18 Media L. & Pol'y 1 (2008-2009)
Investing in Economic Growth: Broadband Network Tax Forbearance

handle is hein.journals/medilpoy17 and id is 3 raw text is: FALL 2008, 18 MEDIA L. & POL'Y

INVESTING IN ECONOMIC GROWTH:
BROADBAND NETWORK TAX FORBEARANCE
by
Larry F. Darby*
Joseph P. Fuhr Jr.**
I
INTRODUCTION
This paper argues, and concludes, that raising taxes on broadband and
related telecom network services will directly and indirectly destroy more
value for taxpaying citizens than expenditure of the funds can reasonably be
expected, or been analytically shown to create. Put differently, the paper
inquires and answers whether broadband tax forbearance is a good
government investment.
Private or public investment is generally warranted if its expected
value over time exceeds its expected (mainly current) cost. The greater the
expected return, the greater the impetus to invest. Forbearing broadband
taxation is a form of public investment, which, when compared to other forms
of taxation and/or expenditure plans, most likely will yield very attractive
returns.
Federal, state and local fiscal authorities routinely tailor expenditure
plans and programs to reflect not only short term needs, but also to foster
long-term growth and development via capital expenditures for infrastructure
development. This includes streets, sewers, buildings, schools, medical
facilities, sports facilities, and other projects. The rationale for government
expenditure of taxpayer dollars for long-term capital development programs is
straightforward. Investment of taxpayer dollars is warranted when the present
value of future benefits from the investment expenditure can reasonably be
expected to be greater than the present value of the alternative, but foregone,
private or public expenditures. Other considerations matter, but a major
* President, Darby Associates; Fellow, The American Consumer Institute, a 501(c)3
organization formed to advance an economics-based consumer welfare platform in
information technology, communications and related matters.
** Professor of Economics, Widener University; Fellow, The American Consumer Institute.

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