would help toensure that consumers – not legislators – pick marketplace winners and losers,as well as serve our ongoing mission of lower, simpler, and fairer taxes forall forms of telecommunication.
To give one example of the current,troublesome situation, Ohio levies video service taxes on satellite televisionthat are significantly higher than those levied on cable television at thestate level. Current budget shortfalls have encouraged numerous other states toconsider such tax schemes in recent years. If consumers are to be defendedagainst widespread, misguided taxation, it will be necessary for the federalgovernment to assert its perfectly legitimate prerogative by setting boundarieslike those contained in H.R. 1804.
Some argue new statewide satellitetaxes are warranted because the cable television industry has paid “franchisefees” to local governments in exchange for rights of way to lay cable. It isquite true that these franchise fees are often exorbitant, with some expertsestimating that as little as 10 percent goes toward maintaining public propertywhile the other 90 percent props up bloated municipal budgets. Yet, that isprecisely why the path to tax fairness and neutrality is through lowering thoseinflated charges, not through raising taxes on satellite subscribers. NTU iscommitted to winning franchise-fee relief and will continue to urge state andlocal governments to review these policies, but they cannot be used as ajustification for imposing discriminatory statewide taxes on customers of otherservices. In any case, H.R. 1804’s salutary provisions will afford protectionsagainst several forms of inequitable taxation, including levies that could fallupon Internet protocol-based technologies.
Telecommunications of all varietieshave been targets for disproportionate and punitive taxes since theSpanish-American War, slowing much of the progress and productivity that couldhave emerged to enrich our society sooner. There is an obvious need to reducetelecommunication tax burdens on all providers, promote consumer choice,and provide a neutral playing field among similar products. At the federallevel, we have endorsed efforts to prevent discriminatory taxation of Internet services,digital goods, and wireless services and we support the application of thisprinciple to video services as well.
Congress needs to send a clearmessage against discriminatory video taxes now. We urge you to cosponsor and support this bill, and any roll call voteson H.R. 1804 will be significantly weighted in NTU’s annual Rating of Congress.
Sincerely,Andrew MoylanVicePresident of Government Affairs