Thoughts on broadband strategy

The FCC received reply comments last week concerning the national broadband plan it is required — pursuant to the stimulus legislation — to deliver to Congress by Feb. 17, 2010. In the attached reply comments of my own, I conclude: The broadband market is delivering better services at lower prices. There is no evidence of a market failure which would justify additional regulation. I pointed out that just as the Sherman Act does not “give judges carte blanche to insist that a monopolist alter its way of doing business whenever some other approach might yield greater competition,” according to the Supreme Court, the Commission would be wise not to insist that broadband providers alter their way of doing business just Read More ›

Sales taxes are finished Inc. has informed its marketing affiliates in Hawaii that it is ending its business with them to avoid collecting sales tax in the state. Lawmakers in Hawaii, following in the footsteps of North Carolina and Rhode Island, have passed legislation that would require companies to collect sales tax if they have marketing affiliates in the state. Affiliate marketers run blogs or Web sites and get a sales commission by featuring links to outside e-commerce sites. Although sales taxes are an efficient way for state and local officials to raise lots of revenue, sales taxes are a vestige of the industrial age which are doomed to extinction in the information age. Consumers don’t have to buy goods and services locally. Read More ›

Work, Invent, Invest

Driving the economy are not dollars in peoples’ pockets but the ideas in their heads. Not buying-power but incentives impel people to take risks and make efforts and investments. More dollars may even reduce peoples’ incentives to work and invent and invest. Every dollar rebated to a consumer comes from another consumer or investor. You cannot increase spending power (real income) without first increasing output. Supply creates its own demand. Demand does not increase supply except to the extent that the demand symbolizes previous productive efforts that expanded output. Democrats and wobbly Republicans are panicked by class rhetoric from lowering the top rates which most affect incentives. These top marginal rates yield all the revenue (the lower the rates the Read More ›

A Technology Tax Hike?

Check out my friend John Rutledge’s new report for the U.S. Chamber on efforts to raise tax rates on “carried interest” — i.e., venture capital and private equity. Rutledge shows that Venture capital has had an extraordinary record in creating new businesses, new technologies, new business models, and new jobs. Venture-backed companies accounted for $2.3 trillion of revenue, 17.6% of GDP, and 10.4 million private sector jobs in 2006. Venture-backed companies grow faster, are more profitable, and hire more people. and concludes that Raising tax rates on the long-term capital gains of limited partnerships will drive capital offshore, reduce the productivity of American workers and the ability of US companies to compete in global markets. It will cost American jobs Read More ›

A Tax on Innovation

See Don Luskin’s great column this morning on why we should eliminate the capital gains tax. Luskin nicely documents the virtuous cascading effects of innovation, both for the economy and for tax receipts. While eliminating the cap-gains tax may well induce companies like Microsoft to generate additional taxable activity, there’s a more important opportunity here. Eliminating the cap-gains tax will cause the economy to generate more innovators like Microsoft. For each new Microsoft, the cost to government would mean $40 billion in foregone revenues. But for those new Microsofts that wouldn’t have existed otherwise, the payoff would mean raking in $268 billion. Bruce Bartlett offered another angle on capital gains last week, with a useful analogy: The great economist Irving Read More ›

Richard Rahn on how to sabotage the U.S. economy

If foreign adversaries wanted to undermine the U.S. economy they would find it very simple, writes Richard Rahn. Target a few key industries and induce hapless bureaucrats to tax and regulate the industries until they are uncompetitive. Which industries are key? [T]he computer, Internet and wireless industries, coupled with the world’s most productive financial engineering, have provided much of the U.S. economic growth for the last quarter-century. Here is how you, as an agent of a foreign government, make the industries noncompetitive: The IPO market in the U.S. is drying up and moving to other countries. Venture capital firms are shutting down or reducing their investments. Legislation, such as the Sarbanes-Oxley bill, has made it prohibitively expensive to take a Read More ›

Give IRS keys to the Internet?

The IRS likes to talk about how it’s primarily concerned with improving taxpayer services, particularly this time of year. But don’t be fooled. Earlier this year, the Bush Administration proposed to require “brokers” to report online sales of tangible personal property to the IRS. This is really another giant surveillance program, like the trial balloon the administration has previously floated to require internet service providers to retain customer data to combat crimes committed against children (as I’ve discussed here and here). In both cases, the government is trying to harness the unique capacity of the Internet to identify and document conduct in ways that were never feasible nor possible before — in this case ordinary commercial transactions that just happen Read More ›

“National strategy” for broadband?

Japan has 7.2 million all-fiber broadband subscribers who pay $34 per month and incumbent providers NTT East and NTT West have only a 66% market share. According to Takashi Ebihara, a Senior Director in the Corporate Strategy Department at Japan’s NTT East Corp. and currently a Visiting Fellow at the Center for Strategic and International Studies here in Washington, Japan has the “fastest and least expensive” broadband in the world and non-incumbent CLECs have a “reasonable” market share. Ebihara was speaking at the Information Technology and Innovation Foundation, and his presentation can be found here. Ebihara said government strategy played a significant role. Local loop unbundling and line sharing led to fierce competition in DSL, which forced the incumbents to Read More ›

Digital Prosperity Report Concludes IT Investment Critical

Policy makers should recognize information technology as the centerpiece of economic policy and develop their plans accordingly, concludes the Digital Prosperity study published this week by the Information Technology and Innovation Foundation.
“In the new global economy information and communications technology (IT) is the major driver, not just of improved quality of life, but also of economic growth,” writes Foundation president, Dr. Robert D. Atkinson, author of the study.
Atkinson is a widely respected economist who formerly served as project director of the Congressional Office of Technology Assessment, and is the former director of the Progressive Policy Institute’s Technology and New Economy Project of the centrist Democratic Leadership Council.
Based on reviews of other studies, and Atkinson’s own research, the report maintains, “IT was responsible for two-thirds of total factor growth in productivity between 1995 and 2002 and virtually all of the growth in labor productivity” in the United States.

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