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News for Public Officials and the People They Serve

FCC Proposal to Expand Internet Taxes Tabled

Proposed FCC rules seeking taxes for text messages and cell phone usage as well as increased taxes on internet services have been tabled for now.


Efforts to tax the physical internet were nixed by

"The last time Congress addressed Tech policy they intentionally left the ‘Net completely alone. They authorized no one to regulate the Web in any way. So of course the Obama Administration has been in full-on regulatory Internet assault mode. And they are successfully killing it."


 Congress in 2007 and are not scheduled for discussion until 2014. Nonetheless, President Barack Obama's iteration of the U.S. Federal Communications Commission (FCC) asks the FCC to consider taxing the internet with rules that effectively tax internet services, cell phones, text messages and land lines.


The new taxes are proposed to provide funding for the Connect America Fund which is commonly referred to as Obama's "national broadband" plan as well as other projects encouraged by the president. The FCC is asking for your comments on the proposed rule changes in this 182 page notice.


Unpopular and Possibly Illegal

Taxing the Internet has always been a problem for people who believe the internet should be free to everyone.


When the FCC released a report in 2010 suggesting the federal government should investigate establishing a national framework for digital goods and services taxation, the response from taxpayers and the media was swift and withering.

"The Obama Era has become a protracted, nightmarish Whack-A-Mole game of tax increases and bureaucratic self-enlargement. In sector after sector of American life, another scheme to expand government and wrench more earnings from Americans’ pockets pops up", wrote the Washington Times in an article dated April 10, 2010.


And it is just as unpopular today. Some say it may even be illegal as the US Congress has not authorized anyone to regulate the Web. In a heartfelt opinion piece that appeared August 28, 2012 on the pages of the author said , "Everything the government does to regulate the Internet is illegal" "And the Administration is considering a completely illegal Internet tax."

So far an "internet tax" has remained a contentious issue and tremendously unpopular with the general population who already feel overtaxed. Some states have made headway in forcing online retailers to pay state sales taxes and some Congressional Democrats are calling for a national policy for enforcing sales tax on the internet. The proposed FCC rule changes might provide a less politically volatile way of collecting internet taxes from all of us without letting you know how much you are being taxed.


Hidden Taxes

Under the proposed rules, new and increased taxes consumers would be pay are folded into your cell phone and internet bill and the FCC is considering whether to allow carriers to continue the practice of including such taxes as a separate line item on customer bills. Line item notations allow consumers to see exact amount of taxes you are paying on your monthly statement. The FCC proposed rules might relegate tax notification to the back pages with the tiny print where the consumer is least likely to see it.


Update 10-11-2012: FCC Tables Broadband Tax Proposal

The Federal Communications Commission has withdrawn a proposal to tax broadband Internet service after a public outcry over the issue according to an article in Heartlander.

With one FCC official calling the Internet tax “politically toxic,” Republicans and Democrats on the commission are blaming each other for the unpopular proposal.


In an election year the Obama administration will likely be wary of levying a new tax on U.S. consumers in any way the public might discover. So the decision of whether to put the new broadband tax back on the table will likely be made early next year by the next President -- be it Obama or Mitt Romney.


The original proposed rule changes can be seen in this 182 page notice from the FCC.


To learn more:

Get Updates from News for Public Officials In Your Email


read these articles:

Obama's FCC Looks to Tax the Internet DailyTech

Further notice of proposed rulemaking  FCC (pdf)

FCC Approves Obama Administration's Government-Run Broadband Plan



Posted 10-03-12

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