Magazine article Insight on the News

Private Corporations Impose Taxes on Americans

Magazine article Insight on the News

Private Corporations Impose Taxes on Americans

Article excerpt

House Judiciary subcommittee on Commercial and Administrative Law Chairman George W. Gekas of Pennsylvania is trying to learn if Congress really has authorized three private corporations to tax Americans more than $40 billion during the next five years.

The taxes in question are showing up on long-distance telephone bills. "Congress passed the Telecommunications Act in 1996 intending to bring the benefits of open markets and competition to communications," said Gekas, whose subcommittee has begun holding hearings on the issue. "Lower costs and better service are the payoffs that so many of us sought for our constituents when we voted for the bill."

The 1996 act included provisions to extend communications service to rural areas and other regions where it is not economical to provide service. Following the breakup of the Bell monopoly, a settlement system called the National Exchange Center Association was set up to divide income from dollar flows and access charges among hundreds of local and long-distance carriers. Congress gradually added additional fee settlements, including costs mandated for the handicapped under the Americans with Disabilities Act. The 1996 act took this one step further with the establishment of a universal service fee to make service more widely available. Congress expected this to be modest.

Instead, the Federal Communications Commission, or FCC, in a controversial move, set up three nongovernment corporations and empowered them to tax telephone companies to fulfill the missions of these corporations. …

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