FTC Chairman: Tax on CE is ‘Terrible Idea’

The FTC was mulling a 5% tax on technology to subsidize the "reinvention of journalism" but FTC chief Jonathan Leibowitz said in a hearing yesterday that the idea is stupid.

FTC Chairman: Tax on CE is ‘Terrible Idea’
Julie Jacobson · June 10, 2010

It looks like the Federal Trade Commission won’t subsidize newspapers by taxing technology after all.

They must have read my memo (followed by CEA chief Gary Shapiro’s plea in the Huffington Post).

In a ridiculous proposal to bail out journalism, the FTC had considered a 5% tax on consumer electronics, which could raise about $4 billion per year. (CLARIFICATION: The proposal was not created by the FTC, just


by the commission.)

The money would be used to subsidize poorly run news outlets suffering the “challenges … of the Internet age.”

That idea, as well as other silly schemes to guide journalism “through a significant transition in which business models are crumbling” are spelled out in a 47-page FTC document called “Potential Policy Recommendations to Support the Reinvention of Journalism (pdf).”

In a hearing yesterday, however, FTC chairman Jonathan Leibowitz said a CE tax was a dumb idea:

Recently, we released a Discussion Draft with a number of proposals. Some of these may not be advisable policy recommendations – for instance, it would be a terrible idea to tax electronic equipment to subsidize newspapers. We are examining these issues and will be holding a roundtable next week and issue a report in the fall.

The comment was merely an aside to a question about newspapers and antitrust, during yesterday’s meeting of the Subcommittee on Antitrust, Competition Policy and Consumer Rights of the Senate Judiciary Committee. The hearing was entitled “Oversight of the Enforcement of the Antitrust Laws.”

About those other taxes ...

The tax on CE is only one recommendation studied by the FTC to save journalism from the evils of the Internet.

The group also is pondering a 2% sales tax on advertising, as well as new accounting rules that would further punish advertisers ... and, ironically, the journalists they help to employ.

And then there’s the “small” 3% tax on cell phone bills “to fund content they [consumers] access on their digital services.” And that’s supposed to help “reinvent” journalism ... how?

What do you say to that, Chairman Leibowitz?

In an email to CE Pro, FTC spokesman Peter Kaplan explains: “The recommendation for a 5% tax on CE was “an idea submitted to the FTC’s staff as part of workshops we’ve been holding since last year. It was never FTC’s proposal or recommendation ....”

Read the entire note.

  About the Author

Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Email Julie at [email protected]

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  Article Topics

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