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FTC Discusses 5 Percent Federal Tax on Computers, Phones, and Consoles

FTC Discusses 5 Percent Federal Tax on Computers, Phones, and Consoles

Jason Mick

June 07, 2010

The U.S. government has compiled some creative ideas to “save journalism” or more aptly to save newspapers.  Among their feel-good suggestions to help preserve the free press (paper) is to institute a 5 percent tax on all consumer electronics.

The U.S. Federal Trade Commission has submitted a multi-faceted list of suggestions for public review and to the appropriate officials – President Obama and Congress.  The FTC states that the proposal is “solely for the purposes of discussion”, though it expects aspects of it could work their way in to legislation.

The most suggestion on the list is a proposal to tax all digital electronics, including, but not limited to – iPads, iPods, iPhones, laptops, desktop PCs, Macs, netbooks, Zunes, Sansas, Creative MP3 players, digital cameras, video cameras, Android smart phones, Nintendo DS’s, PSP Go’s, Xbox 360s, Wiis, and the PS3.

The 5 percent federal tax, along with applicable state taxes, would bump total tax on these items to 10 percent or more in many states. 

The proposal would suck in $25 per $500 spent on electronics goodness.  The government would “redistribute” the $4B USD it hopes to haul in from the proposal to struggling print news businesses, who have seen their ad revenue drop 40 percent in the last decade as advertising has made the leap to the internet.

The full list of recommendations is available here [PDF].  Feel free to contact your Senators and Representatives and give them your thoughts.

Even if the federal consumer electronics tax never gets the legislative green light, state governments should help pick up the slack.  Nationwide there’s a wealth of measures looking to tax digital downloads such as iTunes tracks, video game downloads from Valve, and more.  Critics say the laws will drive people to piracy, but advocates say they will allow the government to harvest much needed funds to pay for roads, schools, and police forces.

Update: June 4, 2010 3:38 p.m. EST-
Our FTC contact graciously pointed out that there were some inaccuracies with this report and other reports concerning this story.  The FTC itself did not propose this suggestion.  Rather it compiled a list of suggestions.  Among these suggestions was the discussed proposal to tax consumer electronics.

We are trying to dig up exactly who made the suggestion.  A number of high profile parties contributed suggestions on all ends of the political spectrum – from Arianna Huffington to Ruper Murdoch.  We’ll let you know if we find out exactly who made this curious proposal.

Update 2: June 4, 2010 5:30 p.m. EST-
The FTC source who contacted us claimed that the FTC itself did not originate that statement, which was published in an FTC report on the topic (indeed the report itself makes this claim as well).  However, they could not provide us a source for the statement.  The document itself mentions a mysterious “Id. at 209-11” as being the source.

We could not divine what exactly that meant.  The document itself is not 209 pages long.  Nor is there a section 209 in it.  Nor is there a 209th source listed.

Our FTC contact did send us this link, which he says contains the links to the speakers’ presentations which contained the information in the report.  However, looking through every one of these presentations, none of them contained reference to a tax on consumer electronics (search tax in the PDF, to see for yourself).

Update 3:  June 4, 2010 7:00 p.m. EST-
Whoops, apparently we need to brush up on our legalspeak.  Id means to refer to the previous source, so with that we were able to establish the source – pages 209-211 of The Death and Life of American Journalism: The Media Revolution that Will Begin the World Again " by Robert W. McChesney and John Nichols.  McChesney is a professor in the Department of Communication at the University of Illinois Urbana-Champaign.  And Nichols is a blogger and activist.  He writes for The Nation.  His blog bio can be found here.

So at last we know who’s suggesting the nation embrace a tax hike on consumer electronics.

_© 2009, DailyTech.

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