After posting a commentary from former FCC Chairman Mark Fowler about the push for Congressional legislation to bring back the tax certificate, we heard from Multicultural Media, Telecom and Internet Council President Emeritus David Honig, who said Fowler is simply wrong. Here’s what Honig had to say…
By David Honig
Here are the facts about the proposed restoration of the FCC’s Tax Certificate Program. It’s vital that this widely supported program to advance broadcast ownership diversity be evaluated based on the facts.
- Unlike the 1978-1995 version of the program, the proposed legislation is aimed at helping socially disadvantaged individuals, who often are but are not required to be minorities or women.
- The claim that the program spawned sham ownership structures is an urban legend. I looked at the over 200 tax certificate transactions that occurred from 1978-1995. Only one was a sham, and the FCC punished that licensee severely. No one has identified even one other sham transaction.
- The proposed legislation has a $50M deal size cap, a feature not contained in the earlier version.
- No study or other scholarship demonstrates that the program did not assist minority broadcasters. Indeed, minority broadcasters today universally support the restoration of the program. So do nine former FCC Chairs, the NAB, all 50 state broadcast associations, and dozens of national minority organizations.
- To be sure, minorities today do have more access to the airwaves than they did 30 years ago. But since the 1940’s, the FCC has looked to ownership diversity as the means by which consumers can access the unfiltered voice to the voiceless. The FCC’s just-released 2019 ownership study found that minorities owned 6 percent of the nation’s full-power TV stations, 7 percent of commercial FM radio stations, and 13 percent of commercial AM radio stations — even though they make up 43 percent of the U.S. population. No one seriously considers this to be OK.
David Honig is President Emeritus of the MMTC and can be reached by e-mail at [email protected]
The substance of my comments is about using the tax code, by whatever scheme, to favor, in this case, the buyer of the station based on the identity group to which they belong. Government, at any level, should not be engaging in the advantaging or disadvantaging of anyone. Such an outcome is toxic in the free-market system, and in other ways.
Meanwhile, ‘minorities’ have plenty of outlets by which to express their views, and with which to be economically successful, without anything needing to be handed to them.
“Government, at any level, should not be engaging in the advantaging or disadvantaging of anyone.”
That’s not the system we have now. There are hundreds of tax deductions and tax credits. If an owner wants to avoid cap gains taxes, he can do what CBS did and use a reverse morris trust. No cap gain. Or donate the station to a non-profit. Tax deduction. EMF gets lots of tax benefits, which is why they’re the only ones buying radio stations now.
We are not a full free market economy. Farmers get tax credits for not growing certain crops. The tax system benefits companies leasing rather than owning their headquarters, which is why CBS just sold several of their buildings. And this really isn’t about minorities having outlets to express their views. It’s about OWNING those outlets rather than just using them. For over 45 years the FCC has released an annual study of minority ownership of broadcasting. If that’s racist, then Congress should tell them to stop. But as long as they continue to cite it as an issue that needs to be corrected, people will attempt to address it.
That boat has sailed. Have you looked at the value of radio stations lately? Even with a tax certificate radio doesn’t make a lot of sense as an investment unless you plan an ‘ice cube’ model. If these groups want a ‘voice’ for a lot less money they can launch an online audio service and build that. The idea of a tax certificate for anyone is so 1980s…let’s move on folks.
It is never, ever right to use tax dollars, in any system or procedure, at any level of government, to advantage or DISadvantage any identity group…including white business owners. Such a governmental scheme results in reverse discrimination.
The supposed necessity or urgency for tax-subsidized ‘incubator’ or ‘tax certificate’ ideas also ignore that all Americans, including so-called minorities, have other outlets to express or advocate for ideas, most especially the Internet…but also community newspapers, community groups, direct mail and other printed materials, etc.
If we are to have a ‘tax certificate’ or other-branded subsidy, it should be for ALL small business owners, including white male businessmen. If not, it is rank discrimination of one group to advance another. Hard-earned tax dollars, in a free-market system, are not the way to do it.
If you read the actual proposal, the tax credit would go to owners of any race who sold their station to a minority. The minority buyer doesn’t get a tax credit. The majority seller gets to defer capital gains taxes on the sale.