New Taxes+Unusable Speed=Good for School? New Math For Politicians?

New Taxes+Unusable Speed=Good for School? New Math For Politicians?
August 19, 2013

Bartlett Cleland

Bartlett Cleland is the Managing Director of Madery Bridge Associates, public strategy firm... (read full bio)

What could possibly be wrong with the idea? It helps the kids. 

But when a politician uses children to justify a plan it is time to quickly grab your wallet and your liberties as at least one of the two is about to be taken away.  In this case President Obama has proposed a new tax to pay for his "ConnectED" proposal which made news again recently after being brought up during a press conference.

The President would like to increase the speed of Internet access at the nation's public schools.  According to a White House spokesman, "... we could connect 99 percent of schools all across the country to the Internet, and that would expand educational opportunities for students in a really important way." But, the program is not about connecting more schools -- in 2000 99 percent of public schools already had Internet access.  Instead the President wants to increase the speed of the access in schools since the FCC said that half of the schools believe that they have slower Internet connections than an average home. 

Is extra speed currently needed for any particular use, or if this is just a mere extension of former FCC chairman Genachowski's wish list as he detailed last year.  While he desperately tried to make that case that greater speeds were urgent, he in fact, provided no support to show that all that speed could be used for applications now or in the near future.  Pushing speed is an exceedingly poor substitute for innovation, advancement or a bold new idea.   And mere opinion should never be enough to move government policy.

Also not reported, according to the FCC, 91 percent of U.S. residents are pleased with their home broadband speed.

And why is that?  Because speeds have gotten so fast that in fact there are precious few applications to even try to take advantage of it.  Consumers don't really care about some number, and frankly neither do schools.  What is important is whether or not the school can accomplish what they want in education taking into account all resources, which includes adequate technology training for teachers, encouragement to integrate technology into a curriculum and having resources beyond fast broadband.

To cover the costs of the White House estimated $4-6 billion program the President has proposed raising taxes on monthly mobile phone bills.  Being unwilling to negotiate with the U.S. Senate and U.S. House he is doing an end run around them, pushing a unilateral administrative tax increase through the FCC, adding to the mass of mobile phone taxes already burdening consumers.

Tax authorities, and now Mr. Obama, have seized upon the success of mobile communications, taxing mobile telecommunications services to stratospheric levels.  Nationally, the average tax rate on wireless service is already at extortion levels of 17.2%, or nearly two-and-a-half times higher than the 7.4% average sales tax rate imposed upon other goods and services.

Even worse, specific localities are pushing the tax limits to new extremes:  Baltimore City first imposed a $4.00 per line per month charge on inner city residents; Montgomery County, Maryland has increased their flat fee per wireless line from $2.00 to $3.50; and New York City residents face 10 separate city, state and federal fees and charges, not counting a high sales tax.  Some states even go for a double dip by charging a sales tax and then adding a 4% or 5% gross receipts tax on wireless services.  Overall, the effective rate of taxation on wireless services has increased three times faster than the rate on other taxable goods and services - clearly discriminatory treatment.

That discrimination drives up costs and drives down adoption with taxes higher than those placed on pornography, alcohol or gambling winnings.   This fact has prompted Congress to act, introducing The Wireless Tax Fairness Act, to place a five-year moratorium on new or increased taxes in the states on wireless telecommunications infrastructure and services.   And yet the President heads the opposite way. No wonder he is trying to force the tax via executive power rather than negotiate with Congress. 

If we are to truly achieve a national goal of greater broadband adoption including more ubiquitous broadband in schools, then states, localities and the FCC, even if pushed by the President, cannot be allowed to continue the shameless pile up of discriminatory taxes on wireless communications.

Bartlett Cleland

Bartlett Cleland is the Managing Director of Madery Bridge Associates, public strategy firm... (read full bio)