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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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