09 June 2010

Your obsolete business model is not my problem...

...and it's not the government's job to fix it.

Ignore for a moment how foolish it is to be creating state-supported media companies.  The particular taxes use to raise the funds to prop-up/buy-off those media companies are equally indefensible.
Reuters: Political Risk | James Pethokoukis | Will Washington bail out the MSM with an iPad tax?

This is actually quite astonishing. A “staff discussion draft” [pdf] from the Federal Trade Commission recommends ways the government can save journalism. First, it lists a number of ways Washington can subsidize the media (to the tune of $35 billion a year): [...]

And here is where the money would come from, which I will quote directly:
Tax on broadcast spectrum. They argue “commercial radio and television broadcasters are given monopoly rights to extremely lucrative spectrum at no charge,” and this is a massive public subsidy. They therefore suggest the revenues generated by that spectrum be taxed at a rate of 7 percent, which should result in a fund of between $3 and $6 billion. In exchange, commercial broadcasters would be relieved of any obligations to engage in “public-interest programming,” which the broadcasters claim costs them $10 billion annually.
Isn't that spectrum already auctioned off, making it false to say it is handed over "at no charge"?  And the revenue generated from it is already subject to regular corporate taxation.  Why does that revenue deserved to be more taxed than other revenue?
Tax on consumer electronics. A 5 percent tax on consumer electronics would generate approximately $4 billion annually.
This is the heart of what bugs me about this revenue proposal. This is what I think of as a "proximity tax." The state wants money for a particular problem, so it just points at the closest party with some money and decides those are the appropriate funds to use.

Is there any reason consumer electronics manufacturers, retailers, and purchasers are responsible for propping up Old Media? (Well, there's no reason any of us should be made responsible for that. What I mean to say is, should those consumers be more responsible?)

I could name all sorts of correlations — e.g. people who use iPads will spend less time reading and buying newspapers — but they're all irrelevant. People who spend more time excercising also will spend less time reading newspapers. Should we tax gym memberships to bail out the NY Times? People who use iPads will spend less time playing board games or doing crossword puzzles in those digest books or sending postcards, so should be use the "iPad Tax" to prop up makers of those things?
Spectrum auction tax. They suggest there be a tax on the auction sales prices for commercial communication spectrum, with the proceeds going to the public-media fund.
Ah. There is a spectrum auction after all.

I've never gotten good with Game Theory, but isn't the reaction to a tax on the auction price for everyone to bid lower by the amount of the tax, causing the auction revenue to remain constant?
ISP-cell phone tax. They suggest consumers could pay a small tax on their monthly ISP-cell phone bills to fund content they access on their digital services. A tax of 3 percent on the monthly fees would generate $6 billion annually.
Again, why does this have anything to do with bailing out the Boston Globe? What you're essentially saying by proposing this is that people spend time using the internet on their phones, some of that times is consuming news content, and therefore 3% of the cost of the service should be funneled directly to Old Media companies. Why can't they charge for their services themselves? Why do they need to state to act as their henchman? What about all the other content providers people use on their phones? Is Facebook going to get a piece of this? Twitter? By proposing this you are asserting that reading newspapers on your phone is intrinsically more valuable than anything else you do with it.

(Via Stephen Bainbridge)

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