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1 J. D. Foster, The Economics of Section 1071: The FCC Tax Certificate Program 1 (1995)

handle is hein.taxfoundation/taxfaawc0001 and id is 1 raw text is: TAX 4M FOUNDATION February 1995 The Economics of Section 1071: The FCC Tax Certificate Program House Ways & Means Committee Testimony The following testimony was presented by Dr. Foster before the House Ways & Means Committee on January 27, 1995. Madam Chairwoman and Members of the Committee, my name is J.D. Foster and I am the Executive Director and Chief Economist of the Tax Foundation. The Tax Foundation is a nonprofit, nonpartisan research and public education organization that has been monitor- ing fiscal policy at all levels of government since 1937. I would like to emphasize to the Committee that the Tax Foundation is not a grass-roots organization, a trade association, or a lobbying organization. We do not take positions on specific legislation or legislative Even at a time when such fiscally colossal issues like a balanced budget amendment and the Contract with America dominate our attention, there remain many important issues that should not be neglected, even though they may never appear above the fold on the morning paper. proposals. Our goal is to explain as precisely and clearly as we can the current state of fiscal policy and the consequences of particular leg- islation in the light of specific tax principles so that you, the policy makers, may make in- formed decisions. I appreciate the opportunity to appear be- fore you today to discuss Section 1071 of the Internal Revenue Code which allows the Fed- eral Communications Commission (FCC) to grant tax relief with respect to the sales of ra- dio, television, and other properties under cer- tain circumstances. This demonstrates, I think, that even at a time when such fiscally colossal issues like a balanced budget amendment and the Contract with America dominate our at- tention, there remain many important issues that should not be neglected, even though they may never appear above the fold on the morning paper. I commend the Committee for taking the time to address this issue. I will restrict my remarks to the economic aspects of this issue and leave the debate about the social and communications policy to oth- ers more familiar with those aspects. It is not my purpose today to argue in favor of or against the program, or for or against any changes in the program, but rather to present its underlying economics as best as I have been able to determine them. The FCC Tax Certificate Program Under Section 1071, the FCC has the au- thority to grant a tax certificate to the former owners of certain broadcast facilities when the sale or exchange of those facilities is certified by the FCC to be necessary or appropriate to effectuate a change in a policy of, or the adop- tion of a new policy by, the Commission with ByJD. Foster Executive Director and Chief Economist Tax Foundation I EJF

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