ITTA, along with the Competitive Carriers Association (CCA), sent a letter to Congressional leadership on May 11, 2017 urging Congress to consider the impact of treating Universal Service and other federal broadband support as taxable income. The logic of taxing distributions from programs that the consumer base pays into for the benefit of expanding communications networks in areas otherwise uneconomical to serve doesn’t make a lot of sense.
To put it in perspective, if an ITTA member company pays an effective corporate tax rate of 35%, the USF dollars they receive to deploy broadband networks in rural America are automatically taxed at 35%. Meaning $35 out of every $100 the member company receives cannot be used to expand broadband but rather must go to paying taxes.
It would make far more sense for Congress to amend the tax code to treat distributions from federal broadband programs such as the Universal Service Fund as non-taxable income. This change would have an immediate impact on broadband service in rural America by ensuring that each and every broadband support dollar is being used for its intended purpose.
ITTA looks forward to working with members of Congress on this issue in the coming days. Our overriding goal is to coordinate with policymakers and industry to craft policy solutions that will increase broadband investment in rural America.