How the FTC Wants To Tax and Subsidize Journalism

Journalism is not what it used to be and the Federal Trade Commission is exploring ways to reinvent the craft. The FTC proposed that the US government should be the hub of a media overhaul but some are worried it is not the right course of action.

Concern now is that the Internet has changed the way things are being done. The Web has been providing consumers information in a way never before done and is essentially strong-arming the media companies to follow suit. News organizations now must work to adapt to the changing market through experimentation. Reports show there is doubt the market will survive on its current course and thus the government needs to step in and save the day.

Varieties of ideas are being thrown into the mix to help save the industry but most are not to the consumer’s benefit. Some proposals include taxation on news websites that can be collected and divided up between newspapers. The tax would also affect sites like Digg and Reddit. These sites gather news links from around the world and give readers a forum to discuss news issues hence their popularity.

In addition to the taxing of news websites, proposals also offer the possibility of tax exemptions to news organizations. Thoughts about establishing a national fund for news organizations have also been discussed. Those funds would be created from monies coming from the new taxes. There has even been talk of an extra tax being placed on electronic devices people use to read the news, like the Apple iPad or Amazon Kindle. Even laptops and desktop PCs may see the added tax.

Should the government step in, the conflict of interest that would be created is apparent. Government contributions to the salaries of reporters and news workers would hardly create unbiased results. There would be no incentives for telling a story like it is. Consumers would suffer the most if it is decided that the government is the only saving grace. It would become only more difficult for them to read about or share various viewpoints on newsworthy subjects.
Some of the proposed taxes include:

Broadcast taxes – since commercial radio and television broadcasters are given rights to a profitable spectrum for free, it is essentially a public subsidy. When taxed at a rate o 7%, a fund of up to $6 billion dollars could be collected. In return, commercial broadcasters would not be obligated to provide public-interest programming estimated to cost broadcasters $10 billion each year.

Electronic device tax –If a 5% tax is added to consumer electronics, the amount collected is estimated to be around $4 billion each year.

Taxes on advertising – a 2% tax on commercial advertising would bring in about $6 billion a year. If the tax write-off on ad costs for businesses where changed from a write-off every year to one covering a 5-year period, another $2 billion could be collected.

Cell phone taxes – if consumers were to pay a small tax on their cell phone bills for the content they access digitally, $6 billion could be collected each year of taxed at 3% of the monthly fees.