Regardless of one’s views on the deficit, our national debt and the various “solutions” being proposed, and regardless of one’s views on the spectrum (radio frequencies allocated to various uses) debate (how to find “more” spectrum), what should be obvious is that spectrum policy cannot merely become a subset of budget policy.
Many reports have outlined various strategies to close the huge deficit gap by, in part, counting on the sale of licenses of spectrum. Fair enough, so long as the assumptions on revenue are reasonable and so long as revenue demands alone do not drive spectrum policy, since spectrum is a critical resource if we expect to continue the digital revolution and expand U.S. innovation.
Some proposals floating around Capitol Hill would actually grant the FCC new power to impose spectrum license user fees amounting to more than $4 billion. That is in addition to the current regulatory fees already imposed. While the routine failure to balance the budget creates regularly occurring deficits, driving our national debt ever higher, the answer to that problem does not lie in yet another tax on the communications industry. In fact, the opposite is likely the correct course.
Why is it that we should not increase taxes on the communications industry?
- First, it already bears an outsized potion of taxes in the states.
- Second, the industry was finally relieved only a couple years ago of the burden of collecting taxes to pay for the Spanish America War (yes, seriously), so why would we seek to drive up their costs again with fees that will never go away?
- Third, we know that a tax reduces the instance of the object of the tax at the margins. Given that tens of billions of dollars in private capital are invested annually by wireless and satellite communications operators to build networks and the infrastructure necessary to meet consumer’s demands and expectations, all of which drives tens of thousands of jobs, a tax increase directly results in less opportunity for growth, and perhaps even a shrinking communications sector. In short, that means fewer jobs now and even fewer in the future.
The U.S. economy needs growth, lots of growth, to get out of the deep financial hole dug by Congress and the White House over the last many years. Increasing fees on (essentially taxing) one of the industries currently investing billions of dollars in the U.S. and creating jobs, seems a poor choice in the spectrum of ideas.
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Today's TechByte was written by Bartlett D. Cleland, Policy Counsel with the Institute for Policy Innovation.