A Trojan Horse in Washington The Open Letter

An Open Letter To: Working Group for Public Broadcasting
c/o Kiplinger Midcareer Program
School of Journalism
The Ohio State University
242 West 18th Avenue
Columbus, Ohio 43210

We recently read your pamphlet, Public Broadcasting: A National Asset to Be Preserved, Promoted and Protected; A Proposal, from cover to cover. We even read the back cover, where you invited us to join the WGPB, and thoughtfully provided a postpaid reply card for that purpose. We wish we could accept your invitation but, for the present, we can't. And we feel compelled to tell you why we can't.

We value public TV and radio as much as you. We admire the kinds of programs our noncommercial stations offer in spite of their scandalously inadequate funding, and we'd really like to see, and hear, what they could do with $600 million a year.

And we abhor censorship at least as much as you do. We don't doubt that you have "substantial anecdotal and documented evidence...that pressure is exerted to influence programming." We're journalists ourselves, and we have some horror stories of our own. You don't have to give us a bill of particulars on that issue.

And while we're not ready to endorse every detail of your blueprint for an "Independent Public Broadcasting Institution," we certainly don't object to using that part of the Proposal as a starting point or, to use your words, "as a catalyst for discussion of a new Public Broadcasting Act."

But there is one part of the Proposal we find so odious that we oppose even its use as a "catalyst for discussion." We fear that, if enacted by Congress, it could serve as a catalyst for a series of other measures inimical to the interests of consumers. The unacceptable provision is, of course, that 2% tax on electronic equipment.

According to your figures, factory sales of consumer audio and video goods amounted to $29 billion in 1987, while factory sales of professional gear came to $1.45 billion. If your tax had been in effect that year, consumers would have paid 95% of it. And the least affluent consumers would have paid the greatest portion of their incomes, making this a classic example of a regressive sales tax.

Why should consumers be forced to finance public broadcasting when those who benefit financially from their ability to reach consumers through commercial broadcasting are far better able to bear the cost?

In 1986, advertisers spent over $29.5 billion on radio and TV air time, and those expenditures are increasing. For example, the average cost of a 30-second commercial on the 1989 Superbowl telecast was $675,000, an increase of $25,000 over last year's price. And NBC had no trouble selling every available spot. So a 2% tax on radio and TV advertising would yield about the same amount as your proposed electronics tax, or a little more.

Consumers didn't create public broadcasting's problems. As you pointed out, it is advertisers who have forced commercial broadcasters to avoid controversy, to stint on children's programming, and to be consistently majoritarian in an effort to attract the largest, most affluent audiences possible. And it is many of these same advertisers, in their role as corporate underwriters, who have undermined the independence of public broadcasting.

It isn't so much the amount of money involved here. Two percent is less than half the rate of some states' retail sales taxes. It's more a matter of principle. Why shouldn't those who have created the problem pay for the solution?

And it isn't so much the principle as the precedent your Proposal, if enacted in toto by Congress, would set. Though we're sure you didn't intend it that way, any bill incorporating your funding plan would serve as a stalking horse for the record industry's attack on the American consumer.

That industry has long sought "royalty levies" on consumer audio recorders and blank tape. Record executives claim their firms lose $1.5 billion a year to home taping, even though the industry's profits are at an all-time high. But we don't believe them, and neither do most major consumer and public interest groups. Consumers Union and the Consumer Federation of America, for example, have consistently opposed legislation to tax or otherwise restrict home taping.

Fortunately, members of the House Judiciary Committee share our skepticism. They have consistently refused to tax consumers to further enrich an already wealthy industry. Some of them have even chided the industry for making such extravagant claims.

But the House Commerce Committee has been far more receptive to the industry's claims of losses. You may recall that the Subcommittee on Commerce, Consumer Protection and Competitiveness approved the Gore-Waxman Copycode bill, not once, but twice, during the term of the 100th Congress.

The record companies would like to get their tape tax legislation sent to the Commerce committees instead of to the Judiciary committees, but they can't because the regulation of royalty payments is a copyright issue, and thus falls under the jurisdiction of the Judiciary committees. But public broadcasting, as a communications issue, would fall within the jurisdiction of the Commerce committees.

That's why legislation based on your plan would be so important. It would give the entertainment industry's allies on the Commerce committees a chance to approve a Federal excise tax on consumer electronic devices, including recorders—a questionable means for a laudable end. And with public broadcasting as the beneficiary of this proposed tax, some usually canny legislators, who would never believe the record industry's meretricious arguments about the home taping "problem," might be tempted to support this measure—perhaps just enough for a slim majority in each house of Congress.

And then what?

First, with one consumer electronics tax already levied, the record industry would renew its drive for a special tax on consumer recorders and blank tape. Or perhaps the industry would try to get the original tax extended to blank tape, and the portion collected from tape and recorders diverted to a music-industry royalty fund. In that case, the rate of the tax on all items would be raised, to compensate for the diminished base of items taxed to support public broadcasting.

Then, the movie industry would want the same arrangement for its own benefit, this time taking blank videocassettes and recorders out of the public-broadcasting tax pool, and thus requiring a second increase in the consumer electronics tax.

It would be bad enough if the only consequence of these developments was that the movie and record industries, already fabulously wealthy—and helped, not harmed, by home recording—were to realize enormous unearned profits at the consumer's expense. But there would be another, even more baleful effect of any such unwarranted largesse toward the Hollywood set.

The proceeds from the tape tax rejected by the 99th Congress were to be allocated to records on the basis of their standings in the sales charts, which are based on sales in the dominant record chains, and in the airplay surveys used to distribute radio blanket-license revenues to music publishers. To put it mildly, these lists tend to favor the dominant record labels at the expense of the small independents. Hence this disbursement scheme would not foster, but would rather inhibit, competition and diversity in the recording business. And we have no doubt that it would serve as the model for the system of distributing funds from any future audio or video taping taxes.

You don't want to promote that sort of thing, do you?

We would be happy to offer our editorial endorsement of a new Public Broadcasting Act—unless it includes a consumer electronics tax. In that case, we would feel constrained not only to withhold our endorsement, but to actively oppose it—even to the point of reluctantly defending the status quo as the lesser of two evils. We hope it won't come to that.

We urge you to disavow your plan to fund public broadcasting with a tax on electronics, and advocate instead a tax on radio and TV advertising. By doing that, you would advance the interests of consumers and of public broadcasting at the same time. You would also avoid opening an economic Pandora's box.

How can you do otherwise? After all, public broadcasting is too important to be made a pawn in the show business magnates' continuing assault on the American consumer.
Sincerely,
Stereophile

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