PRESS RELEASE: The USF Tax Breaks the 40% Barrier

The following statement should be attributed to Free State Foundation President Randolph May regarding the anticipated increase in the USF contribution factor:

“According to a report in Communications Daily, the USF contribution factor, a tax really, is expected to hit 42.3% in Q3, the highest ever, based on numbers released. That would be an increase of 5%, up from 37% in Q2. Boom! Breaking 40% is akin to breaking the sound barrier.

It’s crystal clear that the current USF regime is unsustainable because at some point — and the point could come suddenly — the USF tax on telecom services will be too much for consumers, and then policymakers, to bear. Reforming the regime should be a near-term priority for Congress. The focus should be on making available subsidies only upon a clear and convincing showing of need, and a reliance on market forces wherever possible to maximize efficiency and reduce waste and fraud."

PRESS RELEASE: The USF Fund May Be Constitutional, But It's on Shaky Ground

 

Free State Foundation President Randolph May issued the following statement regarding the Supreme Court’s decision in the FCC v. Consumers’ Research case:

“While the Supreme Court upheld the constitutionality of the FCC’s universal service programs, I hope the challenge at least served to highlight the long-standing problems with the nearly $10 billion per year Universal Service Fund. Without meaningful substantial reform, the USF fund, as it exists now, is unsustainable. Consumers of traditional telephone services are now paying a tax of 36% on all their calls as the contribution base continues to shrink. Congress needs to get serious about engaging in a top-to-bottom examination of the program to determine its size and scope going forward, how it should be funded, or whether it should even exist."